On 1 January 2022, Azuma Capital PLC established four wholly owned subsidiary companies, all in the same line of business. - A was financed entirely by issued share capital of 105,000. - B had issued share capital of 30,000 and in addition raised 75,000 from the issue of 12% debentures, interest on which was payable annually on 31 December. - C and D were both financed by 30,000 issued share capital. In addition to requiring an initial working capital of 30,000, all of the companies need access to a widget machine. The machines cost 75,000 each and have a 10-year useful life with no residual value. A and B bought a machine each. C and D each leased a machine for an annual rental payment of 13,275 over 10 years, payable in arrears on 31 December. The cost of capital for each of the four companies is 12% per annum. Each company earns annual gross revenues of 27,000 and incurs annual operating costs of 10,125 over 10 years, payable in arrears on 31 December. Interest and rentals were all paid on the due dates. Required: a) What is substance over form and off-balance sheet finance? Illustrate you answer with reference to finance and operating leases. ( 6 marks) b) For each subsidiary prepare an income statement for the year ended 31 December 2022 and a statement of financial position as at 31 December 2022 and show the reported return on Azuma Capital's initial equity investment in each subsidiary, on the following assumptions: - That A and B each use straight line depreciation over the asset's useful life. - That C treats the lease as an operating lease (in spite of IFRS 16 Leases' requirements). - That D treats the lease as a finance lease and depreciates the asset on a straight-line basis. Show your workings for net current assets. (14 marks) (Total: 20 marks)