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Chapter 9 Multiple Choice Problems
Books of Joint Operation Entity – Corporate in Nature
Use the following information for questions 1 to 4
On January 1, 20x4, XX Company and YY Company signed an agreement to form a joint operation to
manufacture a product called plasma. This product is used in the manufacturing of television. The
following are transactions transpired in relation to joint operations for 20x4:
a. To commence the operation, both operators contributed P252,000 in cash.
b. Contributions of cash by the operations.
c. Use of cash and loan to buy machinery & equipment costing P134,400 (cash paid, P84,000 and
the balance on the loan account) and raw materials purchase on account costing P109,200.
d. Labor incurrence amounting to P120,960 with P117,600 paid in cash.
e. Loans from the bank, P100,800.
f. Repayment of loan – machinery and equipment P16,800, raw materials amounting to P70,560,
and other factory expenses, P218,400.
g. Depreciation of machinery and equipment, P13,440.
h. Transfer of materials, labor, and overhead to Work-in-Process; payroll, P120,960; Materials
P80,640; Factory overhead – heat, light and power, P218,400 and depreciation of P13,440.
i. Transfer of Work-in-Process to Finished Goods Inventory, P302,400.
j. Transfer of Finished Goods Inventory, P268,800 to Joint Operations throughout the year.
1. Determine the ending balance in cash:
a. P-0- c. P151,200
b. P80,640 d. None of the above
2. Determine the work in process ending balance amounted to:
a. P117,600 c. P433,440
3. The December 31, 20x4 total assets amounted to:
a. P263,760 c. P394,800
4. The December 31, 20x4 XX’s investment amounted to:
a. P117,600 c. P252,000
b. 235,200 d. None of the above
5. AA company and BB company agreed to form a joint operation to offer health services. To start the
operation, the joint operators agreed to contribute cash of P300,000 each. The joint operation will
record which of the following entries to recognize this event?
a. Joint operator contributions………………………. 600,000
Cash………………………………………………………………. 600,000
b. Cash…………………………………..………………………. 600,000
Joint operator contributions………………………….. 600,000
c. Venturer’s equity – AA………………………………. 300,000

Venturer’s equity – BB………………………………. 300,000
Cash……………………………………………………………… 600,000
d. Cash…………………………………………………………… 600,000
AA- Joint operation contribution………………….. 300,000
BB – Joint operation contribution…………………. 300,000
6. Cash contributed to a joint operation was used to purchase Equipment (P100,000) and raw
materials (P70,000). The following entry would be part of the overall recording of these
transactions:
a. Equipment………………………………………………… 100,000
Raw materials…………………………………………… 70,000
Cash………………………………………………………………. 170,000
b. Work in progress………………………………………. 170,000
Joint operation capital…………………………………… 170,000
c. Cash…………………………………………………………. 170,000
Contribution to joint operation……………………… 170,000
d. Cash............................................................. 170,000
Equipment…………………………………………………….. 100,000
Raw materials………………………………………………… 70,000
7. Three joint operators are involved in a joint operation that manufactures ships chandlery. At the
beginning of the year the joint operation held P50,000 in cash. During the year the joint operation
incurred the following expenses: Wages paid P20,000, Overheads accrued P10,000. Additionally,
creditors amounting to P40,000 were paid and the joint operators contributed P15,000 cash each to
the joint operation. The balance of cash held by the joint operation at the end of the year is:
a. P5,000 c. P35,000
b. P25,000 d. P75,000
Books of Joint Operators: Reporting Proportionate Share of the Assets, Liabilities, Revenues, and
Expenses of the Joint Operation
8. XX company and YY company formed a joint operation and share in the output of the joint operation
60:40. The joint operation paid a management fee of P20,000 to XX company during the current
period. The cost to XX company of supplying the management service was P14,000. XX company
records the management fee revenue as follows:
a. Cash……………………………………………………. 20,000
Fee Revenue………………………………………… 20,000
b. Cash……………………………………………………. 14,000
Fee Revenue………………………………………… 14,000
c. Cash……………………………………………………. 12,000
Fee Revenue………………………………………… 12,000
d. Cash…………………………………………………….. 8,000
Fee Revenue…………………………………………. 8,000
9. Company A and Company B formed a joint operation and share equally in the output of the joint
operation. The joint operation paid a management fee of P20,000 to Company A during the current
period. The cost to Company A of supplying the management service was P14,000. Company A
records the management fee revenue as follows:
a. Cash……………………………………………………. 20,000
Fee Revenue………………………………………… 20,000
b. Cash……………………………………………………. 14,000
Fee Revenue………………………………………… 14,000
c. Cash……………………………………………………… 6,000
Fee Revenue………………………………………….. 6,000
d. Cash……………………………………………………. 10,000
Fee Revenue………………………………………… 10,000
10. Company A Limited and Company B Limited formed a joint operation and share in the output of the
joint operation 60:40. The joint operation paid a management fee of P20,000 to Company A Limited
during the current period. The cost to Company A Limited of supplying the management service was
P14,000. The amount of profit Company A Limited will recognize in relation to the provision of the
management fee to the joint operation is:
a. NIL c. P3,600
b. P2,400 d. P6,000
11. A joint operation holds Equipment with a carrying amount of P1,200,000. The two joint operators
participating in this arrangement share control equally. They also depreciate Equipment using the
straight-line method. The Equipment has a useful life of 5 years. At reporting date each joint
operator must recognize the following entry, in relation to depreciation, in its records:
a. Depreciation, P240,000 c. Investment in joint operation, P240,000
b. Depreciation, P120,000 d. Assets in joint operation, P120,000
12. A 50:50 joint operation was commenced between two operators. Operator One contributed cash of
P50,000 and Operator Two contributed a building with a fair value of P50,000 and a carrying amount
of P40,000. Using the line-by-line method of accounting, Operator Two would record:
a. Building in JO……………………………………………….. 40,000
Building………………………………………………………….. 40,000
b. Building in JO……………………………………………….. 50,000
Building………………………………………………………….. 40,000
Gain on sale of building………………………………….. 10,000
c. Investment in Joint Operation……………………… 50,000
Building……………………………………………………….. 40,000
d. Cash in JO…………………………….……………………… 25,000
Building in JO………………………………………..…….. 25,000
Building………………………………………………………….. 40,000
13. A 60:40 joint operation was commenced between two participants. Participant One contributed
cash of P60,000 and Participant Two contributed agreed to provide technical services to the joint
operation over a period of two years. The fair value of the services was determined to be P40,000
and the cost to provide the services was estimated to be P35,000. Using the line-by-line method of
accounting, Participant Two would record:
a. Cash in JO…………………………….……………………… 30,000
Obligation to JO……………………………………….. 30,000
b. Cash in JO…………………………….……………………… 24,000
Obligation to JO……………………………………….. 21,000
Profit on provisions of services………………….. 3,000
c. Cash in JO…………………………….……………………… 24,000
Obligation to JO……………………………………….. 24,000
d. Cash in JO…………………………….……………………… 24,000
Receivable in JO…………………………………………… 16,000
Obligation to JO……………………………………….. 40,000
14. Three joint operators agree to an agreement in which they have an equal share in an agricultural
joint operation. The work undertaken in setting up the joint operation cost P300,000 and each
operator contributed cash. Each operator will need to recognize the following accounting entry:
a. Cost of joint operation product……………………………….. 300,000
Cash………………….……………………………………………………. 300,000
b. Inventory in JO……………………….……………………………….. 100,000
Cash………………….……………………………………………………. 100,000
c. Cash in JO……………………………….……………………………….. 300,000
Cash………………….……………………………………………………. 300,000
d. Cash in JO……………………………….……………………………….. 100,000
Cash………………….……………………………………………………. 100,000
15. A 50:50 joint operation was commenced between two participants. Joint Operator One contributed
cash of P50,000, and Joint Operator Two contributed a Building with a fair value of P50,000. Using
the line-by-line method of accounting, Joint Operator One would record:
a. Building………………………………………..…………………………. 50,000
Cash………………….……………………………………………………. 50,000
b. Cash in JO……………………………….……………………………….. 50,000
Cash………………….……………………………………………………. 50,000
c. Investment in Joint Operation…………………………..…….. 50,000
Cash………………….……………………………………………………. 50,000
d. Cash in JO……………………………….……………………………….. 25,000
Building in JO…………………………………………………………… 25,000
Cash………………….……………………………………………………. 50,000
AA and BB have established the AB Joint Operation. AA has a 60% interest in the joint operation and BB
has a 40% interest. AA contributed an asset with a carrying amount of P90,000 and a fair value of
P120,000 and BB agreed to provide technical services to the joint operation over the first two years of
operations. The fair value of the technical services was agreed to be P80,000 and the cost to provide the
services was estimated at P65,000 at the inception of the joint operation.
16. As part of its initial contribution, the journal entry for joint operator AA:
a. Debit against the Services Receivable in JO account for P32,000.
b. Debit against the Plant in JO account of P54,000.
c. Credit against the plant of P120,000.
d. Credit against the Gain on Sale of Plant of P18,000.
17. As part of its initial contribution entry BB will record a:
a. Debit against the Services Receivable in JO account for P32,000.
b. Debit against the Plant in JO account of P36,000.
c. Credit against the Obligation to JO of P39,000.
d. Credit against the Gain on Provision of Services of P6,000.
18. On July 1, 20x5, the Ears & Eyes Joint Operation was established. The two joint operators
participating in this arrangement, Ears and Eyes, share control equally. Both joint operators
contributed cash to establish the joint operation. The joint operation holds equipment using the
straight-line method and the depreciation is regarded as a cost of production. The equipment has a
useful life of 5 years. At June 20, 20x6, Ears had sold all of the inventory distributed to it and Eyes
had sold 50% of the inventory distributed to it. At June 30, 20x6, Joint Operator Eyes must recognize
the following entry in relation to depreciation in its records:
a. Dr. Depreciation Expense P240,000
b. Dr. Accumulated Depreciation P120,000
c. Dr. Inventory P60,000
d. Dr. Cost of Goods Sold P120,000

