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Joint Operation Financial Analysis

1) The document describes several problems involving joint operations and joint ventures. Problem 1 involves the sale of equipment from a joint operation. Problem 2 involves allocating profits from a joint operation based on ownership ratios. Problem 3 involves liquidating a joint operation and distributing cash to partners based on their capital accounts. 2) Problem 4 demonstrates accounting for a joint venture using the equity method. Problem 5 involves upstream transactions between a parent and joint venture. Problem 6 discusses impairment testing of investments in joint ventures accounted for using different methods. 3) The problems show various journal entries and financial statements for joint operations and ventures, including entries for investments, profits/losses, dividends, and impairment.

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Lisel Salibio
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18 views11 pages

Joint Operation Financial Analysis

1) The document describes several problems involving joint operations and joint ventures. Problem 1 involves the sale of equipment from a joint operation. Problem 2 involves allocating profits from a joint operation based on ownership ratios. Problem 3 involves liquidating a joint operation and distributing cash to partners based on their capital accounts. 2) Problem 4 demonstrates accounting for a joint venture using the equity method. Problem 5 involves upstream transactions between a parent and joint venture. Problem 6 discusses impairment testing of investments in joint ventures accounted for using different methods. 3) The problems show various journal entries and financial statements for joint operations and ventures, including entries for investments, profits/losses, dividends, and impairment.

Uploaded by

Lisel Salibio
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

JOINT OPERATION

PROBLEM 1
#1 #2
Cash in JO 2,000,000 Cash in JO 2,000,000
Equipment in JO 2,000,000 Equipment in JO 2,000,000
Cash 4,000,000 Equipment

#3
Equipment
FV 4,000,000 Cash in JO 2,000,000
BV -3,000,000 Equipment in JO 1,500,000
Gain 1,000,000 Accumulated Dep 1,000,000
% ratio 50% Equipment 4,000,000
Gain 500,000 Gain on sale 500,000

PROBLEM 2
Equipment in JO 10,000,000
Cash 10,000,000

Revenue 2,000,000
Expenses -500,000
Depreciation
- 1,000,000
Net profit 500,000
Ratio 50%
Share 250,000

PROBLEM 3
NO separate books
JOINT OPERATION
Merchandise 1,000
F-in 50
Purchases 2,500
8,000 Sales
Expenses 550 300 Ending Inventory

4,100 8,300
Profit 4,200

A B C
Share in profit 1,400 1,400 1,400

JO is liquidated
A books
Investment 1,050 Sales
Expense Withdrawals
Share in profit 1,400 Share in loss A 2,450
2,450 B 2,450
C 3,100
B books Total JO-Cash 8,000
Investment 500 Sales
Expense 550 Withdrawals
Share in profit 1,400 Share in loss
2,450

C books
Investment 2,000 Sales
Expense 300 Withdrawals
Share in profit 1,400 Share in loss
3,100

With separate books

A B (manager)
Investment in JO 1,000 No Entry
Inventory 1,000

Investment in JO 50 No Entry
Cash 50

No Entry No Entry

No Entry Investment in JO 500


AP

No Entry No Entry

No Entry Investment in JO 550


Cash
No Entry No Entry
Investment in JO 1400 Investment in JO 1,400
Share in Profit of JO 1,400 Share in Profit of JO

Cash 2,450 Cash 2,450


Investment in JO 2,450 Investment in JO

JOINT VENTURE

PROBLEM 4
Equity Method

Investmen in JV 500,000
Share in NI 1,000,000 400,000
OCI 500,000 200,000
Dividends 600,000 - 240,000
Investmen in JV,end 860,000

PROBLEM 5
Upstream Transaction 2021 2022
Sales 100,000 Profit 1,200,000 1,800,000
GP% 50% Share 20% 20%
UPEI 50,000 240,000 360,000
Tax 15,000 UPEI - 7,000
35,000 RPBI 7,000
Interest 20% ADJ Share in profit233,000 367,000
UPEI 7,000

PROBLEM 6
Situation 1 - equity method and FV is 210,000
Investment in JCE 202,000
Cash 202,000 Recoverable amount 207,000
CV of investment 206,800
Cash 1200 No impairment 200
Investment in JCE 1,200
Dividend
Investment in JCE 6000
Investment income 6,000

Situation 2 - equity method and FV is 196,000

Recoverable amount 194,200 Investment income 6,000


CV of investment 206,800 Impairment - 12,600
Impairment - 12,600 Net Loss -6,600

Situation 3 - at cost and FV is 196,000


Investment in JCE 202,000
Cash 202,000

Cash 1200
Dividend income 1,200

Recoverable amount 194,200 Dividend income 1,200


CV of investment 202,000 Impairment - 7,800
Impairment - 7,800 Net Loss -6,600

Situation 3 - at FV and FV is 196,000


Investment in JCE 200,000
Expense 2,000 FV of investment 196,000
Cash 202,000 CV of investment 200,000
Unrealized Loss - 4,000
Cash 1200
Dividend income 1,200
Dividend income 1,200
Expense -2,000
Unrealized Loss - 4,000
Net Loss -4,800
4,000,000
ager) C Joint Operation
No Entry Inventory
A, capital

No Entry Freight-in
A, Capital

Investment in JO 2,000 Cash


Cash 2,000 C, Capital

No entry Purchases
500 Cash
B, Capital
No Entry Cash
Sales

No Entry Expenses
550 B, capital
No Entry Inventory,end
Sales
Inventory, beg
F-in
Purchases
Expenses
Income Summary
Investment in JO 1,400 Income Summary
1,400 Share in Profit of JO 1,400 A,capital
B, capital
C, capital

Inventory 300 C, capital


Investment in JO 300 Inventory

Cash 3,100 A,capital


2,450 Investment in JO 3,100 B, capital
C, capital
Cash
Joint Operation
1,000
1,000

50
50

2,000
2,000

2,500
2,000
500
8,000
8,000

550
550
300
8,000
Inventory, beg 1,000
50
2,500
550
Income Summary 4,200
4,200
1,400
1,400
1,400

300
300

2,450
2,450
3,100
8,000

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