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.' ?. ^. Draft Statements of Financial Position as at 31 December 2018 House plc Martins Inc. '0004 '000 RUB'000 RUB'0004 ASSETS Non-current Assets Property, plant and equipment 30,000 25,000 Investments 7,500 37,500 25,000 Current Assets Inventory 12,500 20,000 Trade receivables 14,000 17,500 Dividends receivable 3,000 Cash at bank 500 30,000 37,500 67,500 62.500 T & 1 . ?. EQUITY AND LIABILITIES Capital and Reserves Called up share capital (1/RUBI shares) Retained earnings ki & 17,500 20,000 37,500 10,000 15,000 12,500 27,500 12,500+ 1 Non-current Liabilities Current Liabilities Trade payables Dividends payable Bank loan G 7,500 5,000 7.500 20,000 67,500 10,000 6,000 6,500 22,500 62,500 Draft Statements of Profit and Loss or Other Comprehensive Income for the Year Ended 31 December 2018 House ple Martins Inc. '000 RUB'000 Revenue Cost of sales Gross profit Distribution costs Administrative expenses Operating profit Dividend receivable Interest payable Profit before tax Taxation Profit after taxe 80,000 (42,500) 37,500 (12,500) (10,000) 15,000 3,000 (2,000) 16,000 (5,000) 11.000 62,500 (32,500) 30,000 (10,000) (6,000) 14,000 1. 1. (1,500 12,500 (4.000) 8.500 Additional Information 1. Exchange rates at the relevant dates are as follows: RUB to the fee 24 Date 1 January 2011 31 December 2017 31 December 2018 Average rate 2018 1.6 1.52 1.52 tttt ttttt 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 financial 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 profit or loss and other comprehensive income of House plc for the year ended 31 December 2018 and the consolidated statement of financial position as at that date, showing the foreign exchange translation reserve separately within equity. Total 25 Marks Steps guidance: 1. Calculate ownership percentage (there is NCI). 2. Address Note 3 (re. dividends). 3. Translate the SPLOCI @ Average rate 4. Translate SFP: 4 Assets and liabilities at closing rate Ordinary share capital and pre-acquisition reserves at historic rate (acquisition rate) Post-acquisition reserves = 'balancing figure' comprising retained earnings and foreign exchange gain/loss . 5. Prepare foreign exchange translation reserve 6. Calculate goodwill 7. Calculate NCI 8. Calculate consolidated retained earnings 9. Prepare consolidated financial statements 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.' ?. ^. Draft Statements of Financial Position as at 31 December 2018 House plc Martins Inc. '0004 '000 RUB'000 RUB'0004 ASSETS Non-current Assets Property, plant and equipment 30,000 25,000 Investments 7,500 37,500 25,000 Current Assets Inventory 12,500 20,000 Trade receivables 14,000 17,500 Dividends receivable 3,000 Cash at bank 500 30,000 37,500 67,500 62.500 T & 1 . ?. EQUITY AND LIABILITIES Capital and Reserves Called up share capital (1/RUBI shares) Retained earnings ki & 17,500 20,000 37,500 10,000 15,000 12,500 27,500 12,500+ 1 Non-current Liabilities Current Liabilities Trade payables Dividends payable Bank loan G 7,500 5,000 7.500 20,000 67,500 10,000 6,000 6,500 22,500 62,500 Draft Statements of Profit and Loss or Other Comprehensive Income for the Year Ended 31 December 2018 House ple Martins Inc. '000 RUB'000 Revenue Cost of sales Gross profit Distribution costs Administrative expenses Operating profit Dividend receivable Interest payable Profit before tax Taxation Profit after taxe 80,000 (42,500) 37,500 (12,500) (10,000) 15,000 3,000 (2,000) 16,000 (5,000) 11.000 62,500 (32,500) 30,000 (10,000) (6,000) 14,000 1. 1. (1,500 12,500 (4.000) 8.500 Additional Information 1. Exchange rates at the relevant dates are as follows: RUB to the fee 24 Date 1 January 2011 31 December 2017 31 December 2018 Average rate 2018 1.6 1.52 1.52 tttt ttttt 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 financial 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 profit or loss and other comprehensive income of House plc for the year ended 31 December 2018 and the consolidated statement of financial position as at that date, showing the foreign exchange translation reserve separately within equity. Total 25 Marks Steps guidance: 1. Calculate ownership percentage (there is NCI). 2. Address Note 3 (re. dividends). 3. Translate the SPLOCI @ Average rate 4. Translate SFP: 4 Assets and liabilities at closing rate Ordinary share capital and pre-acquisition reserves at historic rate (acquisition rate) Post-acquisition reserves = 'balancing figure' comprising retained earnings and foreign exchange gain/loss . 5. Prepare foreign exchange translation reserve 6. Calculate goodwill 7. Calculate NCI 8. Calculate consolidated retained earnings 9. Prepare consolidated financial statements