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On 1 January 2 0 2 2 , Jigsaw Ltd ( Jigsaw ) acquired 4 5 % of the issued shares of PuzzleLtd ( Puzzle
On January Jigsaw Ltd Jigsaw acquired of the issued shares of PuzzleLtd Puzzle from a third party, Labyrinth Ltd for R The ordinary share capitalof Puzzle has remained the same since the acquisition. In accordance with acontractual arrangement, Jigsaw exercised joint control over Puzzle. The arrangementwas classified as a joint venture in accordance with IFRS Joint ArrangementsThe following trial balance was obtained from the financial records of Puzzle for thefinancial year ended December :Final Trial balance Puzzle LtdRDR CROrdinary share capital R eachRetained earnings: January Marktomarket reserve: JanuaryOrdinary dividends paid Trade and other payables Property, plant, and equipment Trade and other receivables Inventory Sales Cost of sales Other expenses Income tax expense PLMarktomarket reserve OCIIncome tax expense OCIANNEXURE F: FORMATIVE ASSESSMENT HFACJulyDecFASKVOn January acquisition date Puzzle had the following credit balances:Ordinary Share capital R each RRetained earnings RMarktomarket reserve RROn January the net identifiable assets of Puzzle were also considered to befairly valued.During the current year, Puzzle decided to start purchasing inventory from Jigsaw.Jigsaw sold inventory that had cost R to Puzzle for Rie at cost plus Exactly half of this inventory is still on hand at December and includedin Puzzles inventory closing balance.Dividends received by Jigsaw was included as part of their dividend income which isincluded in their other income.Additional information: It is Jigsaws policy to measure its investments in joint ventures at cost in itsseparate financial statements. The other comprehensive income of Puzzle for the year contains only gainsregarding investments that are marked to market. Assume a companies Income Tax rate of REQUIRED:Prepare the pro forma journal entries to equityaccount for Jigsaw Ltds investment inPuzzle Ltd for the financial year ended December Dates and narrations are not required. Round off to the nearest Rand. Ignore the effects of Dividend Tax and Value Added Tax VAT marks
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