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On 1 March 2022, Auto Ltd ("Auto") acquired an 100% interest in Engine Ltd ("Engine") for R2 000000 and from that day, obtained control over Engine. At the date of acquisition, Engine's equity comprised of the following balances: At acquisition date, Engine had an item of equipment with a carrying value of R450 000 (the carrying value equals its tax base), a remaining useful life of 9 years and a zero residual value. The equipment was leased out to a third party. Details of the operating lease are as follows on 1 March 2022 : The fair value of the equipment without considering the lease agreement is R544 500 at acquisition date. The South African Revenue Service (SARS) grants an annual allowance on the equipment which is the same as the annual depreciation recognised by Engine. Apart from the above-mentioned item of equipment, the remainder of Engine's assets and liabilities were fairly valued at acquisition date. Additional information: - All the entities mentioned above have a 28 February financial year end. - Auto accounts for investments in subsidiaries at cost in accordance with IAS 27.10(a) in its separate financial statements. - The pre-tax discount rate is 10% p.a. compounded annually. - Both entities, Auto and Engine depreciate equipment using a straight-line method. - Assume an Income Tax rate of 28% and a Capital Gains Tax inclusion rate of 80%. - Ignore the effects of Value Added Tax (VAT). REQUIRED: Provide the pro forma journal entries for the Auto Ltd Group for the financial year ended 28 February 2023. - Journal narrations are not required. - Show and reference all your workings. - Round off to the nearest Rand where necessary. On 1 March 2022, Auto Ltd ("Auto") acquired an 100% interest in Engine Ltd ("Engine") for R2 000000 and from that day, obtained control over Engine. At the date of acquisition, Engine's equity comprised of the following balances: At acquisition date, Engine had an item of equipment with a carrying value of R450 000 (the carrying value equals its tax base), a remaining useful life of 9 years and a zero residual value. The equipment was leased out to a third party. Details of the operating lease are as follows on 1 March 2022 : The fair value of the equipment without considering the lease agreement is R544 500 at acquisition date. The South African Revenue Service (SARS) grants an annual allowance on the equipment which is the same as the annual depreciation recognised by Engine. Apart from the above-mentioned item of equipment, the remainder of Engine's assets and liabilities were fairly valued at acquisition date. Additional information: - All the entities mentioned above have a 28 February financial year end. - Auto accounts for investments in subsidiaries at cost in accordance with IAS 27.10(a) in its separate financial statements. - The pre-tax discount rate is 10% p.a. compounded annually. - Both entities, Auto and Engine depreciate equipment using a straight-line method. - Assume an Income Tax rate of 28% and a Capital Gains Tax inclusion rate of 80%. - Ignore the effects of Value Added Tax (VAT). REQUIRED: Provide the pro forma journal entries for the Auto Ltd Group for the financial year ended 28 February 2023. - Journal narrations are not required. - Show and reference all your workings. - Round off to the nearest Rand where necessary