=+2. During the year ended 31 December 2005, THOMPSON became involved in a joint venture arrangement with GRAEME Incorporated (GRAEME) with a view to expanding their operations to other countries. THOMPSON and GRAEME each purchased 50% of the ordinary share capital in a new entity, DAVID Limited (DAVID), with each company agreeing to provide 50% of the cash and other resources required to finance DAVID. Neither THOMPSON nor GRAEME is able to control DAVID without the support of the other, and all decisions on financial and operating pdlicy, economic performance and financial position require the consent of both THOMPSON and GRAEME. The following information is available with respect to DAVID’s activities during the year ended 31 December 2005.

Statement of Comprehensive Income for the Year Ended 31 December 2005

€'000 Revenue 300 Cost of sales (100)

Gross profit . / 200 Administrative expenses \ . (50)

Profit before tax . 150.

Income tax (30)

Profit after tax 120°

Statement of Financial Position as at 31 December 2005

€'000 ASSETS *

Non-current Assets Plant and equipment 290 Current Assets Inventory 20 Receivables 10 Bank and cash abe 325 EQUITY AND LIABILITIES Capital and Reserves

€1 ordinary shares 200 Retained earnings 120 Current Liabilities

‘Trade payables 5