Joint- Arrangements PDF

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QUIZ 1:1 arrangement of which two or more parties have joint control.a. joint operation c. joint arrangementb. joint venture d. elbow joint2 contractually agreed sharing of control of an arrangement, which exists only when decisionsabout the relevant activities require the unanimous consent of the p...

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QUI Z1 : 1 . Ana r r a nge me ntofwhi c ht woormor epa r t i e sha vej oi ntc ont r ol . a .j oi ntope r a t i on c .j oi ntar r a nge me nt b .j oi ntve nt ur e d.e l bow j oi nt 2 . Thec ont r a c t ual l ya gr e e ds ha r i ngofc ont r olofa nar r ange me nt ,whi c he x i s t sonl ywhe nde c i s i ons a boutt her e l e va nta c t i vi t i e sr e qui r et heunani mousc ons e ntoft hepa r t i e ss har i ngc ont r ol . a .s i gni fic a nti nflue nc e c .c ont r ol b .j oi ntc ont r ol d.c ont r a c t ua lc ont r ol 3 . Aj oi nta r r a nge me ntwhe r e byt hepar t i e st ha tha vej oi ntc ont r oloft hear r a nge me ntha ver i ght st o t hene ta s s e t soft hea r r a nge me nt . a .j oi ntope r a t i on c .j oi ntar r a nge me nt b .j oi ntve nt ur e d.e l bow j oi nt 4 . Aj oi nta r r a nge me ntwhe r e byt hepar t i e st ha tha vej oi ntc ont r oloft hear r a nge me ntha ver i ght st o t hea s s e t s ,a ndobl i ga t i onsf ort hel i a bi l i t i e s , r e l a t i ngt ot hea r r ange me nt . a .j oi ntope r a t i on c .j oi ntar r a nge me nt b .j oi ntve nt ur e d.e l bow j oi nt 5 . Apa r t yt oaj oi ntope r a t i ont ha tha sj oi ntc ont r oloft ha tj oi ntope r a t i on. a .j oi ntope r a t i oni s t c .j oi ntar r a nge r b .j oi ntve nt ur e r d.j oi ntope r a t or 6 . Apa r t yt oaj oi ntve nt ur et ha tha sj oi ntc ont r oloft ha tj oi ntve nt ur e . a .j oi ntv e nt ur i s t c .j oi nta r r ange me nt or b .j oi ntope r a t i one r d.j oi ntve nt ur e r 7 . Ac c or di ng t oPFRS1 1,i ti san e nt i t yt ha tpa r t i c i pa t e si n aj oi ntar r a nge me nt ,r e ga r dl e s sof whe t he rt ha te nt i t yhasj oi ntc ont r oloft hea r r a nge me nt . a .j oi nta r r ange r c .mi nor i t yi nt e r e s t b .pa r t yt oaj oi nta r r ange me nt d.par t i c i pa t i ngc a t 8 . Ac c or di ngt oPFRS1 1 ,i ti sas e par a t e l yi de nt i fia bl efina nc i als t r uc t ur e ,i nc l udi ngs e pa r a t el e ga l e nt i t i e sore nt i t i e sr e c ogni z e d by s t a t ut e ,r e gar dl e s sofwhe t he rt hos ee nt i t i e sha vea l e ga l pe r s ona l i t y . a .s e pa r a t ev e hi c l e c . s pe c i a lpur pos eve hi c l e b .s pe c i a lpur pos ee nt i t y d.publ i cut i l i t yve hi c l e 9 .I naj oi nta r r a nge me nt ,whi c hoft hef ol l owi nge s t a bl i s he sj oi ntc ont r olbyt hepa r t i e s ? a .mut uals har i ngofc ont r ol c .c ont r a c t uala r r a nge me nt b .o wne r s hi pi nt e r e s tofmor et han2 0 % d.s t oc kc e r t i fic a t e 1 0 .A j oi ntar r a nge me nti nwhi c ht hea s s e t sandl i abi l i t i e sr e l a t i ngt ot hea r r a nge me ntar ehe l di na s e par a t ev e hi c l e . a .j oi ntope r a t i on c .j oi ntar r a nge me nt b .j oi ntve nt ur e d.c anbee i t he raorb

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“Be joyful in hope, patient in affliction, faithful in prayer.” (Romans 12:12) - END -

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ANSWERS TO QUIZ 1: 1. C

6.

D

2.

B

7.

B

3.

B

8.

A

4.

A

9.

C

5.

D

10.

