R, Inc.

Journal Entries
Oil pipeline
Cash

Oil Pipeline operating expense (10,000,000 x 30%)

Cash

Cash ( 20,000,000 x 30%)

Revenue from Oil Pipeline

Amortization expense - pipeline ( 15,000,000 x 30%)

Accumulated depreciation - Oil Pipeline

Compute the share of R, Inc, in the net income of the joint operation
Revenue
Less: Operating expense ₱ 3,000,000.00
Amortization espense (15,000,000/20) ₱ 750,000.00
(50,000,000/20)
Net Income of the Joint Operation
Multiply by: 30%
Net Income of the Joint Operation

Oil Pipeline 28,000,000

Sreel pipes 24,900,000
Gain on steel pipes (70% of gain) 2,170,000
Unrealized gain - Contra account 930000

Journal Entries
Pipeline operationg expense (30% x 10,000,000) 3000000
Cash

Cash 6000000
Revenue from Pipeline (20,000,000 x 30%)

Amortization expense - pipeline ₱ 4,500,000.00

Accumulate depreciation - pipeline

Unrealized gain - contra account (930,000/20) 46500

Amortization expense

Revenue (30% x 20,000,000) ₱ 6,000,000.00

Less: Operationg expense (10,000,000 x 30%) ₱ 3,000,000.00
Amortization expenses (50,000,000 x 30%)/20 ₱ 750,000.00
Add: Gain on steel pipes [70% x (28,000,000 -24,900,000) ₱ 2,170,000.00
 Realized gain - amortization (930,000/20) ₱ 46,500.00
Net Income of R ₱ 4,466,500.00
Gain on stell pipes 2,170,000
Unrealize gain-contra asset ₱ 2,296,500.00

Determine the amortization expense for the year

Amortization expense - pipeline ( 15,000,000/ 20) ₱ 750,000.00
Less: Amortization expense ₱ 46,500.00
Amortization expense for the year ₱ 703,500.00
Dertermine the pipeline's net cost at the end
Oil Pipeline
Less: Net unrealized gain
Unrealized gain - Contra account 930000
Less: Amortization ₱ 46,500.00
Net cost of Pipeline

FOX Corporation
₱ 15,000,000.00
₱ 15,000,000.00

₱ 3,000,000.00
₱ 3,000,000.00

₱ 6,000,000.00
₱ 6,000,000.00

₱ 4,500,000.00
₱ 4,500,000.00

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

₱ 6,000,000.00 ₱ 20,000,000.00
₱ 10,000,000.00
₱ 2,250,000.00
₱ 2,500,000.00
₱ 7,500,000.00
₱ 0.30
₱ 3,750,000.00 ₱ 2,250,000.00

3000000

6000000

₱ 4,500,000.00

46500
 15,000,000

₱ 883,500.00
₱ 14,116,500.00