Prepare journal entries in the records of Treehouse Ltd

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Question - Treehouse Ltd has a 20% interest in a joint venture, Griffith Ltd, in which it invested $35 000 on 1 July 2017. The equity of Griffith Ltd at the acquisition date was:

Share capital 30000

Retained earnings 120000

All the identifiable assets and liabilities of Griffith Ltd were recorded at amounts equal to their fair values. Profits and dividends for the years ended 30 June 2018 to 2020 were as follows:

Profit before tax Income tax expenses Dividends paid

2018 80000 30000 80000

2019 70000 25000 15000

2020 60000 20000 10000

Required - Prepare journal entries in the records of Treehouse Ltd for each of the years ended 30 June 2018 to 2020 in relation to its investment in the joint venture, Griffith Ltd. (Assume Treehouse Ltd does not prepare consolidated financial statements.)

Reference no: EM132793964

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