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- ABC and XYZ enter into a contract to set up a separate vehicle (entity 123) for the purpose of operating a tennis court. The contractual arrangement between the parties establishes joint control of the activities of the tennis court. Entity 123, and not ABC or XYZ, has rights to the assets and obligations to the liabilities of the arrangement. The following transactions of the joint arrangement occurred during 2022 and 2023: 2022: • Received P5,000,000 each from the parties in the joint arrangement as initial investment . Costs of incorporation paid amounted to P200,000 • Acquired land at a cost of P2,000,000, cash • Various costs to construct the tennis courts incurred and paid amounted to P6,000,000 • Office equipment purchased on account, P500,000 • Rental income collected from tennis players, P4 million • Various operating costs paid amounted to P300,000 2023: • Operating costs paid amounted to 500, 000 • Rental income collected from tennis players, P6 million Partial…ABC and XYZ enter into a contract to set up a separate vehicle (entity 123) for the purpose of operating a tennis court. The contractual arrangement between the parties establishes joint control of the activities of the tennis court. Entity 123, and not ABC or XYZ, has rights to the assets and obligations to the liabilities of the arrangement. The following transactions of the joint arrangement occurred during 2022 and 2023: 2022: Received P5,000,000 each from the parties in the joint arrangement as initial investment Costs of incorporation paid amounted to P200,000 Acquired land at a cost of P2,000,000, cash Various costs to construct the tennis courts incurred and paid amounted to P6,000,000 Office equipment purchased on account, P500,000 Rental income collected from tennis players, P4 million Various operating costs paid amounted to P300,000 2023: Operating costs paid amounted to P500,000 Rental income collected from tennis players, P6 million Partial payment on the office…Mingyu, Jun and Wonwoo each engaged in the extraction of oil, agreed to acquire and jointly operate an oil pipeline. Each party will use the pipeline to transport its own product in return for which it bears an agreed proportion of the expenses of operating the pipeline. Mingyu, Jun, and Wonwoo agreed to share equally the cost of acquiring the pipeline and the expenses of operating it. Is the arrangement considered to be a joint operation or a joint venture?
- Minji and Hanni agreed to combine their operations, resources, and expertise to manufacture, market, and distribute jointly a particular product. Different parts of the manufacturing process are carried out by each of the parties. Each party bears its own costs and takes a share of the revenue from the sale of the product equally. Is the arrangement considered to be a joint operation or a joint venture?An entity is developing a multi-unit residential complex. A customer enters into a binding sales contract with the entity for a specified unit that is under construction. Each unit has a similar floor plan and is of a similar size, but other attributes of the units are different (for example, the location of the unit within the complex). The customer pays a deposit upon entering into the contract and the deposit is refundable only if the entity fails to complete construction of the unit in accordance with the contract. The remainder of the contract price is payable on completion of the contract when the customer obtains physical possession of the unit. If the customer defaults on the contract before completion of the unit, the entity only has the right to retain the deposit. Which of the following statements is correct? The entity’s performance obligation is satisfied at a point in time because the entity does not have an enforceable right to payment for performance completed to…Which of the following would most likely be considered as a separate performance obligation in a franchise agreement? a. initial services required of the franchisor that are in substance activities to setup the contract b. equipment that the franchisee is required to purchase or otherwise obtain from a third-party supplier c. grant of license to use the franchisor's trademark d. activities that the franchisor is required to undertake to support the intellectual property covered in the franchise
- On 1 October 2018, Jojo Bhd with 2 other parties, Kenari Bhd and Tiong Bhd, structured a joint arrangement in an incorporated entity, Koko Bhd, with rights to the net assets of the arrangement. Jojo Bhd has 40% of the voting rights in the joint arrangement while Kenari Bhd and Tiong Bhd have 35% and 25% of the voting rights respectively. The contractual arrangement between these three parties specifies that at least 75% of the voting rights are required to make decisions about the relevant activities of the arrangement. Required:(a) Explain whether all the three parties in the joint arrangement would have joint control over Koko Bhd. (b) Briefly explain the two types of joint arrangement in accordance with MFRS11: Joint Arrangement.Which of the following statements about joint arrangements is/are incorrect: (i) Whenever a joint arrangement is structured through a vehicle that is separate from the parties, the arrangement is classified as a joint venture (ii) Whenever the contractual arrangements give the parties rights to the assets and obligations for the liabilities of the arrangement, the arrangement is classified as a joint operation (iii) Joint operations are reported in the consolidated statement of financial position of the joint operator by recognising the share of assets and liabilities attributable to the joint operator (iv) Joint ventures are reported in the consolidated statement of financial position of the joint venturer using the equity method of accounting a. (i) only b. (ii) only c. (iii) only d. (iv) only e. (i) and (ii)Under the following four independent assumptions, prepare the journal entries for the sale of the land and buildings, allocation of any loss or gain,any deficits, the payment of the liability, and the distributions to the partners if: A) the land and buildings were sold for 180,000, and any partners with a resulting deficits can and do pay the amount of their deficits 
- X, Y and Z decided to form XYZ Partnership. It was agreed that X will contribute an equipment with assessed value of P300,000 with historical cost of P800,000 and accumulated depreciation of P500,000. On the date of formation, the fair value of equipment was P 400,000. Y will contribute a land and building with carrying amount of P1,200,000 and fair value of P1,500,000. The land and building are subject to a mortgage payable amounting to P300,000 to be assumed by the partnership. The partners agreed that Y will have 40% capital interest in the partnership. The partners also agreed that Z will contribute sufficient cash to the partnership. Net income for the year is P400,000. How much profit should be allocated to X? a) 1,250,000 b) 1,175,000 c) 1,050,000 d) 1,800,000In paragraph 44 of Statement of Financial Accounting Standards No. 141, “Business Combinations,” the Financial Accounting Standards Board directed that if the sum of the fair values of assets acquired and liabilities assumed in a business combination exceeds the cost of the acquired enterprise, such excess should be allocated as a pro rata reduction of amounts that otherwise would have been assigned to noncurrent assets other than specified exceptions.Instructions What support, if any, do you find for the action of the FASB? Explain.A, B and C formed a partnership for the purpose of contracting with the Philippine Government in the construction of one of its bridges. On June 30, 2020, after completion of the project, the bridge was turned over by the partners to the Government. On August 30, 2020, D, a supplier of materials used in the project sued A for collection of the indebtedness to him. A moved to dismiss the complaint against him on the ground that it was the ABC partnership that is liable for the debt. D replied that ABC partnership was dissolved upon completion of the project for which purpose the partnership was formed. Will you dismiss the complaint against A, if you were the judge? State your reason.