D

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QUI Z2 : Us et h ef o l l o wi ngi nf o r ma t i o nf o rt hene x tt woq ue s t i o ns : Thef ol l owi nga r et het r ans a c t i onsofaj oi ntope r a t i onf or me db yA, Ba ndCdur i ngaye a r :  Ac ont r i but e dc a s hof₱4 0 0a ndme r c ha ndi s ec os t i ng₱8 0 0.  Bc ont r i but e dme r c ha ndi s ec os t i ng₱1 , 6 0 0.Fr e i ght i npa i dbyBi s₱8 0.  Cma depur c has e sa mount i ngt o₱40 0us i ngt hec a s hc ont r i but e db yA.  Cpa i de xpe ns e sof₱8 00us i ngi t so wnc as h.  Cma det ot a ls a l e sof₱3 , 2 0 0 .Al lt heme r c ha ndi s ewa ss ol de x c e ptone ha l foft hos ec ont r i but e d byB.  Ci sa ppoi nt e da st hemana ge roft hej oi ntope r a t i on. Asc ompe ns a t i on,Ci se nt i t l e dt oa₱12 0 s a l a r ypl usbonusof2 5% onpr ofita f t e rs a l ar ya ndbonus .  I nt e r e s tof1 0% pe ra nnum i sa l l owe dt oAa ndB’ sc a pi t a lc ont r i but i ons .  Ci sc ha r ge df ort hec os tofanyuns ol di nve nt or y .Pr ofitorl os sa f t e rne c e s s a r ya dj us t me nt ss ha l l bedi vi de de qual l y . 1 . How muc hi st hepr ofitorl os sa f t e rs a l ar i e sbutbe f or ebonusoft hej oi ntope r a t i on? a .1 92 b .2 4 0 c .3 60 d.4 2 0 2 . Ont hec as hs e t t l e me ntbe t we e nt hej oi ntope r a t or s , a .Apa ys₱1, 28 8 c .Cr e c e i ve s₱9 6 b .Bpa ys₱1 , 8 1 6 d. Al loft he s e Us et h ef o l l o wi ngi nf o r ma t i o nf o rt hene x tt woq ue s t i o ns : Aa ndBf or me daj oi ntope r a t i on.Thef ol l owi ngwe r et het r ans a c t i onsdur i ngt heye ar : A B T ot alpur c has e s 4 0 0 3 2 0 T ot als a l e s 9 60 72 0 Expe ns e spa i d 8 0 0 Ot he ri nc ome 4 0 Thej oi ntope r a t i onwa sc ompl e t e da tt hee ndoft hey e ar .Eac hj oi ntope r a t ori se nt i t l e dt oa1 0 % c ommi s s i ononi t spur c ha s e sa nda20 %c ommi s s i ononi t ss a l e s .Anyr e mai ni ngpr ofitorl os si s di vi de de qua l l y . 3 . How muc hi st hepr ofit( l os s )oft hej oi ntope r a t i on? a .2 00 , 0 0 0 b .( 2 00 , 0 0 0) c .1 80 , 0 0 0 d.( 1 80 , 0 0 0) 4 . Ont hec as hs e t t l e me ntbe t we e nt hej oi ntope r a t or s , a .Apa ysB₱3 68 c .Apa ysB₱4 2 8 b .Bpa ysA₱36 8 d. Bpa ysA₱4 2 8 Us et h ef o l l o wi ngi nf o r ma t i o nf o rt hene x tt woq ue s t i o ns : Aa ndBf or me daj oi ntope r a t i on.Thef ol l owi ngwe r et het r ans a c t i onsdur i ngt heye ar : A B T ot alpur c has e s 4 00 3 2 0 T ot als a l e s 4 8 0 2 4 0 Expe ns e spa i d 8 0 0 Ot he ri nc ome 4 0

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Thej oi ntope r a t i onwa sc ompl e t e da tt hee ndoft hey e ar .Eac hj oi ntope r a t ori se nt i t l e dt oa1 0 % c ommi s s i ononi t spur c ha s e sa nda20 %c ommi s s i ononi t ss a l e s .Anyr e mai ni ngpr ofitorl os si s di vi de de qua l l y . 5 . How muc hi st hepr ofit( l os s )oft hej oi ntope r a t i on? a .7 60 b .( 7 60 ) c .8 4 0 d. ( 8 4 0) 6 . Ont hec as hs e t t l e me ntbe t we e nt hej oi ntope r a t or s , a .Apa ysB₱3 68 c .Apa ysB₱4 2 8 b .Bpa ysA₱36 8 d. Bpa ysA₱4 2 8 7 . A,B,a ndCf or me daj oi ntope r a t i onwhi c hwa sc ompl e t e ddur i ngt hey e a r . Ai st hea ppoi nt e d ma na ge rwhowi l lbee nt i t l e dt oa1 0 % bonusofpr ofitbe f or ebonus .Pr ofitorl os sa f t e rbonust o Ai sdi vi de de qua l l ya mongt hej oi ntope r a t or s .Thea c c ount sofBa ndCs how t hef ol l owi ng ba l anc e s : Ac c ountwi t hA Ac c ountwi t hB Ac c ountwi t hC

BooksofB 1 6Cr .

