.c.

-� •

q
�m 30.0n Ja nuary 1 . : 0 1 3, Lebron 8a sh and D Nayne (the 101nt . .
operators) jointly buy a
"'-'opter for P .30 mill ion eac h · The J. o . nt a
11t-
·

i rrang e111ent nclud es the following terms

'.,, ll1e parties are the i· c,.int owners of the h
.
. :
, er. is at t e :disposal of eac e l icop1. , ,r
l: Tl'e l'eI".•copt � h part y f:>r 70 days each yea r
nie parties may d e ci
TI .
de to use the helic opte r 01 lease
'. it to a thi rd part y I
�rte
"' · ... m ai ntenance aM dispos al f
o the he licopt e· require the unanim ous cbnsent of the
,.,.. 1 es
E'. n,e cont ract u a l arrar:gerne
nt is for the expecti?d life (20 years) o f the helicopter and Ccln
l"le change oi-ly if :-ill 1 iarties
:.>greE: Th·:- res1du , I •1aluE of the ii ehco pter is ni l .
t
�qu.iJly among the joint! �rators .
• Revenues and expenses are to be shared
.

!: �013, the parties paid P300,000 to meet the cdsts .:f m a i n t ai ni ng the helicopter. In 201 3,
eact1 party also incurred costs of running the heli co pte r when they made use of the helicopter
\�-�- Lebron mcurred costs C•f P 20 0 , 00 0 Qn pilot fees. lVlation fuel and landing costs). I n 201 :3 .•

the P3fttes earned renta l mcl1me of P2.5 million by rer.nng the helicopter t o other s .

Vv1,st is the book value of tht� helicopter 1n the booKs ( f Lebron o n Decembe r 3 1 , 201 3?

I\.. P28.5M B P 1 9M C. P21 M D. P9.5M

Problom 3 1 . On January 1 201 1 entities A a nd 8 : ach acq u ired 30 per cent of the ordinary
snaresthat carry vot i ng rights at a general meeting 01 sh a rehold ers of entity Z for P300,000.(9)
E nllties A and 13 imme diat el y agreed to share control over ent ity" Z .

For the year ended Dec. 3 1 . 201 1 en t it y Z recogn1z! ·d a profit of P400,000. On �c. 30 201 :
.

entity z declared and pa id ci d iv id en d of Pi S0.000 fer the year 20X 1 . At Dec. 31 , 201 1the fa1r
value ot each venturers' m·.testment in entity Z is P425.000. H oweve r, there is no p u bl_i s he d -
;.:nee quotation tor e nt it y Z

. .
(ln Dec. 3 1 , 201 1 y
e ntit A sell� goods for F60,000 to entity Z. .L\t Dec. 3 1 ,• 20 1 1 t h e goods
purchased from en tity A wer e in e nt ity Z's invento rie s 'ie 'they had not bee n sold by ent�ty_ Z).
E.nt1�y A sells '.:JOOds at a t·O per cen t mark-up :in .:ost. En tiu es A and 8 account for JOmtly
c0ntrolled ent1t1es using the �qu1ty method.

The amount of investment to be rec ogni zed by ent i ty 1\ should be.

.l. 375.000 c 425 .002

�). 369.000 d. 30(},0CO

Pro blem �
32.0n December :31 , 2009 entit y A a n SME . acquired 30% of th e ordinary shares that
c a:ry votmg rights of entn y Z for P 1 00,000 . In � cqu 1 nn g those sh a res entity A incu rr� d
t ·a n s a ct 1on costs of P1 ,000 E ntity A h as entered 1nio a co nt ra ctu a l arrangement with a not he r
pa11y (entity C) tl1at owns 2!: % of t he ordinary sh.ires )f e ntit y Z , where by entities A and C j oi nt ly
controllet1 entity Z. E ntity A uses the cost model tc account for its i nve st ments in J C E . A fair
\ 3lu atio n of t hn inv-=stment!. in e n t ity Z d eterm inea using a reliable earnings multiple appro<lch

t:\1sts. In January 2 0 1 0 . ent it y Z dec la red and paid d vidend of P20,000 out of pro fi t s earned in
:.oo-:J. No furthm dividends v11e re paid 1n 2010, 20 1 1 a :)d 201 2. At Dece mb er 31 . 201 O, 201 1 and
::u 1 2. m a nagem e nt assessE'd the fair v a l ues of its inv � stm en t in entity Z as P1 02,000, P 1 1 0,000
: ·�,1 PPC'.000. 1 e$ped1vely 1 : o�ts to sel l are �·stirr.atE• I at P4 .OC1Q throughout E n tity A measures
. . ' 11
:•
its nwestment in ent ity Z on December 3 1 , 201 1 at?

P 1 1 0 . 000 b . P 1 0 1 . 000 c. P 1 06,000 d. P95,000

l'nihlem 3.tOn J a nu ary 1 , 2 0 1 3 e_nti ties· A and B (th•! venturers) f o rm a joint vent u re (entity 'I').
_ .
l ioon 1 nc o1 po ration of e ntity Y. e n ti t ies A ano B each take up 50 per cent of the sh a re capital of
t>nt11y Y . 111 return for their i n te re sts
m e nt it y Y . e nt 1 1 1es A a nd B ea ch contribute P 1 00,000 to •
E'nt.ty YEntity A con tri butes machine with a fair va l Je of P 1 00,000 and a carrying amount of
PB0.000 . Ent1tv B's c o ntr i b ution is P 1 00,000 in cash The m ach i ne contributed by entity A h a s
an e stim at ed useful life of 1 l J years with no re si du a l Vi slue.

i:�1t1ty Y's prof1 : for t!'e year e nde d December 3 1 , 20· 3 1s P30,000 (after ded ucti ng depreciation
t•xpense 01 P 1 0,000 on ti 1e machine. contributed by ent ity A . ) E nt ity A ac c o u nt s for the
hvestment usin g the equity m et h od What is the ca1 rym g amaunt of investment of ent it y A o n
\ �ecember 3 1 . 20 t :' ?

. ... A PM nn.� Q p , .., 1 ()()() r· 01nc: """ n n1 nc '"'"

.... ...�..,..
... ,.,,. -�.-- ·•>n ·--·· , T"