1. JOINT ARRANGEMENT Joint operationJoint venture Apportion as per contractual agreement Example 40% of all Assets + Liabilities Equity method (Similar to associate – IAS 28) Work through examples in tutorial 103

2. Question 4 REQUIRED Prepare the pro-forma journal entries to account for Zuchinni Ltd in the books of Starfruit Ltd for the year ended 31 December 20.8. Prepare the asset section of the statement of financial position for the Starfruit Ltd Group for the year ended 31 December 20.8. Your answer must comply with the requirements of International Financial Reporting Standards. Comparative figures and notes to the financial statements are not required. Round all amounts to the nearest rand. Question 4 (Suggested solution) STARFRUIT LTD – PRO-FORMA JOURNAL ENTRIES Property, plant and equipment (280 000 x 40%) Inventories (30 000 x 40%) Trade and other receivables (50 000 x 40%) Cash and cash equivalents (110 000 x 40%) Cost of sales (225 000 x 40%) Other expenses (50 000 x 40%) Income tax expenses (85000 x 40%) Dividends paid (40 000 x 40%) Revenue (430 000 x 40%) Trade and other payables (180 000 x 40%) Share capital (100 000 x 40%) Retained earnings (160 000 x 40%) Recognition of joint operation’s asset, liabilities, income and expenses. J1 Dr R 112 000 12 000 20 000 44 000 90 000 20 000 34 000 16 000 Cr R 172 000 72 000 40 000 64 000 You include the % interest in the JO in the records of the investor via journal entries

3. AT ACQUISITION JOURNAL Share capital (100 000 x 40%) Retained earnings (50 000 x 40%) Goodwill Investment in Zuchinni Ltd Elimination of 40% interest in joint operation J2 Other income: management fee received Other expenses: management fee paid Elimination of intra-group management fee (16 000 x 40%) J3 Dividends received Dividends paid Elimination of intragroup dividends (40 000 x 40%) J4 Dr R 40 000 20 000 28 000 Cr R 88 000 Dr R 6 400 Cr R 6 400 Dr R 16 000 Cr R 16 000 Eliminate the at acquisition EQ and investment Eliminate the intragroup transactions

4. Deferred tax (SFP) Income tax expenses (P/L) Tax implication of the unrealised profit on inventories (1 333 x 28%) J7 Cost of sales Inventories (SFP) Elimination of unrealised profit in inventory (20 000 x / x 40%) J6 20 120 Dr R 1 333 Cr R 1 333 373 Dr R Cr R Revenue Cost of sales Elimination of intragroup sales for the year (100 000 x 40%) J5 40 000 Dr R Cr R