Sharing output  LO3, 4 On 1 July 2019, Darwin Ltd entered into a joint agreement with Broome Ltd to form an unincorporated entity to produce a new type of widget. It was agreed that each party to the agreement would share the output equally. Darwin Ltd’s initial contribution consisted of $2 000 000 cash and Broome Ltd contributed machinery that was recorded in the records of Broome Ltd at $1 900 000. During the first year of operation both parties contributed a further $3 000 000 each. On 30 June 2020, the venture manager provided the following statements (in $’000). Costs incurred Wages $1 840 Supplies 2 800 Overheads 2 200 6 840 Cost of inventories 4 840 Work in progress at 30 June 2020 $2 000 Receipts and payments Receipts: Original contributions $2 000 Additional contributions 6 000 8 000 Payments: Machinery (2/7/19) $ 800 Wages 1 800 Supplies 3 000 Overheads 2 100 Operating expenses 200 7 900 Closing cash balance $ 100 Assets and liabilities Assets Cash $ 100 Machinery 2 800 Supplies 400 Work in progress 2 000 Total assets 5 300 Liabilities Accrued wages 40 Creditors 300 Total liabilities 340 Net assets $4 960 Each joint operator depreciates machinery at 20% p.a. on cost in its own records. Required 1. Prepare the journal entries in the records of Darwin Ltd and Broome Ltd in relation to the joint operation. 2. Prepare the journal entries in the records of Broome Ltd assuming that the joint operation, not the operators, had depreciated the machinery and included that expense in the cost of inventories transferred.