On July 1, 20x5, Abel entered into a 50:50 joint operation with Cain to develop an oil field off the coast
of Aparri, Cagayan. Each operator’s initial contribution was P2 million. Abel contributed P1 million cash
and equipment with a fair value of P1 million and a book value of P500,000. Cain contributed P2 million
cash.
Additional Information:
• Production costs for the JO for the year ended June 30, 20x6 were:
P’000
Purchases 750
Wages 1,300
Management Fee 400
Total production costs 2,450
Less: Work in Progress (650)
Cost of production 1800
• The remaining useful life of the equipment contributed by Abel is 5 years.
• Cain is responsible for the day-to-day management of JO and has recognized the management
fee received during the year as revenue. The costs of providing these management services to
JO were P225,000.
• Tasman has sold all of the oil distributed to it and Abel has sold 50% of the oil distributed to it by
June 30, 20x6.
An extract of JO’s balance sheet at June 30, 20x6 shows: (P‘000)
Cash 650
Work in progress 650
Finished goods in inventory 100
Plant & equipment 1,000
Accounts payable (100)
Net assets 2,300
19. Which of the following will not form part of Abel’s initial contribution entry?
a. Debit against the Cash in JO account of P1,500,000
b. Debit against the Equipment in JO account of P500,000
c. Credit against the Cash of P1,000,000
d. Credit against the Gain on Equipment of P250,000
20. Cain’s initial contribution entry will include a debit in Cash in JO account of:
a. P1,000,000 c. P2,000,000
b. P1,500,000 d. P3,000,000
21. The value of inventory distributed to Abel Ltd by the joint venture and subsequently sold by June 30,
20x6 is:
a. P425,000
b. P850,000
c. P900,000
d. P1,700,000

On January 1, 2021, Entity MM together with another joint operation set up a separate vehicle to
undertake a joint operation. The arrangement provides for both parties to have joint control over the
separate vehicle. For its contribution, Entity MM has recorded its joint interest in the joint operation at
P300,000, being the amount of cash contribution upfront. Apart from recording its assets and liabilities
in the joint operation directly, Entity MM has rights to a 60% share in the property, plant and equipment
of the separate vehicle, a 50% share in the current assets, and a 75% share of the liabilities incurred by
the separate vehicle. Its share of the revenue from the sale of the output produced by the separate
vehicle is 55%, while its share of the expenses incurred jointly is 60%.
Extracts of the financial statements of the separate vehicle for the first year of operation is as follows:
Revenue from the sale of outputs of the vehicle P1,000,000

Less: Expenses 600,000
Net income from operations P400,000
Current assets P600,000

