IFRS 11 defines joint arrangement as an arrangement over which two or more parties have joint control

which is the contractually agreed sharing of control of an arrangement, which exists only when the
decisions about the relevant activities require the unanimous consent of the parties sharing control.
What is the classification of the joint arrangement if the business formed is not structured through a
separate vehicle?

Without a separate vehicle, the joint arrangement is always classified as

The operators have a right to the assets and obligations for the liabilities of the operation is a
characteristic of what type of joint arrangement?

True or false, in joint operation, the legal form of the separate vehicle does not confer separation
between the operators and the separate vehicle.

True or false, in joint operation, the operator accounts for its interest in joint operation by recording an
investment account.

The operators have a right to the net assets of the operation is a characteristic of what type of joint
arrangement?

True or false, in joint venture, the venturer accounts for its interest in joint venture by recognizing an
investment account and accounting it using Cost Method under IAS 28.

True or false, in joint venture, the venturer recognizes its share in net income/(net loss) from joint
venture by increase/(decrease) in Investment in Joint Venture account and records receipt of
cash/property dividend from the venture with a decrease in Investment in Joint Venture account.

Builders Corp. and Progress Co. are two companies whose businesses are the construction of many
types of public and private construction services. They set up a contractual agreement to work together
for the purpose of fulfilling a contract with the government of a motor war between two cities for
P144,000,000 price contract.

The contractual agreement determines the participation shares of Builders and Progress and establishes:
Joint control of the arrangement
The rights to all the assets needed to undertake the activities of the arrangement are shared by
the parties on the basis of their participation shares in the arrangement.
The parties have joint responsibility for all operation and financial obligations relating to the
activities of the arrangement on the basis of their participation shares in the arrangement, and
The profit and loss resulting from the activities of the arrangement is shared by Builders and
Progress on the basis of their participation shares in the arrangement.
In 2013, in accordance with the agreement between Builders and Progress:
Builders and Progress each used their own equipment and employees in the construction
activity.
Builders constructed three bridges needed to cross rivers on the route at a cost of P48 million.
Progress constructed all of the other elements of the motorway at a cost of P60 million.
Builders and Progress shares equally in the 144 million jointly invoiced to and received from
the government.
What is the gross profit of the joint arrangement?
What is the gross profit earned by Builders?

The following joint venture account reflects the transactions of the venture of A, B, and C as recorded
by each venture (participant).

Joint Venture
Nov. 5 Merchandise C P12,750 Nov. 18 Cash sales A P30,600
17 Merchandise B 10,500 Dec. 12 Cash sales A 6,300
22 Freight-in A 525 28 Merchandise B 1,815
Dec. 3 Purchase A 5,250
13 Selling expenses A 600

Distributions of gains and losses are to be trade as follows: A 50%; B 30%; and C 20%. The
venture is to close on December 31, 2014. The joint venture profit (loss) is:

Using the same information, how much of each venture receive in the final settlement?

J, D and A formed a joint operation for the sale of assorted fruits during the Christmas season. Their
transactions during the two-month period as summarized below:

Joint Venture
Nov. 6 Merchandise J P8,500 Nov. 10 Cash sales A P20,400
8 Merchandise D 7,000 12 Cash sales A 4,200
10 Freight-in A 200 28 Merchandise D 1,210
Dec. 8 Purchase A 3,500 Dec. 30 Unsold merchandise
14 Selling expenses A 550 charged to J 540

The operation agreements provided for the division of gains and losses among J, D and A in the ration
of 2:3:5. The venture is to close on December 31, 2014. The joint operation profit (loss) is:

Using the same information, how much would J receive cash in the final settlement?

Ramos, Sili and Torre formed a joint venture, Ramos is to act as manager and is designated to record
the joint venture accounts in his books. As manager, he is allowed a salary of P12,000. Remaining
profit (loss) is to be divided equally.

The following balances appear at the end of 2011 before adjustments for venture inventory and profits.

Debit Credit
Joint venture cash P48,000
Sili, capital 3,000
Torre, capital P 27,000

The venture is to terminate on December 31, 2013 with unsold merchandise costing P10,400.
Assuming that the joint venture profit is P5,000, what is the balance of the Joint Venture before
distribution of profit?

Using the same information and assuming that the joint venture incurs a loss of P1,000, what is the
balance of the joint venture account before distribution of loss?