Additional information: On 1 May 2020 MILK Ltd acquired 730 000 ordinary shares in SHAKE Ltd for R3 066 000. This was not a cum div transaction. SHAKE Ltd has 1 000 000 issued ordinary shares in issue. The identifiable assets acquired and the liabilities at the acquisition date are shown at their acquisition date fair values, as determined in terms of IFRS 3. MILK Ltd chose to measure its investment in SHAKE Ltd in accordance with IFRS 9, at fair value through other comprehensive income in its separate financial statements. Fair value adjustments are recognised in the mark-tomarket reserve. On 31 August 2020 the fair value of the investment in SHAKE Ltd was R3 251 000. The fair value adjustment was correctly recognised in the separate financial statements of MILK Ltd. MILK Ltd measures the non-controlling interest of SHAKE Ltd at fair value at acquisition date. The market value of the shares in SHAKE Ltd was R4.10 per share on 1 May 2020. MILK Ltd has been renting land from SHAKE Ltd since 2015. The current years rent was R5 000 per month and MILK Ltd settled this monthly amount in cash. On 31 July 2020, SHAKE Ltd sold a delivery van (non-current asset) to MILK Ltd at a profit of R7 200. MILK Ltd is not a trader in vehicles. Both companies depreciate vehicles using the straight-line basis. On 31 July 2020 the remaining useful life of the vehicle was 4 years with no residual value. The company tax rate is 28% and 66.6% of capital gains is taxable.

REQUIRED: 2.1 Prepare the following pro forma consolidation journal entries (include tax where applicable) for the year ended 31 August 2020: Reversal of the fair value adjustment of the investment in SHAKE Ltd. The elimination of the owners interest of SHAKE Ltd and the investment in SHAKE Ltd at the date of acquisition. Indicate which component (SFP/SCE/SPL) of the financial statement is affected by each journal entry. Journal explanations/descriptions are not required. (15 marks) 2.2 Prepare the consolidated Statement of Profit or Loss and Other Comprehensive income of MILK Ltd and its subsidiary for the year ended 31 August 2020.