6-1: a

Rental Income P5 million

Expenses (P200,000 + P P1,000,000) 1.2
Net income, 2013 P3.8 million

6-3: a
Investment P10.00 million
Profit share (P3.8 million x 40%) 1.52
Interest entity A, Dec. 31, 2013 P11.52 million

6-5: b
Cash P 50,000
Transportation equipment 600,000
Furniture and fixtures 250,000
Total assets P900,000

6-7: d
Accounts payable P600,000
Other liabilities 100,000
Total liabilities P700,000

6-9: a
Investment in Bank XY P50.0 M
Profit share in Bank XY – 2013 (P4 M x 40%) 1.6 M
Interest of Bank X, December 31, 2013 P48.4 M

6-11: a
Cash (P3,000,000 less P700,000) P2,300,000
Property, plant and equipment P30,000,000 less P1,400,000) 28,600,000
Total assets P30,900,000

6-13: a
At cost of P300,000.

6-15: a
At fair value of P425,000.

6-17: a
Cost P300,000
Recoverable amount 290,000
Impairment loss P 10,000

6-19: b
At fair value P850,000.

6-21: a
Cost P300,000
Share in Entity Z’s loss (P100,000 x 30%) (30,000)
Carrying amount of venturer’s investment in entity Z, 12/31/2013 P270,000
 No impairment loss in 2013, carrying amount of P270,000 is lower that its recoverable
amount 0f P310,000.

6-23: a
Cost of investment in Entity RS, 1/1/2013:
Carrying amount of machine P160,000
Realized gain (200,000 – 160,000) x 50% 20,000 P180,000
Share in entity RS profit (P60,000 x 50%) 30,000
Realized gain (P20,000 ÷ 10 yrs.) 2,000
Investment in entity RS, 12/31/2013 P212,000

6-25: b, should be P786,286

Cost of investment P600,000
Share in entity Z realized profit:
Profit, 12/31/2013 P800,000
Unrealized profit in inventories (120,000 x 40%/140%) (34,285)
Realized profit, 12/31/2013 P765,715
Multiply by 40% 306,286
Dividends received (300,000 x 40%) (120,000)
Investment in entity Z, 12/31/2013 P786,286