SECTIONC: Associates and joint ventures

Brown Ltd acquired a 28% interest in Bandicoot Ltd for $80000 cash on 1 July 2018. The directors of Brown Ltd believe this investment represents significant influence over the investee. The equity of Bandicoot Ltd at the acquisition date was as follows.

Share Capital $30,000

Retained earnings $120,000

All the identifiable assets and liabilities of Bandicoot Ltd were recorded at fair value. Profits and dividends for the years ended 30 June 2019 to 2020 were as follows.

Profit before tax Income tax expense Dividend Paid

2019 $90,000 $30,000 $70,000

2020 $80,000 $16,000 $25,000

Required:

Prepare journal entries in the records of Brown Ltd for each of the years ended 30 June 2019 to 2020 in relation to its investment in the associate, Bandicoot Ltd. (Assume Brown Ltd does not prepare consolidated financial statements.)