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7. Under IFRS 11, how shall the joint venturer account for its Investment in Joint
Venture?
a. Equity method
b. Cost method
c. Fair value method under IFRS 9
d. Proportionate consolidation
8. Under IFRS 11, as an exception to the general rule of mandatory equity method
accounting for Investment in Joint Venture, what is the alternative treatment
available to joint venturer for an investment in joint venture held or is held
indirectly through an entity that is a venture capital organization, mutual trust
fund, unit trust and similar entities including insurance-liked fund?
a. It may elect to measure the investment in joint venture at fair value
through profit or loss.
b. It may elect to measure the investment in joint venture at fair value
through other comprehensive income.
c. It may elect to measure the investment in joint venture at cost method.
d. It may elect to measure the investment in joint venture at proportionate
consolidation.
9. Under IFRS for SMEs, how shall the joint venture account for its Investment in
Joint Venture?
a. Equity method
b. Cost method
c. Fair value method under IFRS 9
d. Any of the above
10. Under IFRS 11, how shall the joint operator account for its interest in a joint
operation?
a. The joint operator shall account for its interest under Equity method.
b. The joint operator shall account for its interest under Cost method.
c. The joint operator shall account for its interest using proportionate
consolidation.
d. The joint operator shall account for its interest by recognizing its assets,
its revenue, its expenses and its shares in the jointly controlled assets,
jointly incurred liabilities, jointly earned revenue and jointly incurred
expenses in accordance with the contractual arrangement.
Entity A and Entity B have rights to the assets and obligations for the liabilities,
relating to the arrangement. The ordinary shares of Entity C will be owned by
Entity A and Entity B in the ratio of 60:40. At the end of first operation of Entity
C, the financial statements provided the following data:
The contractual agreement of Entity A and Entity B also provided for the
following concerning the assets and liabilities of Entity C:
Entity A owns the land and incurs the loan payable of Entity C.
Entity B owns the building and incurs the note payable of Entity C.
The other assets and liabilities are owned or owned by Entity A and
Entity B in the amount of P 1,000,000 and P 2,000,000, respectively. As
of the end of the first year, Entity A and Entity B were able to resell 30%
and 60% of the inventory coming from Entity C to third persons.
The financial statements of Entity C provided the following data for 2018:
Entity C reported net income of P 1,000,000 for 2018 and paid cash
dividends of P 400,000 on December 31, 2018.
During 2018, Entity C sold inventory to Entity A with gross profit of P
50,000. 80% of those inventories were resold by Entity A to third person
during 2018 and the remainder was resold to third persons during 2019.
On July 1, 2018, Entity C sold machinery to Entity B at a loss of P
20,000. At the time of sale, the machinery has remaining useful life of 2
years.
3.1. What is the investment income to be reported by Entity A for the year
ended December 31, 2018?
a. 603,000 b. 606,000 c. 594,000 d. 597,000
4. On January 1, 2016, Storm Inc. invested P 2M cash in a joint venture for 50%
interest. For the years ended December 31, 2016, 2017, 2018, the joint venture
reported the following net incomes and dividend distributions:
Net income (loss) Dividends declared
2016 1,000,000 300,000
2017 (6,000,000) -
2018 7,000,000 500,000
4.1. What is the share in net loss or investment loss to be reported by Storm
Inc. for the year ended December 31, 2017?
a. 3,000,000 b. 2,500,000 c. 2,350,000 d. 2,000,000
the fair value of the investment in joint venture is P 600,000 and the estimated
cost of disposal is 10% of fair value. The value in use of the investment is
estimated at P 550,000.
5.1. Under IFRS for SMEs, what is the book value of Investment in Joint
Venture to be reported by Logan Inc. as of December 31, 2018 if the SME
elects equity method?
a. 550,000 b. 540,000 c. 570,000 d. 600,000
5.2. Under IFRS for SMEs, what is the book value of Investment in Joint
venture to be reported by Logan Inc. as of December 31, 2018 if the SME
elects cost method?
a. 550,000 b. 540,000 c. 570,000 d. 500,000
5.3. Under IFRS for SMEs, what is the book value of Investment in Joint
venture to be reported by Logan Inc. as of December 31, 2018 if the SME
elects fair value method?
a. 550,000 b. 600,000 c. 570,000 d. 500,000
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