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QUESTION 1 (75 marks) Lighthouse Investments Proprietary Limited is a company with various investments in subsidiaries that are accounted for at cost. Unless otherwise stated, all the companies in their group have a 30 June financial year-end. The Lighthouse Investments Proprietary Limited Group prepares consolidated financial statements. None of the Lighthouse Investments Group entities are listed on or are planning to list on the JSE. Waves Proprietary Limited Lighthouse Proprietary Limited holds 85% of the shares in Waves Proprietary Limited. Waves Proprietary Limited, therefore, qualifies as a subsidiary of Lighthouse Proprietary Limited. Waves Proprietary Limited, however, holds 100% of Fish Proprietary Limited. Fish Proprietary Limited, therefore, qualifies as a subsidiary of Waves Proprietary Limited. Waves Proprietary Limited's directors decided not to prepare consolidated financial statements, seeing as Lighthouse Investments Proprietary Limited prepares consolidated financial statements. Stars Proprietary Limited Lighthouse Investments Proprietary Limited holds 100000 shares in Stars Proprietary Limited, and Stars Proprietary Limited has an issued share capital of 150000 shares. Since acquiring the shares, Lighthouse Investments Proprietary Limited has been actively involved in Stars Proprietary Limited's daily activities and has the right to appoint or remove members on the board of Stars Proprietary Limited. Whale Proprietary Limited On 1 February 2022, Lighthouse Investments Proprietary Limited acquired 60000 shares in Whale Proprietary Limited for R505 000. Whale Proprietary Limited qualifies as a subsidiary of Lighthouse Investments Proprietary Limited. Lighthouse Proprietary Limited considered Whale Proprietary Limited's net assets to be fairly valued at the acquisition date and chose to measure any non-controlling interest at its fair value. Whale Proprietary Limited's non-controlling interest had a fair value of R265000 at the acquisition date. On the date of acquisition, Whale Proprietary Limited had the following balances: Share capital (100 000 shares) R100 000 Retained earnings (before 2022 profit) R552 500 The companies had the following profit figures, which accrued evenly through the year, While preparing the consolidated financial statements of the Lighthouse Investments Proprietary Limited Group for the financial year ending 30 June 2022, the following pro-forma journals were recorded: Sand Proprietary Limited During the 2022 financial year, Lighthouse Investments Proprietary Limited acquired 100% of the share capital of Sand Proprietary Limited. Sand Proprietary Limited qualifies as a subsidiary of Lighthouse Investments Proprietary Limited. Sand Proprietary Limited has a 30 August year-end. Although they are planning on changing the year-end to agree to the rest of the companies in the group, they will not be able to do so before the group's 30 June 2022 consolidated financial statements are finalised. This is the first time Lighthouse Investments Proprietary Limited has invested in a company with a different reporting date. They are not 100% sure how to deal with accounting for a subsidiary which has a different reporting date. 3) With reference to the investment in Whale Proprietary Limited, advise whether you agree with the pro-forma journal entries recorded in the 30 June 2022 consolidated financial statements of the Lighthouse Investments Proprietary Limited Group. Include any correcting journals you deem necessary in your discussion. QUESTION 1 (75 marks) Lighthouse Investments Proprietary Limited is a company with various investments in subsidiaries that are accounted for at cost. Unless otherwise stated, all the companies in their group have a 30 June financial year-end. The Lighthouse Investments Proprietary Limited Group prepares consolidated financial statements. None of the Lighthouse Investments Group entities are listed on or are planning to list on the JSE. Waves Proprietary Limited Lighthouse Proprietary Limited holds 85% of the shares in Waves Proprietary Limited. Waves Proprietary Limited, therefore, qualifies as a subsidiary of Lighthouse Proprietary Limited. Waves Proprietary Limited, however, holds 100% of Fish Proprietary Limited. Fish Proprietary Limited, therefore, qualifies as a subsidiary of Waves Proprietary Limited. Waves Proprietary Limited's directors decided not to prepare consolidated financial statements, seeing as Lighthouse Investments Proprietary Limited prepares consolidated financial statements. Stars Proprietary Limited Lighthouse Investments Proprietary Limited holds 100000 shares in Stars Proprietary Limited, and Stars Proprietary Limited has an issued share capital of 150000 shares. Since acquiring the shares, Lighthouse Investments Proprietary Limited has been actively involved in Stars Proprietary Limited's daily activities and has the right to appoint or remove members on the board of Stars Proprietary Limited. Whale Proprietary Limited On 1 February 2022, Lighthouse Investments Proprietary Limited acquired 60000 shares in Whale Proprietary Limited for R505 000. Whale Proprietary Limited qualifies as a subsidiary of Lighthouse Investments Proprietary Limited. Lighthouse Proprietary Limited considered Whale Proprietary Limited's net assets to be fairly valued at the acquisition date and chose to measure any non-controlling interest at its fair value. Whale Proprietary Limited's non-controlling interest had a fair value of R265000 at the acquisition date. On the date of acquisition, Whale Proprietary Limited had the following balances: Share capital (100 000 shares) R100 000 Retained earnings (before 2022 profit) R552 500 The companies had the following profit figures, which accrued evenly through the year, While preparing the consolidated financial statements of the Lighthouse Investments Proprietary Limited Group for the financial year ending 30 June 2022, the following pro-forma journals were recorded: Sand Proprietary Limited During the 2022 financial year, Lighthouse Investments Proprietary Limited acquired 100% of the share capital of Sand Proprietary Limited. Sand Proprietary Limited qualifies as a subsidiary of Lighthouse Investments Proprietary Limited. Sand Proprietary Limited has a 30 August year-end. Although they are planning on changing the year-end to agree to the rest of the companies in the group, they will not be able to do so before the group's 30 June 2022 consolidated financial statements are finalised. This is the first time Lighthouse Investments Proprietary Limited has invested in a company with a different reporting date. They are not 100% sure how to deal with accounting for a subsidiary which has a different reporting date. 3) With reference to the investment in Whale Proprietary Limited, advise whether you agree with the pro-forma journal entries recorded in the 30 June 2022 consolidated financial statements of the Lighthouse Investments Proprietary Limited Group. Include any correcting journals you deem necessary in your discussion