Banks A and B (the parties) agreed to combine their corporate, investment banking, asset management and service activities by establishing a separate vehicle (bankX). Both partiesexpect the arrangement to benefit them in different ways.

The assets and liabilities held in Bank X are the assets and liabilities of Bank X and not the assets and liabilities of the parties. Banks A and B each have a 40% ownership interest in Bank X,withthe remaining 20% being listed and widely held. The stockholder's agreement between Bank A and Bank B establishes joint control of the activities of Bank X.

Transactions for year 2016 and 2017 follow:

2016 2017

Investment of Bank A, beg P50,000,000

Investment of Bank B, beg P50,000,000

Revenues P10,000,000 P12,000,000

Cost and Expenses P6,000,000 P7,000,000

Dividends Paid - Bank X P4,000,000

Questions:

1.What is the interest of Bank A in the joint arrangement at December 31, 2016? a. P51,600,000

b.P50,000,000

c.P48,400,000

d.P48,000,000

2.What is the interest of Bank B in the joint arrangement at December 31, 2017? a. P52,500,000

b.P52,400,000

c.P54,500,000

d.P52,000,000

PROBLEM 2:

On January 1, 2015, Pablo Corporation acquired 1,800 shares of the outstanding capital stock of Jose Company for P270,000. As of this date, the stockholders' equity of Jose Company consisted of the following:

Capital Stock, P100 par P600,000

Retained Earnings 240,000

On July 1, 2016, Pablo Corporation sold 360 shares of its investment of Jose CompanystockforP80,000. Changes in the retained earnings account of Jose Company are as follows:

Year 2015Income from Operations P168,000

Dividends Declared at December 31, 2015 126,000

Year 2016Income from Operations 210,000

Dividends Declared at December 31, 2016 189,000

The investment is accounted for by the equity method.

What is the balanc e of investment in Jose Company Account on December 31, 2016? a. P205,920

b.P180,720

c.P314,100

d.P231,120

PROBLEM 3:

On January 1, 2016, Pablo, Inc. purchased 40% of Anton Company's ordinary shares. On that date, the carrying amount of Anton's assets and liabilities approximated their fair values.During2016,Anton paid P10,000 cash dividends to its stockholders. Summarized Statement of Financial Positionforthe two companies follows:

PabloAnton

12/31/2016 12/31/2016 01/01/2016

Investmentsin Anton (Equity)P130,000

Other Assets 139,000 P115,000 P100,000

Total P269,000 P115,000 P100,000

Common Stock P50,000 P20,000 P20,000

Additional Paid - in Capital 80,250 44,000 44,000

Retained Earnings 138,750 51,000 36,000

Total P269,000 P115,000 P100,000

Question:

1.What amount of Investment Income is to be reported by Pablo inits2016Statementof Comprehensive Income?

a.P12,000

b.P10,000

c.P15,000

d.P20,000

2.What is the cost of Investment in Anton on January 1, 2016

a. P120,000

b.P124,000

c.P115,000

d.P110,000