Explain all entries and calculations required by donny ltd

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Question - On 1 July 2020, Donny LTD and Cher LTD signed a contractual agreement to form a joint operation for the production of music toys. Each operator is entitled to 50% of the output from the join operation. The agreement provided that Donny LTD would contribute on an item of equipment that has a fair value of $200,000. Its currently recorded in the records of Donny LTD at a carrying mount of R$100.000 net of accumulated depreciation of R$80.000. Financial information of the joint operation at 30 Jun 2021 is provided.

Cash 96.000 Acc payable 48.000

Inventory 40.000 Accrued wages 93.000

Work in progress 80.000 Loan 600.000

Equipment 600.000

Accumulated (40.000)

Depr 776.000 741.000

Cost of inventory $340.000

1. Explain all entries and calculations required by Donny LTD to accounts for its share of the equipment in the joint operation of $600.000

2. Explain all entries and calculations required to determine how much inventory (in total) Donny LTD is entitled to. Prepare the journal entries.

Reference no: EM133189733

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