ADVANCED FINANCIAL ACCOUNTING AND REPORTING

AFAR-13 | JOINT ARRANGEMENTS

-
- JINT ARRANGEMENT

- JOINT CONTROL

- at least two parties must have joint control; not all

- case 2 & 3
= no joint control; only collective control
→ A & B can decide w/o C, and A & C can decide w/o B (case 2)
→ may opt for joint arrangement if unanimous decision is specific among parties
- TYPES OF JOINT ARRANGEMENTS

- JO (lol)
→ has separate rights on both assets and liab.
- JV
→ requires net amount for assets and liab
- HOWTO DETERMINE (IF JO OR JV)

- “separate vehicle” = separate entity

- no separate vehicle = JO
- has a separate vehicle = either JO or JV
- ACCOUNTING FOR JOINT OPERATIONS

- w/ books = same accounting procedure for partnerships

- w/o books → TBD
- e.g.,
→ Saturday revenue = distributed to weekday assignees equally
- problem solving

note: JO account
= debited for expenses incurred
= credited for income-related transactions
- note: profit/loss should be the same in each party

- JO debit = receivable
- JO credit = payable
- problem 1 (w/o separate books)

- note: they may choose not to have entries in the formation of a joint operation
- need to monitor simultaneously

- Dec. 1
- L is liable if ever the JO won’t continue

- problem II

- problem III

- problem IV

- problem V

- problem VI

- JOINT VENTURE

- apply equity method whether investment in associate or joint venture

- problem VII
JO or Inv. in Associate won’t matter; equity method prevails
- problem VIII

Alcera, Vincent Luigil C. | BSA 4-11

16/03/2023; hope I graduate on time :’]