Little was incorporated over 20 years ago, operating as an independent entity for 15 years until 1998 when it was taken over by Large. Large's directors decided that the local expertise of Little's management should be utilized as far as possible, and since the takeover they have allowed the subsidiary to operate independently, maintaining its existing supplier and customer bases. Large exercises 'arm's length' strategic control, but takes no part in day-to-day operational decisions.
The statement of financial positions of Large and Little at 31 March 2004 is given below. The statement of financial position of Little is prepared in francos (F), its reporting currency.

NOTES TO THE STATEMENT OF FINANCIAL POSITIONS
Note 1 - Investment by Large in Litte
On 1 April 19W8 Large purchased 36 000 shares in Little for 72 million francos. The accumulated profis of Little at that date were 26 million francos. Large's accounting policy in respect of goodwill on acquisition is to amortize it on a straight line basis over five years.
Note 2 - Intra-group trading
Little sells goods to Large, charging a mark-up of one-third on production cost. At 31 March 20X4, Large held $1 million (at cost to Large) of goods purchased from Little in its inventories. The goods were purchased during March 20X4 and were recorded by Large using an exchange rate of $1 =5 francos. (There were minimal fluctuations between the two currencies during March 20X3). At 31 March 20X3, Large's inventories included no goods purchased from Litte. On 29 March 20X4, Large sent Little a cheque for $1 million to clear the intra-group payable. Little received and recorded this cash on 3 April 20X4.
Note 3 - Accounting policies
The accounting policies of the two companies are the same, except that the directors of Little have decided to adopt a policy of revaluation of property, whereas Large includes all property in its statement of financial position at depreciated historical cost. Until 1 April 20X3, Little operated from rented warehouse premises. On that date, the entity purchased a leasehold building for 25 million francos, taking out a long-term loan to finance the purchase. The building's estimated useful life at 1 April 20X3 was 25 years, with an estimated residual value of nil, and the directors decided to adopt a policy of straight line depreciation. The building was professionally revalued at 30 million francos on 31 March 20X4, and the directors have included the revalued amount in the statement of financial position.1
Note 3 - Exchange rates
Date Exchange rate
(francos to$1)
1 April 19W8 ...................................................................... 6.0
31 March 20X3 .................................................................... 5.5
31 March 20X4 .................................................................... 5.0
Weighted average for the year to 31 March 20X4 ........................... 5.2
Weighted average for the dates of acquisition of closing inventory........ 5.1
'Depreciation during the year ended 31.3X4 was calculated on the historical cost.
No other property was owned by Little during the year.
Required:
(a) Explain (with reference to relevant accounting standards to support your argument) how the financial statements (statement of financial position and statement of comprehensive income) of Little should be translated into $s for the consolidation of Large and Little.
(b) Translate the statement of financial position of Little at 31 March 20X4 into $s and prepare the consolidated statement of financial position of the Large group at 31 March 20X4.

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Large Litte F00D F000 Non-current assets Property, plant and equipment63 000 Investmonts 80 000 12 000 75 000 Current assets: Inventories Trade receivables 25 000 20 000 6 000 30 000 28 000 5 000 Cash 51 000 126 500 63 000 143 000 Large 5000 Litte F000 5000 FOOD Issued capital and reserves: Cailed up share capital (50 40 000 centa/1 Franco shares) Revalustion reservo Accumulated profits 6 000 34 000 80 000 35 000 65 000 Non-current liabilties Interest-bearing biorrowings Deferred tax 20 000 6 000 25 000 10 000 26 000 35 000 Current liabiities Trade payables Tax Bank overdrat 25 000 7 000 3 000 20 000 8 000