Martins Inc., a Russian company, carries out its day-to-day operations in Russian rubles (RUB) and acts independently of House plc. On 1 January 2011, House plc purchased 11,250,000 shares in Martins Inc. when the retained earnings of Martins Inc. were RUB5,000,000. The fair value of the net assets of Martins Inc. on 1 January 2011 was the same as their book value.

The draft statements of profit or loss and other comprehensive income for the year ended 31 December 2018 of House plc and Martins Inc., together with their draft statements of financial position as at that date, are shown below.

JANUARY 2019, QUESTION 2 Martins Inc., a Russian company, carries out its day-to-day operations in Russian rubles (RUB) and acts independently of House plc. On 1 January 2011, House plc purchased 11,250,000 shares in Martins Inc. when the retained earnings of Martins Inc. were RUB5,000,000. The fair value of the net assets of Martins Inc. on 1 January 2011 was the same as their book value. The draft statements of prot or loss and other comprehensive income for the year ended 31 December 2018 of House plc and Martins Inc., together with their draft statements of nancial position as at that date, are shown below. Draft Statements of Financial Position as at 31 December 201 8 House plc Martins Inc. '000 '000 RUB '000 RUB '000 ASSETS Non-current Assets Property, plant and equipment 30,000 25,000 Investments 1% 32,500 _ 25,000 Current Assets Inventory 12,500 20,000 Trade receivables 14,000 17,500 Dividends receivable 3,000 - Cash at bank , _- , gm Q EQUITY AND LIABILITIES Capital and Reserves Called up share capital (1iRUBl shares) 12,500 15,000 Retained earnings EM Q 32,500 27,500 Non-current Liabilities 10,000 12,500 Current Liabilities Trade payables 2,500 10,000 Dividends payable 5,000 6,000 Bank loan 1% EM a Qa a Q Draft Statements of Prot and Loss or Other Comprehensive Income for the Year Ended 31 December 2018 House plc Martins Inc. '000 RUB'000 Revenue 80,000 62,500 Cost of sales (,m (2m Gross prot 37,500 30,000 Distribution costs (12,500) (10,000) Administrative expenses (EM) () Operating prot 15,000 14,000 Dividend receivable 3,000 - Interest payable {2%} (1,5001 Prot before tax 16,000 12,500 Taxation (gm Em Prot aer tax HM am Additional Information 1. Exchange rates at the relevant dates are as follows: Date RUB to the 1 January 2011 2 31 December 2017 1.6 31 December 2018 1.5 Average rate 2018 1.52 2. Amounts shown as non-current liabilities by House plc and Martins Inc. represent the long-term element of the bank loan shown in current liabilities. These loans were raised by each of the companies independently and are repayable by each of the companies in their local currency. 3. The dividends payable included in the draft statements of nancial position of House plc and Martins Inc. shown above had not been approved by the shareholders at 31 December 2018. No other dividends were paid or proposed by either company during 2018. Requirement Prepare the consolidated statement of prot or loss and other comprehensive income of House plc for the year ended 31 December 2018 and the consolidated statement of nancial position as at that date, showing the foreign exchange translation reserve separately within equity. Total 25 Marks 5