Property, plant, and equipment 1,000,000
Total assets P1,600,000
Liabilities P800,000
Capital 400,000
Net income from operations 400,000
Total liabilities and capital P1,600,000
22. Determine Entity MM’s “Cash in Joint Operation” (interests in joint operation) (credit balance)
arising from the share in assets, liabilities, revenue and expenses.
a. P110,000 c. P420,000
b. P240,000 d. Nil
23. Determine Entity MM’s “Cash in Joint Operation” (interests in joint operation) ending balance:
a. P190,000 c. P820,000
b. P540,000 d. Nil
24. The share in net income/gross profit of Entity MM’s amounted to:
a. P300,000 c. P220,000
b. P240,000 d. P190,000
Use the following information for questions 25 and 26
Because the scale of the project exceeded the capacity of the entities MM and NN individually, they
tendered jointly for a public contract with a government to construct a motorway between two cities.
Following the tender process, the government awarded the contract jointly to entities MM and NN.
In accordance with the contractual agreements entities MM and NN are jointly contracted with the
government for delivery of the motorway in return for P19,600,000 (a fixed price contract). In 20x4, in
accordance with the agreement between entities MM and NN:
• Entities MM and NN each used their own equipment and employees in the construction activity.
• Entity MM constructed three bridges needed to cross rivers on the route at a cost of P5.6
million.
• Entity NN constructed all of the other elements of the motorway at a cost of P8.4 million.
• Entities MM and NN shared equally in the P19,600,000 jointly invoiced to (and received from)
the government.
25. Determine the net income generated by Joint Operator – Entity MM:
a. P9,800,000 b. P5,600,000
c. P4,200,000 d. None of the above
26. Determine the net income generated by Joint Operator – Entity NN:
a. P9,800,000 c. P1,400,000
b. P8,400,000 d. None of the above
L Inc., M Co., and N Inc. sign an agreement to collectively purchase an oil pipeline and to hire a company
to manage and operate the pipeline on their behalf. The costs involved in running the pipeline and the
revenue earned from the pipeline are shared by the three parties based on their ownership percentage.
All major operating and financing decisions related to the pipeline must be agreed to by the three
companies. The cost of purchasing the pipeline was P70,000,000. The pipeline has an estimated 20-year
useful life with no residual value. The management fee for operating the pipeline for 20x4 was
P14,000,000. Revenue earned from the pipeline is 20x4 was P23,100,000. L invested P21,000,000 for a
30% interest.
27. Compute the share of L Inc. in the revenue of the joint operation for 20x4.
a. P1,680,000 c. P14,000,000
b. P6,930,000 d. P21,000,000
28. Compute the share of L Inc. in the expenses of the joint operation for 20x4.
a. P1,050,000 c. P5,250,000
b. P4,200,000 d. P6,930,000
29. Compute the share of L Inc. in the revenue of the joint operation for 20x4.
a. P1,680,000 c. P14,000,000
b. P6,930,000 d. P21,000,000
On January 1, 20x4 entities MM, NN, OO, PP, and QQ (the joint operators) jointly buy a jet aircraft for
P14,000,000 cash. The operators are the registered as equal joint owners of the aircraft. They enter into
an agreement whereby the aircraft is at the disposal of each operator for 70 days each year. The aircraft
is in maintenance for the remaining days each year. The operators may decide to use the aircraft, or for
example, lease it to a third party. Decisions regarding maintenance and disposal of the aircraft require
the unanimous consent of the operators. The contractual arrangement is for the expected life (20 years)
of the aircraft and can be changed only if all the operators agree. The residual value of the aircraft is
zero.
In 20x4, the operators each paid P140,000 to meet the joint costs of maintaining the aircraft (e.g.,
hangar rental and aviation license fees).
In 20x4, each operator also incurred costs of running the aircraft when they made use of the aircraft
(e.g., entity MM incurred cost of P70,000 on pilot fees, aviation fuel and landing costs).
In 20x4, entity MM also earned rental income of P532,000 by renting the aircraft to others.
30. Determine the net income generated by Joint Operator – Entity MM:
a. P180,000 c. P392,000
31. the net book value of property, plant, and equipment
a. P2,660,000 c. P2,268,000
b. P2,590,000 d. None of the above
Instead of contributing cash for a 30% interest in the pipeline, L contributed steel pipes to be used by
the company constructing the pipeline. L had manufactured the pipes at a cost of P15,400,000. All
parties to the contract agreed that the fair value of these pipes was P21,000,000 and the fair value of
the pipeline once it was completed was P70,000,000. All other facts are the same as in the previous
problem. The other operators have a 70% interest in the joint operation.
32. Determine the realized gain upon the contribution of the steel pipes:
a. P5,600,000 c. P1,680,000
b. P3,920,000 d. Zero
33. Determine the unrealized gain upon the contribution of the steel pipes at year end:
a. P5,600,000 c. P1,680,000
b. P3,920,000 d. Zero
34. Determine the amortization expense for the year 20x4 is:
a. P-0- c. P966,000
b. P84,000 d. P1,050,000
35. Determine the pipeline’s net cost at the end of 20x4:
a. P-0- c. P19,404,000
b. P19,320,000 d. P21,000,000
Books of Joint Operation Entity – Partnership in Nature
36. The investment in the joint operation accounts in the books of the joint operators, X, Y, and Z show
the balances below, upon termination of the joint operation and distribution of the profits:
X Y Z
Accounts with
Dr (Cr) Dr (Cr) Dr (Cr)
X - P2,500 P2,500
Y P4,000 - 4,000
Z (6,500) (6,500) -
Final settlement of the joint operation will require payment as follows:

a. X pays P2,500 to Z, and Y pays P4,000 to Z.
b. Z pays P2,500 to X, and pays P4,000 to Y.
c. Y pays P6,500 to X, and Z pays P2,500 to Y.
d. None of these
The following information for the operations of joint operation is as follows
Investment In Joint Operation (Anton Company)

