uestion 6: (15 Marks) Vivo Ltd acquired a 40% interest in Drum Ltd in which it invested $170 000 on 1 July 2018. Vivo Ltd has signed a joint venture agreement with the other investors in Drum Ltd providing joint control to all investors. The share capital, reserves and retained earnings of Drum Ltd at the investment date and at 30 June 2019 were as follows: 1 July 2018 30 June 2019 Share capital $300 000 $300 000 Asset revaluation surplus - $100 000 General reserve - $15 000 Retained earnings $100 000 $109 000 Details Dr Cr A . 1. Retained earnings Account 1400 Income tax expenses Account 600 Sales Revenue Account 3000 Inventory Accounts 500 Cost of sales Accounts 4500 2. Deferred tax asset account 150 Income tax expenses Accounts 150 B. 1. Sales Revenue Accounts 360 Inventory Accounts 30 Cost of sales Accounts 330 2. Deferred tax assets Accounts 9 Income tax expense Accounts 9 3. Accounts Payables Accounts 80 Accounts receivables Accounts 80 BAP32 Trimester 1 2021 FEX Page 10 of 11 At 1 July 2018, all the identifiable assets and liabilities of Drum Ltd were recorded at amounts equal to their fair values. The following is applicable to Drum Ltd for the year to 30 June 2019: (a) Profit (after income tax expense of $11 000): $39 000 (b) Increase in reserves General (transferred from retained earnings): $15 000 Asset revaluation (revaluation of freehold land and buildings at 30 June 2019): $100 000 (c) Dividends paid to shareholders: $15 000. Vivo Ltd does not prepare consolidated financial statements. Required Prepare the journal entries in the records of Vivo Ltd for the year ended 30 June 2019 in relation to its investment in the joint venture, Drum Ltd.