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Flower Ltd owns the following investments in other entities: Additional information: Petunia Ltd: The investment in Petunia Ltd's ordinary shares was obtained at the start

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Flower Ltd owns the following investments in other entities: Additional information: Petunia Ltd: The investment in Petunia Ltd's ordinary shares was obtained at the start of the financial year i.e., on 1 July 2022. On the same day (acquisition date), Petunia Ltd also issued 1000000 cumulative preference shares at R2 each. The 7\% preference shares are non-redeemable. Flower Ltd paid R1 200000 for its investment in these preference shares. Details from the Statement of Changes in Equity of Petunia Ltd for the year ended 30 June 2023 are as follows: Orchid Ltd: Flower Ltd has appointed five of the seven directors of Orchid Ltd. Additional information: - All investments in entities are recognized at cost in the separate financial statements of Flower Ltd. - Flower Ltd accounts for NCl (non-controlling interests) using the partial goodwill method (at the proportionate share of identifiable net assets). REQUIRED: 2.1 Discuss whether or not each of the four entities is a subsidiary of Flower Ltd at 30 June 2023. If an entity is not a subsidiary, then discuss how the investment should be classified instead. (25 marks) 2.2 Now assume that Flower Ltd acquired 55% of Petunia Ltd's ordinary shares on 1 July 2022 for R985 500 instead of 45% (given that all other information is the same). Prepare the pro forma journal entries to account for Petunia Ltd in the group financial statements of Flower Ltd for the financial year ended 30 June 2023 using this new ownership interest. Ignore all taxation, dates, and narrations. (25 marks)

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