A P plc acquired $80 \%$ of the ordinary share capital of $S$ plc for $£ 150,000$ and $50 \%$ of the issued $10 \%$ cumulative preference shares for $£ 10,000$, both purchases being effected on 1 May 2013. There have been no changes in the issued share capital of $\mathrm{S}$ plc since that date. The following balances are taken from the books of the two companies at 30 April 2014:

\begin{tabular}{|c|c|c|}

\hline & \begin{tabular}{ll}

Pplc \\

fOnO

\end{tabular} & Splc \\

\hline Ordinary share capital ( $£ 1$ shares) & 300 & 100 \\

\hline $10 \%$ cumulative preference shares ( 50 p shares) & & 20 \\

\hline Share premium account & 20 & 10 \\

\hline \begin{tabular}{l}

General reserve \\

Retained profits

\end{tabular} & 68 & 15 \\

\hline Retained profits & 65 & 45 \\

\hline Trade accounts payable & 35 & 22 \\

\hline Taxation & 50 & 30 \\

\hline \multicolumn{3}{|l|}{ Depreciation } \\

\hline Freehold property & \begin{tabular}{r}

40 \\

100

\end{tabular} & \begin{tabular}{l}

15 \\

48

\end{tabular} \\

\hline Plant and machinery & 678 & $\frac{405}{305}$ \\

\hline Freehold property at cost & 86 & 55 \\

\hline Plant and machinery at cost & 272 & 168 \\

\hline Investment in S plc & 160 & - \\

\hline Inventory & 111 & 65 \\

\hline Accounts receivable & 30 & 15 \\

\hline Cash & 19 & 2 \\

\hline

\end{tabular}

The following additional information is available:

(a) Inventory of P plc includes goods purchased from S plc for $£ 20,000$. S plc charged out this inventory at cost plus $25 \%$.

(b) A proposed dividend of $£ 10,000$ by $S$ plc includes a full year's preference dividend. No interim dividends were paid during the year by either company.

(c) Creditors of $\mathrm{P}$ plc include $£ 6,000$ payable to $S$ plc in respect of inventory purchases. Debtors of S plc include $£ 10,000$ due from P plc. The parent sent a cheque for $£ 4,000$ to its subsidiary on 29 April 2014 which was not received by S plc until May 2014.

(d) At 1 May 2013 the balances on the reserves of S plc were as follows:

$£ 000$

Share premium 10 General reserve 20 Retained profits 30 Required:

(a) Prepare a consolidated statement of financial position for $\mathrm{P}$ plc and its subsidiary $\mathrm{S}$ plc at 30 April 2014.

Notes to the accounts are not required. Workings must be shown.

(b) Explain what is meant by the term 'cost of control' and justify your treatment of this item in the above accounts.