20x4: 20x4:
11/6 – Merchandise – Jose P 8,500
11/20 – Cash sales – Ampon P 20,400
11/8 – Merchandise – Deyro 7,000
11/10 – Freight Paid – Ampon 200 11/20 – Cash sales – Ampon 4,200
11/12 – Advertising – Ampon 150 11/28 – Merchandise – Deyro 1,210
12/8 – Purchase – Ampon 3,500
12/14 – Selling Expense – Ampon 400
The operation agreement provided for the division of gains and losses among Jose, Deyro, and Ampon in
the ratio of 2:3:5. The operation was to close as of December 21, 20x4.
37. The total gain from the joint operation amounted to:
a. P6,060 c. P18,180
b. P12,120 d. Some other answer
38. As final settlement, Jose received cash:
a. P6,060 c. P8,080
b. P7,608 d. P9,712
On September 30, 20x4, Roxas, Silverio and Tan agreed on a joint operation to sell their common stock
shares of the Golden Copper Mines. Gains and losses are to be shared in the proportion to the
contributed shares.
Roxas contributed 6,000 shares, which had cost him P42 a share; Silverio gave 10,000 shares which had
cost P58 each and Tan 4,000 shares which had cost P62 per share.
The par value of the shares was P50 and when the operation began market value was P40 a share. Tan
was to manage the operation for a flat fee od P3,000 plus expenses.
On October 20 he sold 4,500 shares for P44 a share. On November 1, Golden Copper distributed a stock
dividend of 20%. Tan sold 5,000 shares, ex-stock dividend, on November 5 for P25 a share. On
November 15, Golden Copper paid a cash dividend of P1 per share. On November 22, he sold 6,000
shares for P28. On December 20, the remainder of the shares was sold for P35 a share. Tan’s expenses
were P4,700.
39. The 20,000 shares contributed to the joint operation should be valued at:
a. P800,000 c. P1,080,000
b. P1,000,000 d. Some other answer
40. Assuming the joint operation is ended December 31, the share of Roxas in the loss of the operation
would be:
a. P10,130 c. P13,130
41. If a distribution of proceeds is made on December 31, the share of Silverio’s would amount to:
a. P374,650 c. P381,450
b. P378,500 d. P385,300
42. Tan’s loss on the disposition of his investment in Golden Copper is:
a. P95,420 c. P105,420
b. P98,140 d. P120,140
On July 1, 20x4, Andres, Bantug, and Carlos formed a Joint Operation for the sale of merchandise.
Andres as designated as the managing operator. Profits or losses are to be divided as follows: Andres
50%, Bantug 25% and Carlos 25%. On October 1, 20x4 though the joint operation was still uncompleted,
the operators agreed to recognize profit or loss on the operation to date. The cost of inventory on hand
was determined at P25,000. The joint operation account has a debit balance of P15,000 before
distribution of profit or loss. No separate book is maintained for the joint operation and the operators
record in their individual books all operation transactions.
43. The joint operation profit or loss on October 1, 20x4 is:

a. P10,000 profit c. P15,000 loss
b. P25,000 profit d. No profit or loss
44. The distribution of the operation profit or loss on October 1, 20x4 to the operators shall be as
follows:
a. Andres, P5,000; Bantug, P2,500; and Carlos, P2,500.
b. Andres, P12,500; Bantug, 6,250; and Carlos, P6,250.
c. Andres, (P7,500); Bantug, (P3,750); and Carlos, (P3,750).
d. No distribution yet because operation is uncompleted.
e. Answers not given
Anson and Burgos are operators in an operation for the acquisition of construction supplies at an
auction. The two operators agreed to contribute cash of P20,000 each to be used in purchasing the
supplies and to share profits and losses equally. They also agreed that each shall record his purchase,
sales and expenses in his own books.
Several months later, the two operators terminated the operation. The following date relate to the
operation activities.
Anson Burgos
Joint Operation account balance P16,000 Cr P18,400
Value of inventory taken 600 2,200
Expenses paid from Joint
800 1,800
Operation cash
45. The amount of joint operation sales is:
a. P77,000 c. P34,400
b. 27,000 d. None of these
46. In the final settlement, Anson would receive:
a. P2,000 c. P38,000
b. P18,600 d. None of these
Reyes and Santos formed a joint operation to acquire and sell a particular lot of merchandise. Reyes was
to manage the operation and to furnish the capital, and the operators, were to share equal in any gain
or loss. On June 10, 20x4 , Santos sent Reyes P10,000 cash, which was immediately used to purchase
merchandise which cost P10,000. Reyes paid freight of P240 on the merchandise purchased. On June 24,
one half merchandise was sold for P7,200 cash. Reyes paid the cost of delivering merchandise to
customers, which amounted to P260. No further transactions occurred on June 30, 20x4.
47. The profit (loss) of the operation for the period June 10 – June30, 20x4 is:
a. P1,820 c. (P1,700)
48. On June 30, 20x4 after recognizing the profit (loss) on the uncompleted operation, the account of
Santos on the books of Reyes will show a debit (credit) balance at:
a. (P10,910) c. P10,850
b. (10,975) d. Some other answer
Joint operation activities for M, N, and O having proved to be unprofitable, the joint operators agreed to
dissolve the operation. Accounts with the operation and co-operators on the books of M, the managing
joint operator are as follows just before the dissolution and liquidation:
Debit Credit
Joint Operation Cash P12,000
Joint Operation 6,500
N, Capital P14,500
O, Capital 6,500
The balance of joint operation assets on hand is sold by M for P3,500. M is allowed special
compensation of P300 for winding up the operation; remaining profits or loss is distributed equally.
49. The joint operation profit (loss) is:

a. P3,000 c. (P3,000)
b. P19,000 d. None of the these
50. In the final settlement, N and O received:
a. N, P13,400; O, P5,400 c. N, P15,850; O, P7,850
b. N, P10,500; O, P3,500 d. None of these
Al Benin and Rey Sucat formed a joint operation on January 1, 20x4 to operate two stores to be
managed by each operator. They agreed to contribute cash as follows: Benin, P30,000; Sucat, P20,000.
Profits and losses are to be divided in the capital ratio. All the operation transactions are for cash, and
the cash receipts and disbursements of the venture during the four-month period, handled through the
operators’ bank accounts are as follows:
Benin Sucat
Receipts P78,920 P65,425
Disbursements 62,275 70,695
On April 30, 20x4, the remaining joint operation’s non-cash assets in the hands of the operators were
sold for P60,000 cash. The operation was terminated and settlement was made between Benin and
Sucat.
51. The operation profit (loss) for the four-month period after selling the remaining non-cash assets
was:
a. P11,375 d. (P38,625)
b. P21,375 e. None of these
c. (P31,375)
52. The P60,000 cash was divided between the operators in the following manner:
a. Benin, P16,180; Sucat P43,820 c. Benin, P26,180; Sucat P33,820
b. Benin, P21,905; Sucat P38,095 d. Benin, P48,095; Sucat P11,095
53. The books of three joint operators contain the following account balances:
N’s Books O’s Books P’s Books
Account with N P2,000 Cr P2,000 Cr
Account with O P3,000 Cr 3,000 Cr
Account with P 5,000 Dr 5,000 Dr
When P makes final settlement of the operation, the entries are:

