Prepare the pro-forma consolidation journal entries

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Reference no: EM132643886

Question - The following are the abridged trial balances of Haleb Ltd and Serena Ltd for the financial year ended 31 December 2019:

	Haleb Ltd	Serena Ltd
Debits:
Property, plant and equipment	R1 500 000	R1 000 000
Investment in Serena Ltd (390 000 shares)	R800 000	R0
Inventory	R600 000	R200 000
Other assets	R600 000	R100 000
	R3 500 000	R1 300 000
Credits:
Ordinary share capital	R800 000	R600 000
Retained earnings: 1 January 2019	R800 000	R500 000
Other liabilities	R1 000 000	R100 000
Profit after tax	R900 000	R100 000
	R3 500 000	R1 300 000

Additional Information:

1. Haleb Ltd acquired 60% (360 000 ordinary shares) in Serena Ltd during 2016 for R500 000 when Serena Ltd's retained earnings amounted to R300 000. At this date, all of Serena Ltd's identifiable assets and liabilities were considered to be fairly valued.

2. Non-controlling interest is measured at their share of net identifiable assets.

3. During 2019 Serena Ltd started selling inventory to Haleb Ltd at a mark-up of 50% on cost. These sales amounted to R500 000 for the year. Haleb Ltd still had inventory purchased from Serena Ltd for R87 000 on hand at 31 December 2019.

4. On 31 December 2019, Haleb Ltd acquired an additional 5% interest (30 000 ordinary shares) in Serena Ltd for R300 000. At this date, all Serena Ltd's identifiable assets and liabilities were still considered to be fairly valued.

5. The SA normal tax rate is 28%.

6. Goodwill is not considered to be impaired at year end.

Required -

1. Prepare the pro-forma consolidation journal entries of the Haleb Ltd Group for the financial year ended 31 December 2019.

2. Prepare the consolidated statement of changes in equity for the Haleb Ltd Group for the year ended 31 December 2019.

Your answers should comply with International financial reporting standards (IFRS)

Reference no: EM132643886

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