Problem VI

The joint operator, Entity K account for their interests in the joint operation as follows:

January 1, 20x4 (P12,000,000 / 5 = P2,400,000)

Property, plant and equipment (interest in an aircraft) 2,400,000

Cash 2,400,000

To recognize the purchase of an ownership-interest in a

jointly controlled aircraft.

In 20x4

Cash 12,000

Profit or loss (rental income) 12,000

To recognize income earned in renting to others the use of

the aircraft in 20x4.

Profit or loss (aircraft operating expenses) 180,000

Cash 180,000

To recognize the costs of running an aircraft in 20x4.

Profit or loss (depreciation expense) 120,000

Accumulated depreciation (interest in an aircraft 120,000

To recognize depreciation of an ownership-interest in a

jointly controlled aircraft in 20x4: P12,000,000/20 years =

P600,000/5 operators = P120,000

share for each joint operato