Trees Ltd is a company with investments in various other entities. All companies in the group have a 30 June year-end. The following trial balances as at 30 June 2022 are presented to you: Investment in Leaves Ltd: - Trees Ltd acquired 80000 shares in Leaves Ltd on 31 May 2019. At the acquisition date, Leaves Ltd had a retained earnings balance of R154 200. - At the acquisition date, the assets and liabilities of Leaves Ltd were considered fairly valued according to IFRS 3, except for a machine, which Trees Ltd considered to be undervalued by R40000. The machine had a remaining useful life of 4 years on 31 May 2019. - On 1 July 2021 , Leaves Ltd issued 20000 preference shares. Trees Ltd took up 8000 of the preference shares issued by Leaves Ltd. The preference share dividend payment has priority over that of the ordinary shareholders. - At 30 June 2022, all the preference dividends were declared and paid. - Trees Ltd acquired 30000 shares in Roots Ltd on 1 March 2018 for R225 000. At the acquisition date, Roots Ltd had a retained earnings balance of R298 500. - At the acquisition date, the assets and liabilities of Roots Ltd were considered fairly valued according to IFRS 3. - Due to Roots Ltd making losses for the 2021 and 2022 financial years, Trees Ltd recognised an impairment loss of R15000 in respect of its investment in Roots Ltd in its separate financial statements for the 30 June 2022 financial year. The impairment loss was included in arriving at Trees Ltd's profit for the year, and the investment in Roots Ltd is reflected in Trees Ltd 's trial balance at its impaired value of R210000. - To prepare the consolidated financial statements, Trees Ltd determined the recoverable amount of Roots Ltd to be R290 000 as at 30 June 2022. General information: - Trees Ltd accounts for investments in both ordinary shares and preference shares in subsidiaries at cost in its separate financial statements. - Trees Ltd elected to measure the non-controlling interest at its proportionate share of the subsidiary's identifiable net assets. - There were no changes in the issued share capital of any of the companies in the group. - Leaves Ltd's preference shares were classified as equity. - Assume a tax rate of 28% and a capital gains tax inclusion rate of 80%. REQUIRED: Prepare the pro forma journal entries required to prepare the consolidated financial statements of the Trees Ltd Group for the financial year ending 30 June 2022. - Investment in Leaves Ltd (30 marks) - Investment in Roots Ltd (18 marks)
