QUESTION 2 [65 MARKS] The following represent the condensed financial statements of profit or loss and other comprehensive income and the statements of changes in equity of Gogo Ltd and its subsidiary, Casper Ltd, for the year ended 28 February 20.23 Gogo Ltd Group Statement of profit or loss and other comprehensive income for the year ended 28 February 20.23 Gogo Ltd Casper Ltd R R Gross profit 484 680 326 200 Other income 59 750 24 500 - Interest received 35 750 12 500 - Administration fees received 24 000 12 000 Expenses (270 900) (221 650) - Depreciation 158 000 134 400 - Staff costs 60 000 48 000 - Interest paid 28 500 24 650 - Auditors remuneration 12 400 8 600 - Administration fees paid 12 000 6 000 Profit before tax 273 530 129 150 - Income tax expense (141 412) (64 460) Profit for the year 132 118 64 690 Other comprehensive income for the year - - Total comprehensive income for the year 132 118 64 690 Page 5 of 6 Gogo Ltd Group Statement of changes in equity for the year ended 28 February 20.23 Gogo Ltd Casper Ltd Gogo Ltd Casper Ltd Gogo Ltd Casper Ltd Gogo Ltd Casper Ltd R R R R R R R R Balances at 1 March 20.22 200 000 100 000 80 000 120 000 224 690 44 000 504 690 264 000 Changes in equity for 20.23 Profit for the year 132 118 64 690 132 118 64 690 Balance at 28 February 20.23 200 000 100 000 80 000 120 000 356 808 108 690 636 808 328 690 Additional information 1. Gogo Ltd acquired 80% of the voting rights in Casper Ltd on 1 March 20.20 for R250 000, at which point Casper Ltds owners interest consisted of the following: R Share capital 100 000 Retained earnings 64 000 Revaluation surplus 120 000 Consider the carrying amount of the assets and liabilities of Casper Ltd to be equal to the fair value thereof at the date of acquisition. 2. On 1 December 20.21, Casper Ltd sold a machine with a carrying amount of R200 000 to Gogo Ltd at a profit of R50 000. It is the policy of the group to depreciate plant and machinery at 20% per annum on the straight line method. 3. Gogo Ltd sold some of its inventory to Casper Ltd at a profit of 50% on cost price. Casper Ltd had the following inventories on hand, which they purchased from Gogo Ltd: R Page 6 of 6 28 February 20.22 210 000 28 February 20.23 315 000 4. Gogo Ltd lent the sum of R150 000 to Casper Ltd at an interest rate of 18% per annum, payable annually in arrears, on 1 august 20.22. Gogo Ltd received and banked the cheque for interest for the month of February, on 28 February 20.23. The interest did not qualify for capitalization and was accounted for by both companies. QUESTION 2: REQUIRED MARKS 1. Draft the consolidated statement of profit or loss and other comprehensive income of the Gogo Ltd Group for the year ended 28 February 20.23. 23 2. Draft the relevant pro-forma consolidation journals for Gogo Ltd Group 23 3. Calculations 19 TOTAL MARKS: Answers are to comply with International Financial reporting Standards (IFRSs). Round all amounts to the nearest Rand. Show all calculations clearly.