Question 5 (20 marks) Joint operations On 1 July 2041, Bunbury Ltd entered into an agreement with Broome Ltd to form an unincorporated joint operation It was agreed that each party to the agreement would share production equally Bunbury Ltd's initial contribution consisted of cash of $6,500,000 Broome Ltd contributed machinery with a fair value of $6,500,000 to the operation The machinery contributed by Broome Ltd had a carrying amount of $6,240,000 On 15 December 2040, each party contributed a further $8,500,000 in cash Machinery depreciation is recorded in the books of the joint operation at 20% per annum Each operator accounts for the joint operation in accordance with AASB 11 by using the line-by-line method of accounting On 30 June 2041, the joint operation manager provided the following statements: Costs incurred for the year ended 30 June 2041 S Wages Depreciation Supplies Overheads 5,850,000 1,560,000 7.800.000 6,500,000 21.710,000 -19.175.000 2,535,000 Cost of inventory Work in progress at 30 June 2041 Cash Receipts and Payments for the year ended 30 June 2041 Receipts: Original contributions Additional contributions S 6,500,000 17.000.000 23,500,000 Payments: Machinery (0201:41) Wages Supplies Overheads Operating expenses 2,600,000 5,200,000 7,150,000 6,175,000 650,000 21.275.000 8:41 Read Only - You can't save changes to this... Machinery (020110) Wages Supplies Overheads Operating expenses 2.600.000 5.200.000 7.150.000 6,175 000 650.000 21.275.000 Closing Cash Balance 1,725,000 Statement of Financial Position As at 30 June 2041 Assets Cash Supplies Work in Progress Machinery 9.100.000 Less Accm Dep - Machinery -1.500.000 Total Assets 1.725,000 650,000 2.535.000 7.540.000 12.450,000 Accried wages Accounts payable Total Liabilities Net Assets 650,000 1.625.000 2.275,000 10,175,000 Required: (a) Prepare the journal entry or entries for Broome Ltd on 1 July 2040 (4 marks) b) Prepare the journal entry or entries for Broome Ltd on 15 December 2040. (2 marks) Prepare the journal entry or entries for Broome Ltd on 30 June 2041. (14 marks) 11 0