FUTURE CPA

1. A joint venturer accounts for its interest in a joint venture using the equity method. TRUE
2. A and B enters into a contract to contribute cash to acquire a public utility jeepney (PUJ).
A and B shall have joint control over the operation of the public utility jeepney and shall
share equally in the revenues and expenses. The jeepney is referred to in PFRS 11 as
separate vehicle. FALSE
3. A joint venturer applies the equity method from the date it obtains joint control over the
joint venture and discontinues applying equity method when the investor faces
significant difficulty in transferring funds to the investee, even though the investor still
retains joint control. FALSE
4. According to PFRS 11, a joint operation is a joint arrangement whereby the parties that
have joint control of the arrangement have rights to the assets and obligations for the
liabilities relating to the arrangement. TRUE
5. Under the equity method, the investment is initially measured at cost. TRUE
6. According to PFRS 11, a joint venture is a joint arrangement whereby the parties that
have joint control of the arrangement have rights to the net assets of the arrangement.
TRUE
7. An arrangement qualifies as a joint arrangement under PFRS 11 only if all of the parties
in the arrangement share joint control. FALSE
8. A and B enters into a contract to contribute cash to acquire a public utility jeepney (PUJ).
A and B shall have joint control over the operation of the public utility jeepney and shall
share equally in the revenues and expenses. A and B are referred to as joint jeepney
venturers. FALSE
9. According to PFRS 11, a party to a joint arrangement is an entity that participates in a
joint arrangement, regardless of whether that entity has joint control of the arrangement.
TRUE
10. A and B contributes assets to form a business undertaking. The business obtains control
over the assets contributed by A and B. In exchange, A and B will have equal interests in
the net assets and profits of the business. The arrangement between A and B is most
likely a joint venture. TRUE
11. According to PFRS 11, a joint arrangement is classified as joint operation, jointly
controlled assets, or a joint venture. FALSE
12. A and B enters into a contract to contribute cash to acquire a public utility jeepney (PUJ).
A and B shall have joint control over the operation of the public utility jeepney and shall
share equally in the revenues and expenses. The contract between A and B is a joint
venture. FALSE
13. The parties that share joint control in a joint operation are called joint operationists.
FALSE
 14. If an entity’s statement of financial position shows an “investment” account for its
interest in a joint arrangement, a user of the entity’s financial statement would most
likely find out in the notes that the nature of the joint arrangement is a(an)

Group of answer choices Joint operation, Investment in associate, Either of these , Joint
venture

15. R Company and L Company are publishers of textbooks. R and L enters into a contract to
put up bookstore which shall be named K Bookstore. K Bookstore will have its own
assets, incur its own liabilities, and earn and incur its own revenues and expenses. R and
L will each have a 50% interest in the net assets and profits of K Bookstore. The
arrangement between R and L is most likely a
Group of answer choices Jointly controlled asset, Joint operation, Joint venture, None of
these
16. In its financial statements that are not considered separate financial statements, how
should a joint venturer account for its interest in a joint arrangement?

Group of answer choices

The venturer uses the equity method to recognize its share in the changes in the net assets of
the joint venture through one-line consolidation.

The venturer accounts for the investment at cost, at fair value or using the equity method.

The joint venturer recognizes its share in the assets, liabilities, income and expenses in the joint
venture by adding those shares, line by line, to similar accounts.

The venturer uses the equity method to recognize its share in the profit or loss of the joint
venture by recognizing its share in the revenues and expenses of the joint venture.

