What is the share in the profit of joint venture

Assignment Help Accounting Basics

Reference no: EM132641545

Questions -

Q1 - X, Y, and Z agreed to form a joint operation. Profit or loss of the joint operation shall be divided equally. Y is appointed as the manager. The following were the transactions during the year:

Inventory costing P 1,000 was sent by X to Y

Freight paid by on the inventories sent to Y amounted to P 50 • Cash of P 2,000 was sent by Z to Y to be used to purchase additional inventory

Y purchased additional inventory amounting to P 2,500, P 500 of which were made on account of Y

Cash sales made by Y amounted to P 8,000

Operating expenses amounting to P 550 were paid by Y using own cash

Unsold inventory at year-end amounted to P 300

REQUIRED:

1. If there is no separate books maintained for Joint Operations, how much is the profit or loss of the Joint Operations?

2. How much is the share of profit of X, Y, and Z respectively?

3. Assume that the Joint Operation is liquidated and Z is charged the unsold inventory at cost, how much is the Joint Operation Cash to be shown in the books of Y?

4. How much is the cash receipt or (cash payment) of X, Y, and Z, respectively?

5. If there is a separate book maintained for Joint Operations, how much is the profit or loss of the Joint Operations?

6. How much is the share of profit of X, Y, and Z, respectively?

7. How much is the investment in Joint Operations of X, Y, and Z, shown in their respective books?

8. How much is the capital balance of X, Y, and Z, respectively shown in the Joint Operations Book?

Q2 - 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. 2 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?

Q3 - NOLA owns 20% in a joint venture and uses the equity method to account for its interest in the joint venture. NOLA has joint control over the joint venture. In 2019, the joint venture sold inventory to NOLA for P 100,000 with a 50% gross profit on the transaction. The inventory remains unsold during 2019 and was only sold by NOLA to external parties only in 2020. NOLA's income tax rate is 30%. Assuming Joint Venture reports profit of P 1,200,000 and P 1,800,000 on December 31, 2019 and 2020, respectively:

REQUIRED:

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

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

3. How much is the adjusted share in profit of the joint venture in 2019 and 2020?

Reference no: EM132641545

Questions Cloud

Explain the methods you could use to reconcile accounts : Describe when you would expect the account to be cleared to zero. Explain the methods you could use to reconcile these accounts

Yielded additional valuable information : What approaches could have yielded additional valuable information?

Reason for choosing mixed method design : Give an example of a research study you might design using mixed methods procedures and indicate your reason for choosing a mixed method design.

What is the standard error of the VaR estimate : The probability density function of the loss distribution at the 95% point is estimated to be 0.02. What is the standard error of the VaR estimate

What is the share in the profit of joint venture : Assuming Joint Venture reports profit of P 1,200,000 and P 1,800,000 - What is the share in the profit of joint venture before adjustment for 2019 and 2020

Pros and cons of memory management schemes : Discuss the pros and cons of the memory management schemes presented in this chapter.

How law and constitution were applied in resolution : Explain how the law and constitution were applied in the resolution.

How do you interpret the portfolio manager announcement : You have an investment of R750,000 in the fund. How do you interpret the portfolio manager's announcement

Verify truly objective and measureable success : During a change initiative, what can organizations use to identify or verify truly objective and measureable success?

User Account

All Pages