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Problem 1: 2 entities established a clothing business. The contractual agreement provided that the relevant activities of the business will require unanimous consent of the 2 parties. The business is not incorporated before Securities and Exchange Commission. The 2 parties equally own interest in the said business. How should the investment of the parties be accounted?
Option 1: Business combination
Option 2: Equity method
Option 3: Joint venture
Option 4: Joint operation
Problem 2: __________ is the arrangement that is structured without separate vehicle such as when the rights of each party to the total assets and obligations for total liabilities relating to the arrangement are clearly established.
Option 1: It shall be classified as joint venture.
Option 2: It can be either a joint operation or joint venture depending on the company policy of the parties to the joint arrangement.
Option 3: Neither joint venture nor joint operation.
Option 4: It shall be classified as joint operation.
Financial Statement Analysis and Preparation
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Computation of Free Cash Flow
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