On 1 January 2018, Sydney Ltd enters into a joint operation with QL Ltd to form an unincorporated entity to produce a new type of building product. All the current and future contributions are to be based on a 50:50 split, as are the future distributions of outputs.

Sydney Ltds initial contribution consists of $2,000,000 cash and QL 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.

Required:

Provide the journal entries in the book of Sydney Ltd and in the book of QL Ltd to account for the joint operators contributions to the joint operation.

Ignore tax effect.