Compute share of AA in the revenue of the joint operations

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Reference no: EM132640242

Question - AA, BB and CC sign an agreement to collectively purchase a yacht and to hire a company to manage and operate the yacht on their behalf. The cost involved in running and operating the yacht business and the revenue earned from the pipeline are shared by the three parties based on their ownership percentages. All major operating and financing decisions related to the yacht business must be agreed to by the three companies. The cost of purchasing the yacht was P56M. The yacht has an estimated 20-year useful life with no residual value. The management fee for operating the yacht business for 2020 was P11.2M. Revenue earned from the yacht business in 2020 was P18.48M. AA invested P16.8M for a 30% interest.

1. Compute the share of AA in the revenue of the joint operations in 2020

a. P1.344M b. P5.544M c. P11.2M d. P16.8M

2. Compute the share of AA in the expense of the joint operator for 2020

a. P0.84M b. P3.36M c. P4.2M d. P5.544M

3. Compute the share of AA in the gross profit/net income of the joint operations for 2020:

a. P1.344M b. P5.544M c. P11.2M d. P16.8M

4. Compute the ending capital/investment of AA for 2020.

a. P18.144M b. P16.8M c. P1.344M d. NIL

Reference no: EM132640242

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