3. Question 3 [30 marks]

P acquired the whole of the share capital of S for cash on 31 December 2018. The fair value of Ss net assets at this date were 62,000. The statements of financial position of P and S as at 31 December 2018 are given below.

	P	S
Property, plant and equipment	120000	40000
Investment in S	68000
Net current assets	28000	15000
Total Assets	216000	55000
Share capital	136000	45000
Reserves	80000	10000
Total Equity and Liabilities	216000	55000

a) Prepare the Consolidated Statement of Financial Position (Balance Sheet) of the Group as at 31 December 2018. [10 marks]

b) Control of an entity over another determines which entities should be included in a groups consolidated financial statements. Explain the concept of control. (200-300 words) [10 marks]

c) Discuss the purposes of preparing consolidated financial statements. (200-300 words) [10 marks]