QUESTION 1 (75 marks) Lighthouse Investments Proprietary Limited is a company with various investments in subsidiaries that are accounted for at cost. Unless otherwise stated, all the companies in their group have a 30 June financial year-end. The Lighthouse Investments Proprietary Limited Group prepares consolidated financial statements. None of the Lighthouse Investments Group entities are listed on or are planning to list on the JSE. Waves Proprietary Limited Lighthouse Proprietary Limited holds 85% of the shares in Waves Proprietary Limited. Waves Proprietary Limited, therefore, qualifies as a subsidiary of Lighthouse Proprietary Limited. Waves Proprietary Limited, however, holds 100% of Fish Proprietary Limited. Fish Proprietary Limited, therefore, qualifies as a subsidiary of Waves Proprietary Limited. Waves Proprietary Limited's directors decided not to prepare consolidated financial statements, seeing as Lighthouse Investments Proprietary Limited prepares consolidated financial statements. Stars Proprietary Limited Lighthouse Investments Proprietary Limited holds 100 000 shares in Stars Proprietary Limited, and Stars Proprietary Limited has an issued share capital of 150 000 shares. Since acquiring the shares, Lighthouse Investments Proprietary Limited has been actively involved in Stars Proprietary Limited's daily activities and has the right to appoint or remove members on the board of Stars Proprietary Limited.