a.
Debit P P5,000 N P5,000 Cash P5,000
Credit O P3,000 P P2,000 N P2,000
Cash P2,000 Cash P3,000 O P3,000
b.
Debit Cash P2,000 Cash P2,000 N P3,000
O P3,000 N P3,000 O P2,000
Credit P P5,000 P P5,000 Cash P5,000
c.
Debit P P5,000 N P5,000 Cash P5,000
Credit Cash P3,000 P P3,000 N P3,000
O P2,000 Cash P2,000 O P2,000
d.
Debit Cash P2,000 N P2,000 N P2,000
O P3,000 P P3,000 O P3,000
Credit P P5,000 Cash P5,000 Cash P5,000
e. None of the above
Accounting for Joint Venture
54. Goldman Company reports net income of P140,000 each year and pays an annual cash dividend of
P50,000. The company holds net assets of P1,200,000 on January 1, 20x3. On that date, Wallace
Company purchases 40 percent of the outstanding stock for P600,000, which gives it the ability to
have joint control with Zimmerman Company over Goldman. At the purchase date, the excess of
Wallace’s cost over its proportionate share of Goldman’s book value was assigned to goodwill. On
December 31, 20x5, what is the investment in Goldman Company balance (equity method) in
Wallace’s financial records?
a. P600,000 c. P690,000
b. P660,000 d. P708,000
55. Assume that Goldman Company’s ownership structure is as follows:
75% is needed to direct relevant activities;
50% ownership of Wallace Company;
30% ownership of Zimmerman Company;
20% ownership of American Company
What is the amount of Income from Investment in Goldman’s Company in Wallace financial records
as of December 31, 20x5?
a. P168,000 c. P70,000
b. P108,000 d. P56,000
75% is needed to direct relevant activities;
25% ownership of American Company
a. P168,000 c. P70,000
b. P108,000 d. P49,000
Majority vote to direct relevant activities;
Not applicable – ownership of American Company;
Widely dispersed – other companies
a. P168,000 c. P56,000
b. P108,000 d. P49,000
58. On July 1, 20x8, Berardo Ltd acquired 25% of the ordinary issued share capital of Ricky Ltd for
P375,000. This investment gave rise to significant influence. The share capital and reserves of Ricky
Ltd at July, 1, 20x8 were:
Share capital P 400,000
General reserve – Appropriated retained earnings 250,000
Retained earnings – unappropriated 275,000
P925,000
All the identifiable net assets of Ricky Ltd were stated at fair value at the date of acquisition except
for building whose carrying value was P50,000 less than the fair value. Goodwill arising on Berardo’s
acquisition of Ricky was:
a. P131,250 c. P143,750
b. P135,000 d. P150,000
On July 1, 20x4, Joey Company acquired 25% of the shares of Leo Company for P100,000. On that date
the equity of Leo was P400,000, with all identifiable assets and liabilities being measured at fair value.
Profits/losses made since that date of acquisition were as follows:
Year end 30 June Profit/Loss

20x5 P20,000
20x6 (200,000)
20x7 (250,000)
20x8 16,000
20x9 20,000
There have been no dividends paid or movements in reserves since the date of acquisition.
59. On June 30, 20x5, the equity accounted balance of the investment in Leo was:
a. P50,000 c. P100,000
b. P55,000 d. P105,000
60. On June 30, 20x7, the equity accounted balance of the investment in Leo was:
a. Nil/Zero c. P4,000
b. (P3,500) d. P16,000
61. At June 30, 20x8, the equity accounted balance of the investment in Leo was:
a. Nil/Zero c. P5,000
b. P1,500 d. P20,000
62. Mallard Corporation purchased 25 percent of Drake Company’s stock in January 20x5. At the
acquisition date, Drake has inventory with a market value of P60,000 greater than book value. On
that date, Mallard Corporation gives the ability to have joint control with another entity over Drake
Company’s. Drake expects to sell the inventory during 20x5. Drake has net income of P100,000 and
pays P30,000 of dividends. What amount will Mallard’s net income change as a result of its
investment in Drake?
a. P2,500 c. P10,000
b. P7,500 d. P25,000
63. On January 2, Ken Company purchased a 30 percent interest in Pod Company for P250,000, such
interest gives Ken Company the joint control over Pod Company. On this date, the book value of
Pod’s stockholders’ equity was P500,000. The carrying amount of Pod’s identifiable net assets
approximated fair values, except for land whose fair value exceeded its carrying amount by
P200,000. Pod reported net income of P100,000 and paid no dividends. Ken accounts for this
investment using the equity method. In its December 31 balance sheet, what would Ken report for
this investment?
a. P210,000 c. P270,000
b. P220,000 d. P280,000
The following information relates to questions 64 and 65
On July 1, 20x3, Alpha Ltd acquired a 25% share of Beta Ltd. At that date, the following assets had
carrying amounts different to their fair values in Beta’s books:
Asset Carrying Amount Fair Value

Inventory P12,000 P15,000
Machinery P24,000 P30,000
All inventory was sold to third parties by June 30, 20x4. On July 1, 20x3, the machinery had a remaining
useful life of 3 years. The tax rate is 30%.
64. The adjustment required to the investment in associate account at June 30, 20x4 in relation to the
above asset is:
a. P875 c. P3,500
b. P1,250 d. P5,000
65. The total adjustment required to the investment in associate account (20x3 – 20x5) as of June 30,
20x5 in relation to the above asset is:
a. P500 c. P1,400
b. P1,125 d. P1,750
66. Ace Company purchases 40% of Basket Company on January 1 for P500,000 that carry voting rights
at a general meeting of shareholders of Basket Company. Ace Company and Blake Company
immediately agreed to share control (wherein unanimous consent is needed to all parties involved)
over Basket Company. Basket reports assets on that date of P1,400,000 with liabilities of P500,000.
One building with a seven-year life is undervalued on basket’s Books by P140,000. Also, Basket’s
book value for its trademark (10-year life) is undervalued by P210,000. During the year, Basket
reports net income of P90,000, while paying dividends of P30,000. What is the investment in Basket
Company balance (equity method) in Ace’s financial records as of December 31?
a. P504,000 c. P513,900
b. P507,600 d. P516,000
67. The income from investment in Basket Company in Ace’s financial records as of December 31?
a. P36,000 c. P12,000
b. P19,600 d. P7,600
68. Richardson Corporation purchased 25 percent of Dover Company’s stock in January 20x5 for
P400,000. At the acquisition date, Dover has equipment with a market value of P90,000 greater than
book value. The equipment has an estimated remaining life of 10 years. In 20x5, Dover has net
income of P160,000 and pays P50,000 dividends. What is the balance in the investment account on
Richardson’s financial records at the end of 20x5?
a. P400,000 c. P427,500
b. P425,250 d. P437,750
The following information relates to questions 69 and 70
Nero Ltd purchased a 30% shareholding in Bianco Ltd on January 1, 20x8 for P180,000. Bianco Ltd’s
assets recorded at fair values and its owner’s equity totaling P520,000 was represented as follows:
Share capital P260,000

