1.

On January 1, 2018, Entity A, a public entity, and Entity B, a public entity, incorporated Entity C
which has its fiscal and operational autonomy. The contractual agreement of the incorporating
entities provided that decisions on relevant activities of Entity C will require the unanimous
consent of both entities. Entity A and Entity B will have rights to the net assets of Entity C.

Entity A and Entity B invested P1,000,000 and P1,500,000, respectively, equivalent to 40:60
capital interest of Entity C. The financial statements of Entity C provided the following data for its
two-year operation:
Net income (loss) Dividends declared
2018 200,000 100,000
2019 (2,000,000) -

1. What is the balance of Investment in Entity C to be reported by Entity A in its Statement of

Financial Position on December 31, 2019?
2. What is the balance of Investment in Entity C to be reported by Entity B in its Statement of
Financial Position on December 31, 2019?

2. Entity A and Entity B incorporated Entity C to manufacture a microchip to be used by the

incorporating entities as component for their final products of cellular phones and tablets.

The contractual agreement of the incorporating entities provided that the decisions on relevant
activities of Entity C will require the unanimous consent of both entities.

Entity A and Entity B have right 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 operations of Entity C, the financial statements provided the following
data:
 Entity A owns the land and incurs the loans 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 owed by Entity A and Entity B on the basis of their
capital interest in Entity C.
 The sales revenue of Entity C includes sales to Entity A and Entity B in the amount of
P1,000,000 and P2,000,000, 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.

1. What is the amount of total assets to be reported by Entity A concerning its interest in Entity
C?
2. What is the amount of total liabilities to be reported by Entity B concerning its interest in Entity
C?
3. What is the amount o sales revenue to be reported by Entity A concerning its interest in Entity
C?

3. On January 1, 2018, Entity A, a public entity, and Entity B, a public entity, incorporated Entity C by
investing P3,000,000 and P2,000,000 for capital interest ratio of 60:40. The contractual agreement
 of the incorporating entities provided that the decisions on relevant activties of Entity C will require
the unanimous consent of both entities. Entity A and Entity B will have the rights to the net assets
of Entity C.

The financial statements of entity C provided the following data for 2018:
 Entity C reported net income of P1,000,000 for 2018 and paid cash dividends of P400,000 on
December 31, 2018.
 During 2018, Entity C sold inventory to Entity A with gross profit of P50,000. Eighty percent of
those inventories were resold by Entity A to third persons during 2018 and the remained was
resold to third persons during 2019.
 On July 1, 2018, Entity C sold a machinery to Entity B at a loss of P20,000. At the time of sale,
the machinery has remaining useful life of 2 years.

1. What is the investment income to be reported by Entity A for the year ended December 31,
2018?
2. What is the balance of Investment in Entity C to be reported by Entity B on December 31,
2018?

4. On January 1, 2020, Storm Inc. Invested P2M cash in a joint venture for 50% interest. For the
years ended December 31, 2020, 2021 and 2022, the joint venture reported the following net
incomes and dividend distributions:
YEAR NET INCOME/(NET LOSS) DIVIDEND DISTRIBUTION
2020 P1,000,000 P300,000
2021 (P6,000,000) -
2022 P7,000,000 P500,000
1. What is the share in net loss or investment loss to be reported by Storm Inc., for the year
ended December 31, 2021?
2. What is the book value of Investment in Joint Venture to be reported by Storm Inc. As of
December 31, 2022?