QUESTION 1 Hurrican Group Hurrican is a trader. To be able to control the full spectrum of that market Hurrican acquired 80% of the voting shares of Shiruken. This transaction happened on 1st April 2014. It is clear that Hurrican obtained the control and this transaction was a business combination. Both companies are preparing their financial statements under IFRS. On 31st December 2014 the individual balance sheets of the two entities are the following (each amounts are in thousand dollars, k$): Investment in Shiruken Land and building Plant and equipment Inventory Receivables Cash and equivalent TOTAL ASSETS: Issued capital Share premium Hurrican (k$) Shiruken (k$) 31/Dec/2014 31/Dec/2014 700 300 1000 1000 400 400 300 600 200 1000 100 4000 2000 100 50 100 Retained earnings Equity: 1900 450 2000 600 Long term loans 900 400 Account payables and other short term liabilities Liabilities 1100 1000 2000 1400 OWNERS EQUITY + LIABILITY: 4000 2000 The following information is relevant (acquisition): 1. The issued capital and share premium of both companies are the same since incorporation. 2. The movement in the retained earnings of the companies were the following during 2014: Hurrican Shiruken 1st January 2014 (opening) 1000 150 Net profit of 2014 1500 300 Dividend declared (600) 31st December 2014 (closing) 1900 450