17. Which of the following is a peculiar characteristic of a joint arrangement?

1. When the entity acquires an interest in a joint operation whose activity constitutes a
business, the joint operation shall account for the entity’s acquisition of its share as a
business combination. TRUE
2. Joint control exists when no single party is in a position to control the activity
unilaterally. TRUE
3. A and B enters into a contract to contribute cash to acquire a public utility jeepney (PUJ).
A and B shall have joint control over the operation of the public utility jeepney and shall
share equally in the revenues and expenses. The jeepney is referred to in PFRS 11 as
separate vehicle. FALSE
4. A and B contributes assets to form a business undertaking. The business obtains control
over the assets contributed by A and B. In exchange, A and B will have equal interests in
the net assets and profits of the business. The arrangement between A and B is most
likely a joint venture. TRUE
5. A and B enters into a contract to contribute cash to acquire a public utility jeepney (PUJ).
A and B shall have joint control over the operation of the public utility jeepney and shall
share equally in the revenues and expenses. A and B are referred to as joint jeepney
venturers. FALSE
6. According to PFRS 11, a joint arrangement is classified as joint operation, jointly
controlled assets, or a joint venture. FALSE
7. Under the equity method, dividends received from the investee are treated as dividend
income. FALSE
8. Under the equity method, the investment is initially measured at cost. TRUE
9. A joint venturer accounts for its interest in a joint venture using the equity method. TRUE
10. According to PFRS 11, a party to a joint arrangement is an entity that participates in a
joint arrangement, regardless of whether that entity has joint control of the arrangement.
TRUE
11. A and B enters into a contract to contribute cash to acquire a public utility jeepney (PUJ).
A and B shall have joint control over the operation of the public utility jeepney and shall
share equally in the revenues and expenses. The contract between A and B is a joint
venture. FALSE
12. According to PFRS 11, a joint venture is a joint arrangement whereby the parties that
have joint control of the arrangement have rights to the net assets of the arrangement.
TRUE
13. The parties that share joint control in a joint operation are called joint operationists.
FALSE
14. joint operation is an arrangement of which two or more parties have joint control. FALSE
15. According to PFRS 11, a joint arrangement that is structured through a separate vehicle
is a joint venture. TRUE
 16. An arrangement qualifies as a joint arrangement under PFRS 11 only if all of the parties
in the arrangement share joint control. FALSE
17. According the PFRS 11, a joint arrangement that is not structured through a separate
vehicle is a joint operation. TRUE
18. Under the equity method, the fair value per share of the investment does not necessarily
affect the measurement of the investment at the end of the reporting period. TRUE
19. According to PFRS 11, a joint operation is a joint arrangement whereby the parties that
have joint control of the arrangement have rights to the assets and obligations for the
liabilities relating to the arrangement. TRUE
20. A joint venturer applies the equity method from the date it obtains joint control over the
joint venture and discontinues applying equity method when the investor faces
significant difficulty in transferring funds to the investee, even though the investor still
retains joint control. FALSE
21. Which of the following is a peculiar characteristic of a joint arrangement?

Group of answer choices Significant influence, Joint venture, Control, Joint control

22. R Company and L Company are national distributors of textbooks. R and L enters into a
contract to acquire a warehouse in a particular region. Each party will use the warehouse
to store its own inventories. The parties agree to share in the cost of acquiring and
maintaining the warehouse. The arrangement between R and L is most likely a

Group of answer choices None of these, Joint venture, Joint operation, Jointly controlled asset

23. R Company and L Company are publishers of textbooks. R and L enters into a contract to
put up bookstore which shall be named K Bookstore. K Bookstore will have its own
assets, incur its own liabilities, and earn and incur its own revenues and expenses. R a nd
L will each have a 50% interest in the net assets and profits of K Bookstore. The
arrangement between R and L is most likely a
Group of answer choices Jointly controlled asset, None of these, Joint venture, Joint
operation
24. If an entity’s statement of financial position shows an “investment” account for its
interest in a joint arrangement, a user of the entity’s financial statement would most
likely find out in the notes that the nature of the joint arrangement is a(an) :
Either of these, Investment in associate, Joint operation, Joint venture
25. In its financial statements that are not considered separate financial statements, how
should a joint venturer account for its interest in a joint arrangement?

Group of answer choices

The venturer uses the equity method to recognize its share in the changes in the net assets of
the joint venture through one-line consolidation.

The venturer accounts for the investment at cost, at fair value or using the equity method.
The venturer uses the equity method to recognize its share in the profit or loss of the joint
venture by recognizing its share in the revenues and expenses of the joint venture.

The joint venturer recognizes its share in the assets, liabilities, income and expenses in the joint
venture by adding those shares, line by line, to similar accounts.