The following trial balances were obtained from the financial records of two entities in the food industry, namely Crab Ltd (Crab) and Shrimp Ltd (Shrimp), for the financial year ended 28 February 2023:

1. Acquisition of Pizza

The Hamburger Company acquired 60% of Pizza's ordinary share capital from a third party in cash on 1 March 2021, which allows Hamburger to control Pizza. At acquisition date, Pizzas equity comprised of ordinary share capital of R500 000 and retained earnings of R765 000.

At acquisition, all the assets and liabilities of Pizza were considered to be fairly valued except for the following:

A vehicle (VW Transporter) was considered to have a fair value of R75 000 above its carrying amount. The vehicle had a remaining useful life of 5 years (from 1 March 2021) and a nil residual value. Pizza purchased the vehicle on 1 March 2020 at a cost of R500 000 and, at the time of purchase, had a useful life of 6 years and a nil residual value. The tax base of the vehicle was the same as the carrying value on acquisition date (1 March 2021) and the South African Revenue Services (SARS) allowed the deduction of the tax base over its remaining useful life (5 years) from 1 March 2021 on a straight line basis.

2. Sale of vehicle (VW Transporter)

On 1 September 2022, Pizza sold the vehicle (VW Transporter) to a third party for R420 625.

3. Disposal of machinery

On 1 December 2022, Pizza purchased a machine from an external party for R90 000 and immediately sold the machine to Hamburger for R145 000. The machine had a useful life of 10 years and a nil residual value on the date of disposal. SARS allows a deduction of the original cost (R90 000) over the machines useful life (10 years from 1 December 2022) on a straight-line basis.

4. Dividends declared

Ordinary dividends were declared on 28 February 2023 by both entities (Hamburger and Pizza).

Additional information:

• All the entities in the Hamburger Ltd Group have a 28 February financial year end.
• All transaction in 1, 2 and 3 above have been correctly recorded in the records of the respective entities.
• Both Hamburger and Pizza depreciate their depreciable assets on a straight-line basis based on their respective useful lives.
• Hamburger accounts for investments in subsidiaries at cost in accordance with IAS

27.10(a) in its separate financial statements.

• Hamburger elected to measure the non-controlling interest in Pizza at its proportionate share of Pizzas identifiable net assets at acquisition date.
• The company Income Tax rate is 28%.
• Ignore the effects of Dividend Tax and Value Added Tax (VAT).

REQUIRED:

Prepare all the pro forma journal entries necessary to prepare the Consolidated Financial Statements of the Hamburger Ltd Group for the financial year ended 28 February 2023.

Instructions:

• Where journal entries affect the Profit and Loss accounts, be specific as to which account it is [e.g. Depreciation: Vehicles (Pizza Ltd) (P/L)]. In other words, do not merely write Profit after tax.
• Show and reference all your workings and calculations clearly.

Dates and narrations are not required.