X Company and Y Company formed a joint venture, XY Company, in 20x1 to sell particular merchandise. Cash investments by the venturers X Company (65%) P1,200,000; Y Company (35%) P800,000. The following information is available: Purchases of merchandise on account, P1,500,000; Expenses paid, P100,000; Sales on account (130% of cost), P1,508,000. REQUIRED: 11. What is the net income? ___________ 12. Using the equity method, what is the balance of the Investment in Joint Venture account in the books of Y Company on December 31, 20x1? ____________ 13. Using the equity method, what is the balance of the Investment in Joint Venture account in the books of X Company on December 31, 20x1? ____________

X Company and Y Company formed a joint venture, XY Company, in 20x1 to sell particular merchandise. Cash investments by the venturers X Company (65%) P1,200,000; Y Company (35%) P800,000. The following information is available: Purchases of merchandise on account, P1,500,000; Expenses paid, P100,000; Sales on account (130% of cost), P1,508,000. REQUIRED: 11. What is the net income? _ 12. Using the equity method, what is the balance of the Investment in Joint Venture account in the books of Y Company on December 31, 20x1? 13. Using the equity method, what is the balance of the Investment in Joint Venture account in the books of X Company on December 31, 20x1? __

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 11MCQ

See similar textbooks

Similar questions

During 20X1, Blue Corporation sold products for $3,000,000 with the sales returns and allowances of $80,000. The company incurred selling expenses for $150,000 and administrative expenses for $400,000. During the year, the company purchased 20,000 common shares of Francis Corporation at $11 per share and recorded the FV-NI investments, and purchased 15,000 shares of Davis Corporation at $10 per share and recorded the FV-OCI investments. On December 31, 20X1, the share prices of Francis Corporation and Davis Corporation were $7 per share and $12 per share, respectively. The company recognized interest income for $78,000. The beginning-of-year balance of inventory was $760,000 and the end-of-year balance of inventory was $890,000. During the year, the company purchased inventory for $2,000,000. On September 1, 20X1, the company discontinued operation of a division that had an income of $200,000 for its operation in 20X1. The discontinued division had the carrying value of net…
During 20X1, Blue Corporation sold products for $2,500,000 (gross amount) with the sales returns and allowances of $50,000. The company incurred selling expenses for $120,000 and administrative expenses for $330,000. During the year, the company purchased 23,000 common shares of Francis Corporation at $8 per share and recorded the FV-NI investments, and purchased 18,000 shares of Davis Corporation at $12 per share and recorded the FV-OCI investments. On December 31, 20X1, the share prices of Francis Corporation and Davis Corporation were $11 per share and $10 per share, respectively. The company recognized interest expense for $62,000. The beginning-of-year balance of inventory was $640,000 and the end-of-year balance of inventory was $590,000. During the year, the company purchased inventory for $1,600,000. On September 1, 20X1, the company discontinued operation of a division that had a loss of $150,000 for its operation in 20X1. The discontinued division had the carrying value…
On-Ju Company acquired 90% interest in Southwest Company on December 31, 20x4 for P320,000. During 20x5 Southwest had a net income of P22,000 and paid a cash dividend of P7,000. Applying the cost method would give a debit balance in the Investment in Southwest Company account at the end of 20x5 of: P335,000 P333,500 P313,700 P320,000
On January 1, 20X0, Station invested P2,000,000 cash in a joint venture for 50% interest. For the years ended December 31, 20X0, 20X1, and 20X2, the joint venture reported the following data: Year Net Income (Net Loss) Dividend Distribution 20X0 P1,000,000 P300,000 20X1 (6,000,000) - 20X2 7,000,000 500,000 Determine the following: Share in net loss or investment to be reported by Station for the year ended December 31, 20X1. The book value of Investment in Joint venture to be reported by Station as of December 31, 20X2.