BooksofC 1 6Cr . 4 8Cr .

5 6Dr .

Uns ol dme r c handi s ewa sc har ge dt oA a tac os tof₱8 8.Ont hec a s hs e t t l e me ntbe t we e nt hej oi nt ope r a t or s , a .Ar e c e i ve s₱72 ;Cpa ys₱3 2 c .Br e c e i ve s₱7 2; Cpa ys₱3 2 b .Bpa ys₱7 2; A pa ys₱4 0 d.Noneoft he s e 8 . A,B,a ndCf or me daj oi ntope r a t i onwhi c hwa sc ompl e t e ddur i ngt hey e a r . Thea c c ount soft he j oi ntope r a t or ss how t hef ol l owi ngba l anc e s : BooksofA 1 6Dr . 2 6Cr .

Ac c ountwi t hA Ac c ountwi t hB Ac c ountwi t hC

BooksofB 1 0Dr . 26Cr .

BooksofC 1 0Dr . 1 6Dr .

Ont hec as hs e t t l e me ntbe t we e nt hej oi ntope r a t or s , a .Ar e c e i ve s₱26 ;Cpa ys₱1 6 c .Cr e c e i ve s₱1 6 ;Apa ys₱1 0 b .Bpa ys₱1 6; A pa ys₱1 0 d.Noneoft he s e 9 . A,B,a ndCf or me daj oi ntope r a t i on.Pr ofitorl os ss ha l lbedi vi de de qua l l y .Thef ol l owi ngwe r e t ake nf r om t hej oi ntope r a t i on’ sbooks : J O –Cas h J oi ntope r a t i on B,Capi t al C, Ca pi t a l

De bi t 80 20 60

Cr e di t

40

A’ ss ha r ei nt hej oi ntope r a t i on’ spr ofiti s₱1 6 .A a gr e e dt obec ha r ge df ort heuns ol dme r c handi s ea s ofye a r e nd.How muc hi st hec os tofuns ol dme r c ha ndi s ec har ge dt oA? a .5 6 b .6 2 c .6 8 d.7 2

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1 0 .A,B,a ndCf or me daj oi ntope r a t i on.Thef ol l owi ngwe r et a ke nf r om t hej oi ntope r a t i on’ sbooks : J O –Cas h B,Capi t al C, Ca pi t a l

De bi t 8 0 6 0

Cr e di t

8 8

Thec os tofuns ol di nve nt or yi s₱7 2.Thej oi ntope r a t i on’ spr ofiti s₱4 4 .How muc hi st hebal a nc eof t hej oi ntope r a t i ona c c ountbe f or edi s t r i but i onofpr ofit ? a .2 8 b .1 1 6 c .5 6 d.0

“Repay no evil for evil. Have regard for good things in the sight of all men. If it is possible, as much as depends on you, live peaceably with all men. Beloved do not avenge yourselves, but rather give place to wrath; for it is written, “Vengeance is Mine, I will repay,” says the Lord. Therefore, “If your enemy hungers, feed him; if he thirsts, give him a drink; for in doing so you will heap coals of fire on his head.” Do not be overcome by evil, but overcome evil with good.” –( Ro ma ns12 : 1 7-2 1) -END -

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SOLUTI ONSTO QUI Z2 : 1. B Solutions: Profit or loss is computed as follows: Joint operation Merchandise – A Purchases - A's cash Merchandise – B Freight - in – B Expenses – C

Salaries expense - C

Bonus expense**

800

Sales – C

3200

400 1600

Unsold inventory charged to C*

840

80 800 360

Profit before salary and bonus - Credit balance

240

Profit after salary but before bonus Credit balance

192

Profit after salary and bonus

120

48

*Unsold inventory: (₱1,600 plus ₱ 80 freight-in) multiplied by one-half. 2. C Solution: Profit is allocated to the joint operators as follows: Allocation to:

A

B

C

Profit before salary and bonus

Totals 360

Salary to C Bonus to C**

120

(120)

48

(48)

