IAS $28$ ?Accounting for associates recommends that associate companies be accounted for using equity accounting when consolidating. While IFRS $3$ ?recommends that subsidiaries be accounted for using full consolidation

a$)$ ?Explain how the two methods differ when preparing the group income statement.$(3$ ?marks$)$

b$)$ ?Below are the statements of financial position of three entities as at $30$ ?December $20$X$8.$

$\backslash$table$[[,$IP$,S,$A$],[$Non$-$current assets$],[$Property$,$ ?plant and equipment,$122,500,65,625,26,250],[$Investments$,87,500,$F$-,$F$],[$Current assets,$52,500,26,250,13,125],[,,],[262,500,91,875,39,375],[$Equity$],[$Share capital $($K$1$ ?ordinary shares$),87,500,8,750,4,375],[$Retained earnings,$65,625,48,125,21,875],[$Non$-$current liabilities,$70,000,10,938,4,375],[$Current liabilities,$39,375,24,062,8,750],[,,,]]$

$262,500$

$91,875,39,375$

Further information:

$($i$)P$ ?acquired $75\%$ ?of the equity share capital of $S$ ?several years ago, by exchanging $7$ ?shares in $P$ ?for every one share in S$.$ ?At this time the balance on S$\text{'}$s retained earnings was K$26,250.$P has already made the adjustment in the share capital account

$($ii$)P$ ?acquired $30\%$ ?of the equity share capital of $A2$ ?years ago. Paying K$6,563$ ?in cash the balance on A$\text{'}$s retained earnings was $K13,125$

$($iii$)$ ?During the year, $P$ ?sold goods to A for $K8,750$ ?at a margin of $20\%.$ ?At the year$-$end, A still held one third of these goods in inventory.

$($iv$)S$ ?transferred goods to $P$ ?at a transfer price of $K5,250$ ?at a mark$-$up of $25\%.$ ?One quarter of this remained in inventory at the year end.

$($v$)$ ?At $31$ ?December $20\times 8,$ ?it was determined that the investment in A was impaired by K$308.$ ?while that of $S$ ?by $5\%$

$($vi$)$ ?Non$-$controlling interests are valued using the fair value method. The fair value of the noncontrolling interest at the date of acquisition was $K5,600.$

Required:

Prepare Journal entries for notes $($iii$),($IV$)$ ?and $($V$)$

Prepare the consolidated statement of financial position of the $P$ ?group as at $31$ ?December $20$X$8.(18$ ?mark$)$

B$)$ ?IFRS $3$ ?recommends that good will can either be calculated using the fair value method or the proportion of net assets method.

b$)$ ?Assuming that the $P$ ?group uses the net asset method to valun the mon onntrolling interest re