On January 1, 20X1, Entity A and Entity B, both public entities, incorporated Entity C by investing P3,000,000 and P2,000,000 for a capital interest ratio of 60:40. The contractual agreement of the incorporating entities provided that the decisions on relevant activities of Entity C will require unanimous consent of both Moreover, Entity A and Entity B will have rights to the net assets of Entity C. The financial statements of Entity C provided the following data for 20X1: Entity C reported a net income of P1,000,000 for 20X1 and paid cash dividends of P400,000 on December 31, During 20X1, Entity C sold inventory to Entity A with a gross profit of P50,000. 80% of those inventories were resold by Entity A to third persons during The remainder was resold to third persons during 20X1. On July 1, 20X1, Entity C sold a piece of machinery to Entity B at a loss of P20,000. At the time of sale, the machinery has remaining useful life of two (2) Determine the following: The investment income to be reported by Entity A for the year ended December 31, The balance of Investment in Entity C to be reported by Entity B on December 31,

On January 1, 20X1, Entity A and Entity B, both public entities, incorporated Entity C by investing P3,000,000 and P2,000,000 for a capital interest ratio of 60:40. The contractual agreement of the incorporating entities provided that the decisions on relevant activities of Entity C will require unanimous consent of both Moreover, Entity A and Entity B will have rights to the net assets of Entity C. The financial statements of Entity C provided the following data for 20X1: Entity C reported a net income of P1,000,000 for 20X1 and paid cash dividends of P400,000 on December 31, During 20X1, Entity C sold inventory to Entity A with a gross profit of P50,000. 80% of those inventories were resold by Entity A to third persons during The remainder was resold to third persons during 20X1. On July 1, 20X1, Entity C sold a piece of machinery to Entity B at a loss of P20,000. At the time of sale, the machinery has remaining useful life of two (2) Determine the following: The investment income to be reported by Entity A for the year ended December 31, The balance of Investment in Entity C to be reported by Entity B on December 31,

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter13: Comparative Forms Of Doing Business