Profit after salary and bonus

192

Interest on capital: A - (300 x 10%)

120

B - (420 x 10%)

(120) 168

(168)

Profit after interests on capital Allocation (24 ÷ 3) Net share - as allocated

(96) (32)

(32)

(32)

96

88

136

136

-

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**Bonus is computed as follows: P B

=

P

1 + Br

B = 240 – (240 ÷ 1.25%) = 48

Cash settlement is determined as follows: Joint operation - A Inventory contributed by A

400

Cash contribution

800

Net share in profit

88

Cash settlement – receipt

1,288

Joint operation - B Inventory contributed

1,600

Freight paid

80

Net share in profit

136

Cash settlement – receipt

1,816

Joint operation – C Expenses paid

800

Net share in profit

136

Cash settlement - receipt

96

3. A Solution: Requirement (a): Profit or loss Joint operation - A

Purchases – A Purchases – B Expenses – A

400

960

320

720

800

40

Sales - A Sales - B Other income - B

840

Cost of inventory taken

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Profit - credit balance

200 4. B Solution: Profit is allocated as follows: Allocation to:

A

B

Profit for the year

Totals 200

10% commission on purchases: (10% x 400) – A

40

(40)

(10% x 320) – B

32

(32)

20% commission on sales: (20% x 960) – A

192

(192)

(20% x 720) – B

144

Total to be divided equally

(144) (208)

Allocation: (208 ÷ 2)

(104)

(104)

208

Net share - as allocated

128

72

-

Cash settlement is determined as follows: Joint operation - A Purchases

400

Expenses

800

Net share

128

Cash settlement – receipt

368

960

Joint operation - B Purchases Net share

320

720

72

40 368

5. B Solution: Requirement (a): Profit or loss

Collections on sales Collections on other income Cash settlement - payment

Collections on sales

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Joint operation Purchases – A Purchases – B Expenses – A Loss - debit balance

400

480

320

240

800

40

Sales - A Sales - B Other income - B

760

6. B Solution: The loss is allocated as follows: Allocation to:

A

B

Totals

Loss during the year

(760)

20% commission on purchases: (10% x 400) – A

40

(10% x 320) – B

(40) 32

(32)

25% commission on sales: (20% x 480) – A

96

(20% x 240) – B

(96) 48

(48)

Loss to be allocated equally

(976)

Allocation: (976 ÷ 2)

(488)

(488)

976

Net share - as allocated

(352)

(408)

-

Cash settlement is determined as follows: Joint operation - A Purchases Expenses Cash settlement - receipt

400

480

800

352

368

Collections on sales Net share in loss

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Joint operation - B Purchases

320

408 240

Net share in loss Collections on sales

40

Collections on other income

368

Cash settlement - payment

7. C Solution: The joint operation’s profit is computed as follows: Joint operation Account with A

16

56

Account with C

Account with B

48

88

Unsold inventory

80

Profit before bonus - credit balance

Profit is allocated as follows: Allocation to:

A

B

C

Profit before bonus

Totals 80

Bonus to A (80 x 10%)

8

(8)

Profit after bonus

72

Equal allocation (72 ÷ 3)

24

24

24

(72)

As allocated

32

24

24

-

Cash settlement is determined as follows: Joint operation – A Contributions

16

Net share in profit

32

88

Inventory taken

40

Cash settlement - payment

Joint operation – B Contributions

48

Net share in profit

24

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Cash settlement – receipt

72

Joint operation – C

Net share in profit

56

Withdrawals

32

Cash settlement - payment

24

Cash settlement – Reconstruction of accounts

8. B Solution: The joint operation’s profit is determined as follows: Joint operation 10 Account with C

26

Account with A

16

Account with B

0

Profit before bonus

Joint operation - A Contributions

10

Withdrawals

10

Cash settlement - payment

Joint operation - B Contributions

16

Withdrawals

16

Cash settlement - payment

Joint operation – C Contributions

26

Cash settlement - receipt

26

Withdrawals

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9. C Solution: If A’s share in the joint operation’s profit is ₱ 16 and profit or loss is divided equally between the three joint operators, then total profit of the joint operation must be ₱ 48 (i.e., ₱ 16 for each joint operator multiplied by 3 joint operators). Unsold merchandise is squeezed after placing relevant data in the joint operation account as shown below: Joint operation Debit balance

20 68

Unsold merchandise (squeeze)

48

Profit - credit balance (₱16 x 3)

10. A Solution: Joint operation Debit balance (squeeze)

28 72

Unsold merchandise

44

Profit - credit balance...