you were recently appointed as the group financial accountant of the Strawberry Ltd group of companies. The accountants

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you were recently appointed as the group financial accountant of
the Strawberry Ltd group of
companies. The accountants of the various companies in the group
finalised the trial balances of
the individual companies and handed them to you for preparation of
the consolidated financial
statements for publication.
The financial year-end of the group is 31 March 2021. The
summarised trial balances are as follows:
ADDITIONAL INFORMATION
1. Grape Ltd
1.1 Strawberry Ltd acquired a 40 % interest in Grape Limited on 1
April 2012 for N$400 000.
The retained earnings of Grape Ltd amounted to N$300 000 at that
date. All assets and
liabilities, were regarded as being fairly valued.
1.2 Strawberry Ltd sold inventories from 1 April 2019 on a regular
basis to Grape Ltd at a profit
of 25% on cost. Total sales from Strawberry Ltd to Grape Ltd
amounted to N$500 000 for
the current financial year. Inventories to the value of N$100 000
which was sold by
Strawberry Ltd to Grape Ltd was still on hand at 31 March 2020 and
N$200 000 at
31 March 2021.
1.3 On 1 April 2019 machinery with a carrying value of N$125 000
was sold to Strawberry Ltd
for N$150 000. The machine was still included in the property,
plant and equipment of
Strawberry Ltd at 31 March 2021. Depreciation is provided at 20%
per annum on the cost
price of machinery
2. Peach Ltd
2.1 Strawberry Ltd acquired 960 000 ordinary shares in Peach Ltd
for N$1 200 000 a number of
years ago when Peach Ltd’s retained earnings amounted to N$120 000.
On this date
Strawberry Ltd valued vacant land of Peach Ltd N$50 000 higher than
the book value at that
stage. Peach did not recognise the revaluation in their records.
All other assets and
liabilities were regarded as being fairly valued.
2.2 Peach Ltd sells inventories to Strawberry Ltd at cost price
plus 25%. Included in inventories
of Strawberry Ltd are the following inventories purchased from
Peach Ltd;
The inventories on 1 April 2020 were sold fully to third parties
by 31 March 2021.
Total sales of inventories by Peach Ltd to Strawberry Ltd amounted
to N$500 000 during the 2021
financial year.
3. Mango Ltd
3.1 Peach Ltd acquired 600 000 ordinary shares in Mango Ltd for
N$950 000 on
1 October 2020. All assets and liabilities were regarded as being
fairly valued.
3.2 The monthly sales and associated cost of sales of Mango Ltd
increased with 25% from
1 August 2020. The operating expenses of Mango Ltd accrued evenly
throughout the year.
4. General
4.1 Accounting policies
4.1.1 Investments are accounted for at cost in the separate
financial statements of
Strawberry Ltd Group.
4.1.2 It is the accounting policy of the Strawberry Ltd group to
measure the non-controlling
interest at its proportionate share of the acquiree’s identifiable
net assets.
4.1.3 Investments in associated companies are accounted for in
accordance with the
equity method.
4.2 Taxation
4.2.1 Assume that the statutory tax rate has remained unchanged at
28% for a number of
years.
4.3 Dividends
The dividends of all companies in the group were approved and
authorised at directors’
meetings held on 15 March 2021. The dividends will be paid on 30
April 2021. The dividends
were correctly accounted for by all companies in the group.
Dividends payable and
receivable are included in creditors and debtors respectively in
the trial balances of the
individual companies.
REQUIRED:
A) Prepare all the pro-forma consolidation journal
entries in the books of the
group for the reporting period ended 31 March 2021. Journal
narrations are
not required.
B) Indicate at what amounts the following line items
will be included in the
consolidated financial statements of the Strawberry Ltd Group as
at
31 March 2021:
i. Investment in associate
ii. Share of profit of associate