Reserves/Appropriated retained profit 120,000
Retained profits (unappropriated) 100,000
Asset revaluation reserve 40,000
During July 20x8, Bianco Ltd paid an interim dividend of P18,000. At December 31, 20x8, Bianco Ltd
reported:
Profit for 20x8 P48,000

Final dividend payable 14,000
A transfer to the general reserve 10,000
Increase of the asset revaluation reserve to 70,000
69. The equity carrying amount of the investment in Bianco Ltd at 31 December 20x8 is:
a. P199,200 c. P203,400
b. P202,200 d. P211,200
70. Assume that Nero Ltd applied the equity method in its books the entry to record the dividend
receivable from Bianco Ltd at 31 December 20x9 would include:
a. A credit to the dividend revenue account.
b. A credit to the investment in associate account.
c. A debit to the dividend revenue account.
d. A debit to the investment in associate account.
71. Grand Corporation used equity method of accounting for its investments in a 30%-owned investee
that earned P48,000 and paid P12,000 in dividends. As a result, Grand Corporation made the
following entries:
Equity investment………………………………………………….P14,400
Equity income/Investment income………………………………………..P14,400
Cash…………………………………………………………………………P3,600
Dividend revenue……………………………………………………………………P3,600
What effect will these entries have on Grand Corporation’s balance sheet?
a. Investment understated, retained earnings understated
b. Investment overstated, retained earnings overstated
c. Investment overstated, retained earnings understated
d. No effect
72. On January 2, 20x2, Cannon Company purchased 25% of the outstanding commons stock of Angel
Inc. and subsequently used the equity method to account for the investment. During 20x2, Angel
Inc. reported net income of P210,000 and distributed dividends of P90,000. The ending balance in
the investment in Angel Inc. account at December 31, 20x2 was P160,000 after applying equity
method during 20x2. What was the purchase price Cannon paid for investment in Angel Inc.?
a. P85,000 c. P190,000
b. P130,000 d. P235,000
Dok Company acquired a 30% interest in Oak on January 1 for P2,000,000 cash. Assume the cost of the
investment equals the fair value of Oak’s net assets. Dok assigned the P500,000 fair value over book
value of the interest acquired to the following assets:
Inventories P100,000 (sold in the current year)

