on $1$ January $2021,$ Kumusha Ltd acquired $35\%$ of the issued shares of Bamboo Ltd for

R$180000.$ Kumusha Ltd exercised joint control over the financial and operating policy

decisions of Bamboo Ltd since $1$ January $2021.$ The arrangement was classified as a joint

venture in accordance with IFRS $11($Joint Arrangements$).$ The financial accountant of the

group prepared the following section of the analysis of owner$$s equity in Bamboo Ltd$,$ which

you may assume is correct:

$100\%35\%$

Total At

At acquisition $1$ January $2021$

Share capital $350000122500$

Retained earnings $17000059500$

Mark$-$to$-$market reserve $50001750$

$525000183750$

Equity represented by gain on bargain purchase $3750$

Investment in Bamboo Ltd at cost price $180000$

At acquisition date there were no unidentified assets or liabilities and the fair value of the

identifiable assets and liabilities of Bamboo Ltd were considered to be equal to the carrying

amounts thereof. The following is an extract from the trial balance of Bamboo Ltd for the

year ended $31$ December $2022$:

Dr$/($Cr$)$

Share capital $350000$ ordinary shares $(350000)$

Retained earnings $1$ January $2022(190000)$

Mark$-$to$-$market reserve $1$ January $2022(13838)$

Deferred tax on mark$-$to$-$market reserve $(4092)$

Accumulated depreciation $(180000)$

Trade and other payables $(20140)$

Revenue $(390000)$

Other income $(8000)$

Other comprehensive income $($mark$-$to$-$market reserve $-$ after tax$)(4070)$

Property, plant and equipment $420000$Investments in equity instruments:

$-$ Investment in Brush Ltd at fair value $125000$

$-$ Investment in Feathers Ltd at fair value $150000$

Trade receivables $46390$

Cash and cash equivalents $12070$

Inventory $110000$

Dividends paid $31$ December $202220000$

Cost of sales $160000$

Other expenses $69500$

Income tax expense $47180$

Additional information

$1.$ During the current year Kumusha Ltd started selling inventory to Bamboo Ltd at a

$30\%$ mark$-$up on the selling price. On $31$ December $2022$ Bamboo Ltd had inventory

amounting to R$70000$ on hand which was purchased from Kumusha Ltd$.$

$2.$ On $31$ December $2022,$ the investment in Bamboo Ltd was recorded at a fair value

of R$198000$ in the financial records of Kumusha Ltd$.$

$3.$ Joint ventures are accounted for using the equity method.

$4.$ The group measures its investments in equity instruments at fair value through other

comprehensive income. The fair value of all equity instruments is equal to the cost thereof,

unless otherwise stated.

$5.$ The SA normal tax rate is $28\%$ and capital gains tax is calculated at $66,6\%$ thereof.

You may assume that the tax rate and the capital gains tax rate has remained unchanged since

$1$ January $2021.$

$6.$ Each share carries one vote.

required

Prepare the pro$-$forma journal entries to account for the joint venture in the financial

statements of the Kumusha Ltd Group for the year ended $31$ December $2022$