IVY T.

ECAT
BSA 301

PROBLEM 1:

ANSWER AND SOLUTION:

1. Compute the share of A in the revenue of the joint operation for 2020

(30%x18, 840, 000)= P 5, 544, 000

Cash 5,544,000
Revenue from pipeline 5,544,000
(30%x18, 840, 000)

2. Compute the share of A in the expenses of the joint operation for 2020

OPEX (30%x11,200,000) 3,360,000

Amortization Expense(16,800,000x100%/20 years) 840,000
Total 4,200,000
3. Compute the share of A in the gross profit/net income of the joint operation for
2020

Proportionate share (30%) Total (100% based)

Revenue P5, 544, 000 P18, 480, 000
Less: operating expenses 3, 360, 000 11, 200, 000
Amortization expense:
P16, 800, 000x`00% /20yrs. 840,000
P56, 000, 000x100%/20yrs. 2,800,000
Net income of the joint operation 4, 480, 000
Multiply by: 30% interest 30%
Net Income of A P1, 344, 000 1, 344, 000
4. Compute for the ending capital/investment of A

Investment P 16,800,000
Net Income of AA 1,344,000
Ending Capital P 18,144,000

5. Determine the realized gain upon the contribution of the fiberglass

FV of the fiberglass P 16,800,000.00

Less: Cost of the Fiberglass (P 12,320,000.00)
Realized gain P 4,480,000.00

6. Determine the unrealized gain upon the contribution of fiberglass at year end

FV of the fiberglass 16,800,000/20yrs = P 840,000

FV of the fiberglass 16,800,000

Depreciation expense P 840,000
CA P 15,960,000
Less: Cost of the Fiberglass (P 12,320,000.00)
unrealized gain P 3,640,000.00

7. Determine the amortization/depreciation expense for the year 2020

FV of yacht P 56,000,000.00
Divide: Useful life 20 years
Depreciation Expense P 2,800,000.00

8. Determine the yacht, net cost at the end of 2020

FV of yacht P 56,000,000.00
Less: Depreciation Expense P 2,800,000.00
Yacht, net cost at the end of 2020 P 53,200,000.00