Peanutbutter Limited holds 60% of the issued ordinary shares of brownies Limited, a listed company. The trial

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Question:

Peanutbutter Limited holds 60% of the issued ordinary shares of brownies Limited, a listed company. The trial balances for both companies are 31 December 2021 were as follows:

	Peanutbutter Limited Dr/(Cr)	Brownie Limited Dr/(Cr)
Sales	(25 000)	(8 100)
Dividends received	(180)
Interest Income	-	(1 000)
Fair value adjustment-Investment property	(500)	(300)
Fair value adjustment-Investment in subsidiary	(400)	-
Rental Income-Investment property	(900)	(200)
Cost of sales	16 000	4 550
Administration expenses including rentals	800	300
Interest expenses	2 500	400
Selling and distribution cost	930	750
Tax expenses	1 800	1 080
Dividend paid	2 800	300
Share capital	(6 000)	(1 600)
Investment in subsidiary (01/01/2021)	(1 100)	-
Retained income (01/01/2021)	(15 250)	(3 100)
Property, plant, and equipment (carrying amounts)	27 000	3 200
Investment in the subsidiary at Fair value	4 500	-
Investment in Peanutbutter 12.5% Debentures	-	5 000
Investment property at Fair value	10 000	4 000
Deferred tax asset	-	680
Debtors	13 500	900
Inventory	8 000	1 400
Bank	3 000	-
12.5% debentures	(20 000)	(3 000)
Deferred tax liability	(12 500)	-
Creditors	(9 000)	(5 260)

	-	-

Additional information:
 PeanutButter Limited acquired the 60% interest in Brownie Limited on 1 January 2018 for R3 000. At that date, the retained earnings of Brownie Limited were R1 200. No
further shares have been issued by Brownie Limited since the acquisition.
 At acquisition, all the assets and liabilities of Brownie Limited were fairly valued except for a machine that was considered undervalued by R500. The machine had a remaining useful life of 5 years.
 PeanutButter Limited accounts for its investment in a subsidiary as a ‘financial asset at fair value through other comprehensive income in its separate financial statements in terms of IFRS 9. The ‘investment in subsidiary’ account is therefore stated at fair value. Ignore deferred tax on any related temporary differences arising from this fair value adjustment.
 On 31 December 2019, goodwill relating to Brownie Limited was impaired by R230.
 During 2019, Brownie Limited took up 25% of the 12.5% debentures issued (at par) by PeanutButter Limited.
 On 1 January 2020, Brownie Limited acquired its only investment property for R3 600 and leased the property immediately to PeanutButter Limited at a rental of R200 per annum. The office building comprising of the investment property (the value of the land is immaterial) had a useful life of 20 years. Both companies account for an investment property on the fair value model and property, plant, and equipment on the cost model. The investment property is held under a business model to fully recover the carrying amount through rentals.
 Brownie Limited supplies goods to PeanutButter Limited at cost plus 25%. Details of such sales and inventory held are as follows:

Sales by Brownie Limited to PeanutButter Limited:
- Year ended 31 December 2020: R550
- Year ended 31 December 2021: R1 700
Inventory purchased from Brownie Limited held by PeanutButter Limited:
- Year ended 31 December 2020: R300
- Year ended 31 December 2021: R950

 Non-controlling interest is initially measured at their proportionate share of the
subsidiary’s identifiable net assets.
 For the purpose of this question, assume that a tax rate of 30% is applicable. Except in the case of bullet point three above, the deferred tax effect of all transactions, where relevant, must be accounted for.

REQUIRED:
Prepare the Pro-forma journal entries necessary to consolidate Brownie Limited for the year ended 31 December 2021.