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The following final trial balances and extracts from the Statement of Changes in Equity were obtained from the financial records of Sparta Ltd (Sparta) and

image text in transcribedimage text in transcribedimage text in transcribed The following final trial balances and extracts from the Statement of Changes in Equity were obtained from the financial records of Sparta Ltd ("Sparta") and Troy Ltd ("Troy") for the f On 1 September 2022, Sparta purchases an additional 40000 shares in Troy for R192 000 and thereby obtained control of Troy on this date. The net assets and liabilities of Troy were considered to be fairly valued on the acquisition date. The fair value of the non-controlling interest was R160 000 on 1 September 2022. The fair values of Sparta's initial 15\% investment in Troy were as follows: - R60 000 on 1 September 2022. In Sparta's separate financial statements, Sparta classified its investment in Troy as fair value through other comprehensive income ( FVTOCl ). Fair value adjustments regarding the investment in Troy were therefore accounted for in other comprehensive income of Sparta both before and after the additional shares in Troy were acquired. Sparta does not have investments in any other entity and therefore the entire mark-to-market reserve relates to fair value adjustments in Troy. On 28 February 2023, the fair value of Sparta's total shareholding in Troy was R5.20 per Troy declared dividends on 28 February 2023 and these were still outstanding at year end. Sparta's dividend receivable from Troy is included under trade and other receivables. Other information: - 60% of Troy's profit before tax and related tax expense was earned during the first 6 months of the current financial and 40% during the last 6 months of the current financial year. - Sparta elected to measure the non-controlling interest at its fair value at the acquisition date. - There were no changes to the Ordinary Share Capital (and shares in issue) of Sparta and Troy during the current financial year. - Sparta elects to transfer after-tax cumulative fair value gains/losses, previously recognised in other comprehensive income, from the mark-to-market reserve to retained earnings when the underlying IFRS 9 equity investment in Troy is derecognised. - Sparta is not a share dealer for income tax purposes. - All companies in the Sparta Ltd Group have a 28 February financial year-end. - Assume an Income Tax rate of 28% for all periods and that 80% of capital gains are included in taxable income in all periods at the time gains are realised. - Ignore the effects of Dividend Tax and Value Added Tax (VAT). REQUIRED: Prepare all the pro-forma journal entries to account for Troy Ltd in the Consolidated Financial Statements of the Sparta Ltd Group for the financial year ended 28 February 2023. - Dates and narrations are not required. - Show and reference all your workings and calculations clearly. - Be clear, where applicable, regarding which entity the entries are referring to i.e., put the name of the entity in brackets after the account description. - Use the description 'Profit before tax' instead of specific descriptions such as Sales, Cost of Sales, Other Income and Other Expenses since these details were not given. (35 marks)

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