Section: Chapter Questions

Problem 48P

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On January 1, 2021, Entity A and Entity B incorporated AB Company. The contractual agreement provided that the decisions on relevant activities will require the unanimous consent of both Entity A and Entity B, and they will have right to the net assets of AB Company. Entity A and Entity B invested P400,000 and P600,000 respectively, equivalent to 40:60 capital interest of AB Company. The financial statements of AB Company provided the following data for its two-year operation (see image below).1. How much is the balance of Investment in Joint Venture to be reported by Entity B in its Statement of Financial Position at December 31, 2022? 2. How much is the balance of Investment in Joint Venture to be reported by Entity A in its Statement of Financial Position at December 31, 2021? _______________
On January 1, 20x1, the partners of ABC Partnership decided to admit other investors. As a result, thepartnership was converted to a corporation. Relevant information follows:Carrying amounts Fair valuesCash20,000 20,000Receivables60,000 40,000Inventory80,000 70,000Equipment 540,000 670,000PayablesA, Capital (20%)B, Capital (30%)C, Capital (50%)50,000150,000200,000300,00050,000N/AN/AN/AThe corporation has an authorized capitalization of P2,000,000 divided into 200,000 ordinary shareswith par value of P10 per share. Shares were issued to the former partners based on their respectiveadjusted capital balances. How many shares did each of the partners receive? Show computation.
On January 1, 2022, Entity A, a small-medium enterprise, invested P400,000 for a 30% interest in a joint venture. Assume the INDEPENDENT CASES: For the year ended December 31, 2022, the joint venture reported a net income of P300,000 and declared dividends of P90,000. The fair value of the investment was P550,000, and the cost to sell was P50,000. There was a public price quotation for the joint venture. Entity A opted to use the cost model, what is the amount to be reported in profit or loss for the year ended December 31, 2022? Entity A opted to use the cost model, what is the balance of the Investment in Joint Venture account to be reported at December 31, 2022?
On January 1, 2019, an entity purchased 25% of the outstanding ordinary shares of another entity for P3,000,000. On such date, the carrying amounts of the net assets of the investee amounted to P8,000,000 The carrying amounts of net assets equaled fair value except for land and building. The fair value of land exceeded carrying amount by P2,000,000 and the fair value of building exceeded carrying amount by P3,000,000. The investee reported net income of P1,500,000 and paid dividends of P300,000 in 2019. The building has a remaining life of 5 years. On January 1, 2020, the entity sold 60% of its interest to another entity for P2,500,000. On such date, the fair value of the remaining interest was P1,800,000. The remaining interest was reclassified at FVPL. The investee paid dividend of P200,000 during 2020 and on December 31, 2020, the investee reported net income of P1,000,000. The fair value of the remaining interest on December 31, 2020 is P1,600,000. Question: The carrying amount of…
On January 1, 2019, an entity purchased 25% of the outstanding ordinary shares of another entity for P3,000,000. On such date, the carrying amounts of the net assets of the investee amounted to P8,000,000 The carrying amounts of net assets equaled fair value except for land and building. The fair value of land exceeded carrying amount by P2,000,000 and the fair value of building exceeded carrying amount by P3,000,000. The investee reported net income of P1,500,000 and paid dividends of P300,000 in 2019. The building has a remaining life of 5 years. On January 1, 2020, the entity sold 60% of its interest to another entity for P2,500,000. On such date, the fair value of the remaining interest was P1,800,000. The remaining interest was reclassified at FVPL. The investee paid dividend of P200,000 during 2020 and on December 31, 2020, the investee reported net income of P1,000,000. The fair value of the remaining interest on December 31, 2020 is P1,600,000. Question: The gain on disposal of…
During the year, R and S formed C Corporation. For each of the following independent situations, indicate whether § 351 applies to the exchange. a. R contributed property worth $70,000 (basis $50,000) in exchange for 70 shares of stock, and S contributed services worth $30,000 in exchange for 30 shares of stock. b. R contributed property worth $70,000 (basis $50,000) in exchange for 70 shares of stock, and S contributed services worth $25,000 for 25 shares of stock in addition to property worth $5,000 for 5 shares of stock. c. R contributed property worth $70,000 (basis $50,000) in exchange for 70 shares of stock, and S contributed services worth $29,000 for 29 shares in addition to cash of $1,000 for 1 share.
On January 1, 2030, A, B and C formed ABC Partnership with original capital contribution of P600,000, P1,100,000 and P400,000. A is appointed as managing partner. During 2030, A, B and C made additional investments of P1,000,000, P400,000 and P600,000, respectively. At the end of 2030, A, B and C made drawings of P400,000, P200,000 and P800,000, respectively. At the end of 2030, the capital balance of C is reported at P640,000. The profit or loss agreement of the partners is provided below: • 10% interest on original capital contribution of the partners. • Quarterly salary of P80,000 and P20,000 for A and B, respectively. • Bonus to A equivalent to 20% of Net Income after interest and salary to all partners • Remainder is to be distributed equally among the partners. 11. What is the partnership profit for the year ended December 31, 2030?
On January 1, 2030, A, B and C formed ABC Partnership with original capital contribution of P600,000, P1,100,000 and P400,000. A is appointed as managing partner. During 2030, A, B and C made additional investments of P1,000,000, P400,000 and P600,000, respectively. At the end of 2030, A, B and C made drawings of P400,000, P200,000 and P800,000, respectively. At the end of 2030, the capital balance of C is reported at P640,000.The profit or loss agreement of the partners is provided below:• 10% interest on original capital contribution of the partners.• Quarterly salary of P80,000 and P20,000 for A and B, respectively.• Bonus to A equivalent to 20% of Net Income after interest and salary to all partners• Remainder is to be distributed equally among the partners. 10. What is C’s share in the partnership profit for the year ended December 31, 2030?a. P240,000b. P640,000c. P360,000d. P440,00011. What is the partnership profit for the year ended December 31, 2030?a. P1,800,000b.…
On January 1, 2030, A, B and C formed ABC Partnership with original capital contribution of P600,000, P1,100,000 and P400,000. A is appointed as managing partner.During 2030, A, B and C made additional investments of P1,000,000, P400,000 and P600,000, respectively. At the end of 2030, A, B and C made drawings of P400,000, P200,000 and P800,000, respectively. At the end of 2030, the capital balance of C is reported at P640,000.The profit or loss agreement of the partners is provided below:• 10% interest on original capital contribution of the partners.• Quarterly salary of P80,000 and P20,000 for A and B, respectively.• Bonus to A equivalent to 20% of Net Income after interest and salary to all partners• Remainder is to be distributed equally among the partners What is the capital balance of B on December 31, 2030?a. P1,70,000b. P1,680,000c. P1,780,000d. P1,880,000
On January 1, 2030, A, B and C formed ABC Partnership with original capital contribution of P600,000, P1,100,000 and P400,000. A is appointed as managing partner. During 2030, A, B and C made additional investments of P1,000,000, P400,000 and P600,000, respectively. At the end of 2030, A, B and C made drawings of P400,000, P200,000 and P800,000, respectively. 11. What is the partnership profit for the year ended December 31, 2030?a. P1,800,000b. P2,040,000c. P2,100,000d. P1,920,000 14. What is the capital balance of B on December 31, 2030?a. P1,70,000b. P1,680,000c. P1,780,000d. P1,880,000
On January 1, 2022, Entity A, a small-medium enterprise, invested P400,000 for a 30% interest in a joint venture. Assume the INDEPENDENT CASES: Case 1: For the year ended December 31, 2022, the joint venture reported a net income of P150,000 and declared dividends of P40,000. The fair value of the investment was P325,000 and the cost to sell was P15,000. There was no public price quotation for the joint venture. Entity A opted to use the cost model, what is the amount to be reported in profit or loss for the year ended December 31, 2022? Entity A opted to use the cost model, what is the balance of the Investment in Joint Venture account to be reported at December 31, 2022?
On January 1, 2021, Parent Company acquires 80% of the equity interests of Subsidiary Company, a private entity, in exchange for cash of P1,500,000. The management of Parent initially measures the separately recognizable identifiable assets acquired and the liabilities assumed as of the acquisition date in accordance with the requirements of IFRS 3. The identifiable assets are measured at P2,500,000 and the liabilities assumed are measured at P500.000. Parent Company engages an independent consultant, who determines that the fair value of the 20% non-controlling interest in Subsidiary is P420,000. What is the amount of goodwill (gain or bargain purchase) from the business combination?