Sky Ltd obtained a controlling interest in Cloud Ltd from a third party on January

Sky Ltd paid for the investment as follows:

Cash of R

Sale transfer of land that had cost Sky Ltd R The fair value of the land was R on the acquisition date January

Additional information:

Sky Ltd has a December yearend whereas Cloud Ltd has a February yearend.

For all financial years, assume a company tax rate of and of capital gains tax is included in taxable income.

Sky Ltd accounts for investments in subsidiaries at cost in accordance with IAS a in its separate financial statements.

Sky Ltd accounts for land using the cost model in its separate financial statements.

Cloud Ltd cannot prepare financial statements in addition to its own separate financial statements since it would be impractical for them and it would involve too much costs and become cumbersome for the entity.

  

 

REQUIRED: 

Prepare the general journal entries that would be recorded in the separate financial statements of Sky Ltd in terms if IAS Separate financial statements, on January regarding their investment in Cloud Ltd

Dates and narrations are not required.

Include all income tax andor deferred tax entries.

Round off to the nearest Rand where necessary. marks

In terms of IFRS discuss the requirements and the process that Sky Ltd would need to consider and follow in order to account for Cloud Ltd in the consolidated financial statements of the Sky Ltd Group for the year ended December given that Cloud Ltd has a different yearend.

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