How much is the adjusted share in profit of the JV Inc

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Question - GSW owns 20% in JV Inc. and uses the equity method to account for its interest in the joint venture. GSW has joint control over the JV Inc. In 2019, GSW sold inventory to JV Inc. for P 100,000 with a 50% gross profit on the transaction. The inventory remains unsold during 2019 and was only sold by JV Inc. to external parties only in 2020. GSW's income tax rate is 30%. Assuming JV Inc. reports profit of P 1,000,000 and P 1,500,000 on December 31, 2019 and 2020, respectively:

REQUIRED -

1. What is the share in profit of JV Inc. before adjustment for 2019 and 2020?

2. How much is the unrealized profit from the downstream sale net of tax for 2019 and 2020?

3. How much is the realized profit from downstream sale net of tax for 2019 and 2020?

4. How much is the adjusted share in profit of the JV Inc. for 2019 and 2020?

Reference no: EM132641321

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