Question 1 Atomic bought 30 million shares in Briars on 1 October 20X8, when Briars had reserves of 45m. During the year to 30 September 20X9, Atomic sold goods to Briars at a gross profit on selling price of 30 per cent; 50m of these goods remained in Briars's stock on 30 September 20X9. Included in Briars's 'creditors within one year' is an amount of 45m owed to Atomic in respect of a loan made by Atomic to Briars. Briars made a payment of 10m on 30 September 20X9 but this was not received by Atomic until 4 October 20X9. On 1 October 20X8, Atomic also bought a 30 per cent stake in Spade, when Spade had reserves of 30m. Atomic has had involvement in day-to-day management policies since that date via a representative on Spade's board of directors. The respective balance sheets of the companies at 30 September 20X9 were as follows: Atomic m Briars m 55 Spade m 400 100 Property, Plant& Equipment Investment in Briars Investment in Spade 120 70 80 50 40 20 Stock Debtors Loan to Briars Bank 90 35 55 10 190 50 25 155 140 90 730 100 630 10 70 65 20 120 Creditors within 1 year 50 150 Creditors more than 1 year 120 150 50 80 200 120 310 630 70 150 Share Capital (1) Share Premium Reserves (P&L) 70 120 Question 1 (cont'd) Other information is provided as follows: At the date of both acquisitions, the fair value of assets in the acquired company was the same as their net book value. There have been no issues of shares by any of the three companies during the last three years. It is not considered necessary to make any impairment adjustment to goodwill. (a) Produce a consolidated balance sheet for Atomic Group as at 30 September 20X9 consistent with international accounting standards. (18 marks) (b) Explain how can a significant influence by an investor be evidenced under IAS 28, and justify your treatment of the investment in Spade in light of international GAAP.(5 marks) (c) Appraise the need for consolidated financial statements, and discuss critically the approach of international accounting standards to this accounting area. (12 marks)