Building P200,000 (4-year remaining life at January 1)
Goodwill P200,000
During the year, Oak reported net income of P800,000 and paid P200,000 dividends. Using the equity
method.
73. Determine Dok’s income from Oak
a. P90,000 c. P190,000
b. P140,000 d. P240,000
74. Determine the December 31 balance of the Investment in Oak account
a. P1,940,000 c. P2,030,000
b. P2,000,000 d. P2,090,000
75. On January 2, Ken Company purchased a 30 percent interest in Pod Company for P250,000, such
interest gives Ken Company the joint control over Pod Company. On this date, the book value of
Pod’s stockholders’ equity was P500,000. The carrying amount of Pod’s identifiable net assets
approximated fair values, except for land whose fair value exceeded its carrying amount by
P200,000. Pod reported net income of P100,000 and paid no dividends. Ken accounts for this
investment using the equity method. In its December 31 balance sheet, what would Ken report for
this investment?
a. P210,000 c. P270,000
b. P220,000 d. P280,000
76. Ray Corporation owns a 40 percent interest in the outstanding common stock of Ton Corporation
having acquired its interest for P2,400,000 on January 1, 20x0, when Ton’s stockholders’ equity was
P4,000,000. The fair value/book value differential was allocated to inventories that were
undervalued by P100,000 and sold in 2010, to equipment with a four-year remaining life that was
undervalued by P200,000, and to goodwill for the remainder. The balance of Ton’s stockholders’
equity at December 31, 20x4, is P5,500,000 and all changes therein are the result of income earned
and dividends paid. Determine the balance of Ray’s investment in Ton at December 31, 20x4 using
equity method.
a. P2,400,000 c. P2,800,000
b. P2,760,000 d. P2,880,000
Arb Corporation acquired 25 percent of Tee Corporation’s outstanding common stock on October 1 for
P600,000. A summary of Tee’s adjusted trial balances on this date at December 31 follows (in
thousands):
December 31 October 1
Debits
Current assets P500 P250
Plant assets – net 1,500 P1,550
Expenses (including cost of goods sold 800 600
Dividends (paid in July) 200 200
P3,000 P2,600
Credits
Current liabilities P300 P200
Capital stock (no change during the year 1,000 1,000
Retained earnings January 1 500 500
Sales 1,200 900
P3,000 P2,600
Arb uses the equity method of accounting. No information is available concerning the fair value of Tee’s
assets and liabilities. Using equity method:
77. Determine Arb’s investment income from Tee Corporation for the year ended December 31:
a. Nil b. P25,000
c. P200,000 d. P300,000
78. Compute the correct balance of Arb’s investment in Tee’s account at December 31
a. Nil c. P625,000
b. P600,000 d. P700,000
Vat Company acquired a 30 percent interest in the voting stock of Zel Company for P331,000 on January
1, 20x1, when Zel’s stockholders’ equity consisted of capita stock of P600,000 and retained earnings of
P400,000. At the time of Vat’s investment, Zel’s assets and liabilities were recorded at their fair values
except for inventories that were undervalued by P30,000 and a building with a 10-year remaining useful
life that was overvalued by P60,000. Zel has income for 20x1 of P100,000 and pays dividends of P50,000.
Assume undervalued inventories were sold in 20x1. Using equity method:
79. Compute Vat’s income from Zel for 20x1.
a. Nil c. P22,800
b. P15,000 d. P30,000
80. What is the balance of Vat’s investment in Zel account at December 31, 20x1?
a. P316,000 c. P338,800
b. P331,000 d. P353,800
81. What is Vat’s share of Zel’s recorded net assets at December 31, 20x1?
a. P300,000 c. P315,000
b. P330,000 d. P338,800
82. At the beginning of the current year, Jalu S.A. enters a joint venture with another company to
develop a new technology. Each companies invest P1,000,000 for a 50% interest in the joint venture.
During the year, the joint venture reports net income of P200,000 and pays dividends of P60,000. At
the end of the year the joint venture’s balance sheet reports P5,000,000 in assets and P2,860,000 in
liabilities. Jalu reports P22,000,000 in assets and P10,000,000 in liabilities from its own operations. If
Jalu uses the equity method to report its investment in the joint venture, what are its total liabilities
at the end of the year?
a. P2,860,000 c. P11,430,000
b. P10,000,000 d. P12,860,000
83. Investor Limited acquired a 30% interest in Investee Limited for $27,000. Investor holds other equity
investments but does not prepare consolidated financial statements. Investee Limited revalued its
building class of assets by $10,000 during the current financial period. The balance of the
investment in associate account at the end of the current financial period is:
a. P11,100 c. P27,000
b. P18,100 d. P30,000
84. Codger Limited acquired a 40% investment in Lodger Limited for P50,000. Lodger declared and paid
a dividend of P10,000. Codger Limited does not prepare consolidated financial statements. The
appropriate entry for the investor to record this dividend is (apply the equity method in basic
situations):
a. Cash……………………………………………………..P4,000
Investment in associate…………………………….P4,000
b. Dividends Payable………………………………..P4,000
Cash………………………………………………………….P4,000
c. Cash……………………………………………………..P4,000
Dividend Revenue…………………………………….P4,000
d. Investment in associate………………………..P4,000
Dividend Revenue…………………………………….P4,000
85. Fox Corporation purchased 25 percent of Down Company’s stock on January 1, 20x5 for P600,000.
At the acquisition date, Down has an equipment with a market value P250,000 greater than book
value. On that date, Fox Corporation gives the ability to have joint control with another entity over
Down Company’s. the equipment has an estimated remaining life of 10 years. In 20x5, Down has net
income of P320,000 and pays P80,000 of dividends. What is the balance in the investment account
on Fox’s financial records at the end of 20x5?
a. P600,000 c. P653,750
b. P660,000 d. P673,750
86. The income from investment in Fox’s financial records at the end of 20x5:
a. P80,000 c. P6,250
b. P73,750 d. Zero
Assuming the information in number 85, the joint venturer (investor) does not prepare consolidated
financial statements:
87. The investment account on Fox’s financial records at the end of 20x5:
a. P600,000 c. P653,750
b. P660,000 d. P673,750
a. P80,000 c. P20,000
b. P73,750 d. Zero
Assuming the information in number 85, the joint venturer (investor) prepares consolidated financial
statements:
89. The investment account on Fox’s financial records at the end of 20x5:
a. P600,000 c. P653,750
b. P660,000 d. P673,750
a. P80,000 c. P20,000
b. P73,750 d. Zero
91. The investment account in the consolidated financial statements at the end of 20x5:
a. P600,000 c. P653,750
b. P660,000 d. P673,750
92. The income from investment in the consolidated financial statements at the end of 20x5:
a. P80,000 c. P20,000
b. P73,750 d. Zero
Downstream and Upstream Sales Transactions
93. Panner Inc. owns 305 of Watkins and applies the equity method. During the current year, Panner
buys inventory costing P54,000 and then sells it to Watkins for P90,000. At the end of the year,
Watkins still holds only P20,000 of merchandise. What amount of unrealized gross profit must
Panner defer in reporting its investment using equity method?
a. P2,400 c. P8,000
b. P4,800 d. P10,800
94. Investor own 30% of Investee and applies the equity method. In 20x2 Investor sells merchandise
costing P108,000 to Investee for P180,000. Investee’s ending inventory includes P40,000 purchased
from Investor. What amount of unrealized gross profit must be deferred in equity method entry?
a. P4,000 c. P9,600
b. P8,000 d. P14,000
95. Investor own 40% of Investee and applies the equity method. In 2012 Investee sells merchandise
costing P50,000 to Investor for P70,000. Investor’s ending inventory includes P30,000 purchased
from Investee. What amount of unrealized gross profit must be deferred in equity method entry?
a. P4,000 c. P9,600
b. P8,000 d. P14,000
96. Assume the facts in Question 95, which of the following is the correct equity method entry to defer
the unrealized gross profit?
a. Equity Income……………………………………………………………P4,800
Equity Investment……………………………………………………………..P4,800
b. Equity Investment……………………………………………………..P4,800
Equity Income……………………………………………………………………P4,800
c. Cost of Goods Sold…………………………………………………….P16,000
d. Equity Income……………………………………………………………P16,000
97. Assume the facts in Question 95, which of the following is the correct equity method entry to record
the realization of the gross profit in 20x3?
a. Equity Income……………………………………………………………P4,800
b. Equity Investment……………………………………………………..P4,800
Equity Income……………………………………………………………………P4,800
c. Cost of Goods Sold…………………………………………………….P16,000
d. Equity Income……………………………………………………………P16,000
98. Monroe Company owns 40% of the voting stock of Nartal Industries, acquired at book value. Nartal
reports income of P600,000 for 20x3. Nartal regularly sells merchandise to Monroe at a markup of
30% on cost. Monroe’s 20x3 beginning inventory includes P156,000 purchased from Nartal. Its 20x3
ending inventory includes P260,000 purchased from Nartal. Monroe uses the equity method to
report its investment in Nartal. Equity in net income of Nartal for 20x3 is:
a. P249,600 c. P216,000
b. P230,400 d. P264,000
99. Clovelly Ltd, owns 25% of Bronte Ltd. Bronte’s profit after tax for the year ended June 30, 20x3 is
P30,000. The tax rate is 30%. During the year ended June 30, 20x4. Bronte sold P5,000 worth of
inventory to Clovelly. These items had previously cost Bronte P3,000. All the items remain unsold by
the Clovelly at June 30, 20x3. Clovelly’s share of Bronte’s profit for the year ended June 30, 20x3 is:
a. P5,500 c. P7,000
b. P6,250 d. P7,150
Fixed/Plant Assets
100. Clovelly Ltd, owns 25% of Bronte Ltd. Bronte’s profit after tax for the year ended June 30, 20x3 is
P30,000. The tax rate is 30%. On July 1, 20x3, Bronte Ltd sold an item of plant to Clovelly Ltd for
P8,000. The carrying amount of the asset on this date in Bronte Ltd’s records was P3,000. The plant
had a remaining useful life of 5 years. Clovelly’s share of Bronte’s profit for the year ended June 30,
20x3 is:
a. P6,800 c. P7,675
b. P7,325 d. P7,750
Inventory and Fixed/Plant Assets
Albert Company has an investment in the voting shares of Prince Ltd. On December 31, 20x5, Prince
reported a net income of P860,000 and declared dividends of P200,000. During 20x5, Albert had sales to
Prince of P915,000, and Prince has sales to Albert of P500,000. On December 31, 20x5, the inventory of
Albert contained an intercompany profit of P72,000. On January 1, 20x4, Albert sold equipment to
Prince and recorded a profit of P120,000 on the transaction. The equipment had a remaining useful life
of five years on this date. Albert uses the equity method to account for its investment in Prince. Albert
owns 30% of Prince, and Prince is a joint venture using equity method.
101. The investment account in Albert’s financial records at the end of 20x5:
a. P500,000 c. P641,750
b. P671,600 d. P705,200
102. The investment income in Albert’s financial records at the end of 20x5:
a. P60,000 c. P253,200
b. P231,600 d. P265,200
S Co. and T Inc. formed ST Company on January 1, 20x4. S Co. invested equipment with a carrying
amount of P140,000 and a fair value of P490,000 for a 40% interest in ST Company, while T Inc.
contributed equipment which was similar to the equipment contributed by S Co., with a total fair value
of P735,000, for a 60% interest in ST Company. The equipment has an estimated useful life of 10 years.
On December 31, 20x4, ST Company reported a net income of P142,800. Assume that the transaction
does not have a commercial substance in this situation because S Co. owned a similar portion of the
same type of equipment both before and after the contribution to the joint venture.
103. Determine the unrealized gain on transfer to ST Company (the separate vehicle) on January 1, 20x4:
a. P-0- b. P140,000
c. P350,000 d. P490,000
104. Determine the realized gain through depreciation on transfer of equipment to ST Company on
December 31, 20x4:
a. P-0- c. P35,000
b. P14,000 d. P49,000
105. Determine the gain on transfer of equipment to be presented in the 20x4 income statement:
a. P-0- c. P35,000
b. P14,000 d. P49,000
The same data are identical in all aspect to those from previous problem (Nos. 67 to 69), except that T
Co. contributed technology (rather than equipment) with a fair value of P735,000. Assume that the
transaction does have commercial substance in this situation because S Co. owned equipment before its
contribution to the joint venture but indirectly owned a portion of equipment and technology after the
contribution.
106. Determine the unrealized gain and realized gain on transfer to ST Company (the separate vehicle) on
January 1, 20x4:
Unrealized Gain
a. P210,000 P140,000
b. P140,000 P210,000
c. P350,000 P-0-
d. P-0- P350,000
107. Determine the realized gain in income statement on transfer of equipment to ST Company on
December 31, 20x4:
a. P35,000 c. P210,000
b. P175,000 d. P245,000
The same data are identical in all aspect to those from previous problem (Nos. 67 to 69), except that S
Co. receives a 40% interest in ST Company, plus P91,000 cash in return for investing equipment with a
fair value of P490,000, while T Inc. contributed equipment with a fair value of P507,500 plus cash of
P91,000 for a total contribution of P598,500.
108. Determine the immediate gain from selling equipment to T Inc. on January 1, 20x4.
a. P-0- c. P65,000
b. P26,000 d. P91,000
109. Determine the unrealized gain on transfer to ST Company (the separate vehicle) on January 1, 20x4:
a. P28,500 c. P93,500
b. P65,000 d. P285,000
December 31, 20x4:
a. P28,500 c. P93,500
b. P65,000 d. P285,000
a. P28,500 c. P93,500
b. P65,000 d. P285,000
Use the following information for questions 112 to 116:
Using the same information in Nos. 67 to 69, assume the increase in the amount of cash that S Co.
received when it invested equipment for a 40% interest in ST Company and the cash received was
P105,000. Because T Inc. invested only P91,000 cash in the joint venture, the additional P14,000 was
borrowed by ST Company.
112. Determine the sales proceeds and the return of equity of S Company.
a. P99,400; P5,600 c. P105,000; P-0-
b. P91,000; P5,600 d. P91,000; P-0-
113. Determine the immediate gain from selling equipment to T Inc. on January 1, 20x4.
a. P-0- b. P28,400
c. P71,000 d. P99,400
114. Determine the unrealized gain on transfer to ST Company (the separate vehicle) on January 1, 20x4.
a. P-0- c. P279,000
b. P71,000 d. P350,000
December 31, 20x4:
a. P-0- c. P71,000
b. P27,900 d. P98,900
a. P-0- c. P71,000
b. P27,900 d. P98,900
On January 1, 20x1, Amco Ltd. and Newstar Inc. formed Bearcat Resources, a joint venture. Newstar
contributed miscellaneous assets with a fair value of P825,000 for a 60% interest in the venture. Amco
contributed plant and equipment with a carrying amount of P300,000 and a fair value of P1,000,000 and
received a 40% interest in the venture plus P450,000 cash. On December 31, 20x1, Bearcat reported a
profit of P180,000 and declared a dividend of P75,000. Amco has a December 31 year-end and will
account for its 40% interest using the equity method. (Assume a 20-year useful life for the plant and
equipment).
For items 117 and 118:
a. P520,000 c. P592,000
b. P550,000 d. P622,000
a. Nil c. P75,000
b. P72,000 d. P180,000
For items 119 and 120:
Assume that there was no cash in the assets contributed by Newstar and that the cash received by Amco
had been borrowed by Bearcat. Also, assume that the transaction did not have commercial substance
when Amco transferred the plant and equipment to the joint venture.
a. P520,000 c. P592,000
b. P550,000 d. P622,000
a. Nil c. P75,000
b. P72,000 d. P180,000