Nhyiraba Limited entered into a joint venture with KK Quinton Limited agreeing to share profits or losses equally. Nhyiraba Limited gave an amount of R25,000 as the contribution whiles KK Quinton Limited contributed R28,000 and deposited all the amount in a joint bank account. They acquired goods worth R50,000 from Kwasi Limited and paid R45,000. They accepted a bill for the remaining amount and also their bills payable on the due date. Expenses of R5,000 for electricity, R3,000 for rent and an amount of R1,500 for sales expense was made during the period. All the goods were sold for R70,500 and all necessary requirements were met. The joint venture was closed after the execution of the project. Required: Show the necessary journal entries and ledger accounts in a separate set of books.
From the data given, compute the goodwill or gain from bargain purchase for the different items. If CARDO Co purchases the net assets of SYANO Co by issuing 5,000 shares of their P20 par value shares with a fair value of P40 per share, incurs a mortgage loan for P90,000, pays P150,000 cash and paying direct, indirect and stock issue costs of P75,000, P50,000 and P40,000 respective. What is the amount of GOODWILL?
On January 1, 2013, Regina Company entered into a joint agreement classified as a joint venture. For an investment of P1,000,000, Regina Company obtained 30% interest in Gold Joint Venture, Inc. During the year, Gold Joint Venture, Inc. reported profit of P2,000,000 and other comprehensive income of P400,000. Gold Joint Venture, Inc. declared and paid dividends of P1,200,000 during the year. How much is the carrying amount of the investment on December 31, 2013?
On January 1, 20x1, PATRIMONY Co. entered into a joint arrangement classified as a joint venture. For an investment of ₱2,000,000, PATRIMONY Co. obtained 30% interest in HERITAGE Joint Venture, Inc. During the year, HERITAGE Joint Venture, Inc. reported profit of ₱4,000,000 and other comprehensive income of ₱800,000, i.e., a total comprehensive income of ₱4,800,000. HERITAGE Joint Venture, Inc. declared dividends of ₱2,400,000. How much is the carrying amount of the investment in joint venture on December 31, 20x1?
Garrett Manufacturing owns 10% of the common stock of Timberline Corporation and used the fair-value method to account for this investment. Timberline reported a net income of $110,000 for 20X2 and paid dividends of $50,000 on October 1, 20X2.How much income should Garrett recognize on this investment in 20X2? Group of answer choices $50,000 $16,500 $25,500 $7,500 $5,000
On December 4, 20X0, ABC Corporation paid P1,296,000 for 40,000 ordinary shares of XYZ Company. The investment represents a 30% interest in the net assets of XYZ and gave ABC the ability to exercise significant influence over XYZ’s operating and financial policy decisions. ABC received dividends of P1 per share on December 4, 20X0, and XYZ reported net income of P640,000 for the year ended December 31, 20X0. The market value of XYZ’s ordinary shares at December 31, 20X0, was P32 per share. The book value of XYZ’s net assets was P3,200,000, and: • The fair value of XYZ’s depreciable assets, with an average remaining useful life of 8 years, exceeded their book value by P320,000. • The remainder of the excess of the cost of the investment over the book value of net assets purchased was attributable to goodwill. What amount of investment revenue should be reported in ABC’s income statement for the year ended December 31, 20X0?
On January 2, 20x1, Paul Corp. acquired 20% ownership interest in Simon Corp. for P1,350,000 and the carries the investment using the cost model. On December 31, 20x1, Simon Corp. declared and paid dividends amounting to P500,000 and the net income was P2,000,000. On January 10, 20x2, Paul Corp. acquired another 50% ownership interest in Simon Corp for P3,000,000. At that date, Simon Corp. has identifiable assets with book value of P6,000,000 and fair value of P7,200,000 and it has liabilities with book and fair value of P1,500,000. Assuming Paul Corp. measures the NCI at fair value amounting to P2,250,000, what is the amount of goodwill?
From the data given, compute the goodwill or gain from bargain purchase for the different items. If CARDO Co purchases the net assets of SYANO Co by issuing 5,000 shares of their P10 par value shares with a fair value of P20 per share, entered into a mortgage loan of P290,000 and paying direct cost and stock issue cost of P50,000 and P20,000 respectively, a P25,000 direct cost and a P50,000 indirect cost however remain unpaid. Compute for the consolidated total liabilities at the date of acquisition.