Question
(a) On 1 July 2019, Brisbane Ltd enters into a joint operation with Perth Ltd to form an unincorporated entity to produce a new type
(a) On 1 July 2019, Brisbane Ltd enters into a joint operation with Perth Ltd to form an unincorporated entity to produce a new type of building product. It was agreed that each party to the agreement would share the output equally. Brisbane Ltd's initial contribution consists of $2 000 000 cash and Perth Ltd contributes machinery that is recorded at $1 900 000. The fair value of machinery is $2 000 000. During the first year of operation both parties contributed a further $3 000 000 cash each.
Required:
Provide the journal entries in the book of Brisbane Ltd and in the book of Perth Ltd to account for the joint operators' contributions to the joint operation.
Ignore tax effect.
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