Number 6-1 to 6-4 are based on the following data:

Two real estate companies, Co.X and Co. Y (the parties) set up separate vehicle (entity A) for the
purpose of acquiring and operating a shopping center. The contractual arrangement between the
parties establishes joint control of the activities that are conducted by entity A. The main feature of
entity As legal form is that the entity, not the parties has rights to the assets and obligations for the
liabilities relating to the arrangement.

Summary transactions of the joint arrangement for 2013 and 2014 are as follows:

2013

a. Co.X and Co.Y contributed P10million each for 40 percent interest

b. Taxes and licenses paid amounted to P200,000
c. Acquired office furniture and equipment on account, 2 million
d. Entity A acquired land at a cost of P3 million
e. Constructed a building (shopping center) at a cost of P12 million
f. Operating expenses for the year amounts to P1 million
g. Rental income collected from the tenants, P5 million
h. Net income for loss is distributed to the parties in accordance with their interest

2014

i. Operating expenses (including depreciation) incurred for the year, P500,000

j. Rental income collected for the year, P8 million
k. Declared and paid dividends, P3 million
l. Each venture receives a share of the income or loss from the rental of net of operating expenses

6-1: What is the net income (loss) of entity of A for the year ended December 31, 2013?

a. P3.8 million
b. P4.0 million
c. (3.8) million
d. P5.0 million

6-2: What is the net income (loss) of entity A for the year ended December 31, 2014?

a. P7 million
b. P8.0 million
c. P7.0 million
d. (7.5) million

6-3: What is the interest of Co.X in the entity A for the year ended December 31, 2013?

a. P11.52 million
b. P10.0 million
c. P8.2 million
 d. P10.4 million

6-4: What is the interest of C.Y in entity A for the year ended December 31, 2014?

a. P14.15 million
b. P15.65 million
c. P17.15 million
d. P13.32 million

Numbers 6-5 to 6-8 are based on the following data:

R and S establishes a joint arrangement using a separate vehicle (RS). The legal form of the separate
vehicle does not confer separation between the parties and the separate vehicle itself. That is, R and S
have rights to the assets and obligations for the liabilities of RX (a joint operation). Neither the
contractual terms, nor the other facts and circumstances indicate otherwise.

R and S each owns 50% of the equity of RS. However, the contractual terms of the joint arrangement
state that R has rights to all of the transportation equipment and the obligation to pay the accounts
payable in RS. R and S have rights to all other assets in RS and obligation for all other liabilities in RS in
proportion to their equity interest (50%)

For the year ended December 31, 2013 the statement of financial position of the separate vehicle (RS) is
as follows:

Assets:

Cash P100,000

Transportation Equipment 600,000

Furniture and fixtures 500,000

Total assets P12,000,000

Liabilities and Equity

Accounts payable P600,000

Other liabilities 200,000

Equity 400,000

Total liabilities and equity P1,200,000

6-5: On December 31,2013 the total assets of R in his separate statement of financial position would
show:

a. P600,000
b. P900,000
 c. P100,000
d. P300,000

6-6: On December 31, 2013 the total assets of S in his separate statement of financial position is:

a. P50,000
b. P250,000
c. P300,000
d. P900,000

6-7: The total liabilities of R is his December 31, 2013 statement of financial postion is

a. P600,000
b. P800,000
c. P100,000
d. P700,000

6-8: The total liabilities of S in his December 31, 2013 statement of financial position is:

a. P100,000
b. P300,000
c. P700,000
d. P600,000

Question 6-9 and 6-10 are based on the following data:

Banks X and Y (the parties) agreed to combine their corporate, investment banking, asset management
and service activities by establishing a separate vehicle (bank XY). Both parties expect the arrangement
to benefit them in different ways.

The assets and liabilities held in Bank XY are the assets of liabilities of Bank XY and not the assets and
liabilities of the parties. Banks X and Y each have 40% ownership interest in Bank XY. The remaining 20%
was held by outside parties. The stockholders between bank X and bank Y establishes joint control of
the activities of Bank XY.

Summary transactions for year ended December 31, 2013 and 2014 are as follows:

2013 2014

Investments: Bank X P50M P5M

Bank Y 50M 5M

Revenues 10M 12M

Cost and expenses 6M 7M

Dividends paid by Bank XY 4M

6-9: What is the interest of bank X in the joint arrangement at December 31, 2013?

a. P48.4M
b. P52.9M
c. P50.0M
d. P51.5M

6-10: What is the interest of bank Y in the joint arrangement at December 31, 2014?

a. P52.0M
b. P48.4M
c. P52.9M
d. P50.0M

Questions 6-11 and 6-12 are based on the following data:

On January 1, 2013, entities Red, White and Blue (the joint operators) jointly buy a helicopter for P30M
each. The joint arrangement includes the following agreements:

a. The parties are joint owners of the helicopter

b. The helicopter is at the disposal of each party
c. The parties may decide to use the helicopter or lease it to a third party
d. The maintenance and disposal of the helicopter require the unanimous consent of the parties
e. The contractual arrangement is for the expected life (20yrs) of the helicopter and can be change
only if all the parties agree. The residual value of the helicopter is P2M
f. Revenues and expenses are to be shared equally among the parties

Summary transactions during 2013 are as follow:

1. The parties paid P300,000 to meet the costs of maintaining the helicopter
2. Each party incurred cost when they use the helicopter personally. Entity Red use the helicopter
and incurred costs of P400,000 on pilot fees, aviation fuel and landing costs
3. Rental income earned by renting the helicopter to outsiders amount to P3M

6-11: What is the total assets of the joint arrangement?

a. P30,900,000
b. P28,600,000
c. P30,000,000
d. P31,000,000

6-12: What is the interest of each party in the joint arrangement for the year ended December 31, 2013:

a. P10,000,000
b. P10,300,000
c. P15,000,000
d. P15,300,000
6-13: On January 1, 2013, entities A and B each acquired 30% of the ordinary voting shares of entity X
for P300,000. Entities A and B immediately agreed to share control over entity X. For the year ended
December 31, 2013 entity X reported a profit of P400,000 and declared a dividend of P150,000. At
December 31, 2013 the fair value of each venturers investment in entity X is P425,000. Entities A and B
uses the cost model to account for its investment in jointly controlled entities. However, there is no
published price quotation for entity X. Investments are accounted for using the cost model.

At December 31, 2013 the venturers must report their investment in entity X at:

a. P300,000
b. P345,000
c. P255,000
d. P420,000

6-14: Using the same data in No.6-13, assuming on January 2, 2013 entity X also declared a dividend of
P100,000 for year 2012 and at December 31, 2013 the fair value of each ventures investment in entity X
is P400,000

How much dividend income each venture should recognize on December 31, 2013?

a. P45,000
b. P30,000
c. P75,000
d. P15,000

6-15: Using the same data in No. 6-13. However there is a published price quotation for entity X.

At December 31, 2013 the venturers must each report its investment in entity X at:

a. P425,000
b. P300,000
c. P330,000
d. P345,000