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Chapter 9 Multiple Choice Problems

Books of Joint Operation Entity – Corporate in Nature

Use the following information for questions 1 to 4

c. Venturer’s equity – AA………………………………. 300,000

Use the following information for questions 16 to 17

Use the following information for questions 19 to 21

Use the following information for questions 22 to 24

Revenue from the sale of outputs of the vehicle P1,000,000

Current assets P600,000

Use the following information for questions 25 and 26

Use the following information for questions 27 to 29

Use the following information for questions 30 and 31

Use the following information for questions 32 to 35

Books of Joint Operation Entity – Partnership in Nature

Final settlement of the joint operation will require payment as follows:

Use the following information for questions 37 to 38

The following information for the operations of joint operation is as follows

Investment In Joint Operation (Anton Company)

Use the following information for questions 39 to 42

Use the following information for questions 43 to 44

43. The joint operation profit or loss on October 1, 20x4 is:

Use the following information for questions 45 to 46

Use the following information for questions 47 to 48

Use the following information for questions 49 and 50

49. The joint operation profit (loss) is:

Use the following information for questions 51 and 52

When P makes final settlement of the operation, the entries are:

Accounting for Joint Venture

Use the following information for questions 54 to 57

Use the following information for questions 59 to 61

Year end 30 June Profit/Loss

The following information relates to questions 64 and 65

Asset Carrying Amount Fair Value

Use the following information for questions 66 and 67

The following information relates to questions 69 and 70

Share capital P260,000

Profit for 20x8 P48,000

Inventories P100,000 (sold in the current year)

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