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QUESTION $1\text{ }(35$ Marks$)$ The following represents the abridged financial statements of Tesco Limited and its subsidiary Diageo Limited. STATEMENT OF FINANCIAL STATEMENT AS AT $31$ DECEMBER $2023$ Tesco Ltd R Diageo Ltd R ASSETS Non $\mathrm{–}$ current assets Property, plant and equipment $630\text{ }000\text{ }452\text{ }000$ Investment in Diageo Ltd: $96\text{ }000$ shares at fair value $240\text{ }000\text{ }-$ Loan to Diageo Ltd $160\text{ }000\text{ }-$ Current assets $886\text{ }000\text{ }790\text{ }400$ Inventories $350\text{ }000\text{ }308\text{ }000$ Trade and other receivable $536\text{ }000\text{ }434\text{ }000$ Bills receivable $-\text{ }18\text{ }000$ Bank $-\text{ }30\text{ }400$ TOTAL ASSETS $1\text{ }916\text{ }000\text{ }1\text{ }242\text{ }400$ EQUITY AND LIABILITIES Ordinary shares of R$1$ each $200\text{ }000\text{ }160\text{ }000$ Capital redemption reserve $150\text{ }000\text{ }250\text{ }000$ Retained earnings $490\text{ }000\text{ }370\text{ }000\text{ }840\text{ }000\text{ }780\text{ }000$ Non $\mathrm{–}$ current liabilities $8\%$ Debentures $696\text{ }000\text{ }150\text{ }400$ Loan from Tesco Ltd $-\text{ }160\text{ }000$ Current liabilities $380\text{ }000\text{ }152\text{ }000$ Trade and other payables $236\text{ }000\text{ }152\text{ }000$ Bills payable $14\text{ }000\text{ }-$ Bank overdraft $130\text{ }000\text{ }-$ TOTAL EQUITY AND LIABILITIES $1\text{ }916\text{ }000\text{ }1\text{ }242\text{ }400$ STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED $31$ DECEMBER $2023$ Tesco Ltd R Diageo Ltd R Turnover $3\text{ }200\text{ }000\text{ }2\text{ }000\text{ }000$ Profit before tax $1\text{ }606\text{ }000\text{ }1\text{ }111\text{ }000$ Income tax expense $(642\text{ }000)\text{ }(549\text{ }000)$ Comprehensive income for the year $964\text{ }000\text{ }562\text{ }000$ Other comprehensive income for the year $-\text{ }-$ Total comprehensive income for the year $964000\text{ }562\text{ }000$ STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED $31$ DECEMBER $2023$ Retained earnings Tesco Ltd R Diageo Ltd R Balance on $31$ December $2022\text{ }130\text{ }000\text{ }232\text{ }000$ Total comprehensive income for the year $964\text{ }000\text{ }562\text{ }000$ Transfer to Capital redemption reserve $(114\text{ }000)\text{ }(64\text{ }000)$ Dividend paid $(490\text{ }000)\text{ }(360\text{ }000)$ Balance on $31$ December $2023\text{ }490\text{ }000\text{ }370\text{ }000$ Additional information: $1.$ The date when Tesco Ltd acquired its interest in Diageo Ltd was $1$ January $2020.$ At that time Capital redemption reserve and retained earnings in Diageo Ltd were $90\text{ }000$ and $130\text{ }000$ respectively. $2.$ On $1$ January $2022$ Diageo Ltd sold plant and equipment to Tesco Ltd at a profit of R$100\text{ }000.$ Both companies depreciate plant and equipment at $20\%$ on straight $\mathrm{–}$ line basis. $3.$ Since acquisition Tesco Ltd purchases $50\%$ of its inventory from Diageo Ltd at cost plus $25\%.$ Opening inventories in both companies were as follows: $-$ Tesco Ltd R$312\text{ }000\text{ }-$ Diageo Ltd R$530\text{ }000\text{ }4.$ Intercompany sales during the year is $20\%$ of Diageo Limited$\mathrm{’}$s total sales. $5.$ The bills payable are in respect of credit purchases from Diageo Ltd$.\text{ }6.$ The identifiable assets and the liabilities assumed at acquisition are shown at their acquisition$-$date fair values, as determined in terms of IFRS$3.\text{ }7.$ Ignore tax implication. Required $1\mathrm{.}1$ Prepare an analysis of equity of Diageo Limited at $31$ December $2023.\text{ }(25$ Marks$)$

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