Question 3 Consolidated financial statements are presented on the basis that the companies within the group are treated as if they are a single (economic) entity. What advantages are there for stakeholders from requiring groups to prepare consolidated accounts? 1 (1) Investor protection Consolidation prevents the publication of misleading accounts by such means as inflating the sales through selling to another member of a group (ii) Prediction: Consolidation provides a more meaningful EPS figure Consolidated accounts show the full earnings of a parent company's investment while the parent's individual accounts only show the dividend received from the subsidiaries. (1) Accountability. Consolidation provides a better measurement of the performance of a parent company's directors as the total earnings of a group can be compared with its total assets in arriving at a group's return on capital employed (ROCE) A All three B (i) and (ii) only CO), and (ii) only D (ii) and (iii) only Question 4 Andrew acquired 80% of the equity shares of Alpha on 1 January 2015 when Alpha's retained earnings were E100,000. During the year ended 31 December 2015, Alpha purchased goods from Andrew totaling 160.000. At 31 December 2015, 25% of these goods were still in the inventory of Alpha, Andrew applies a mark up on cost of 25% to all of its sales. At 31 December 2015, the retained earnings of Andrew and Alpha were 225,000 and 170,000 respectively. What would be the amount of retained earnings in Andrew's consolidated statement of financial position as at 31 December 2015 A 273,000 R 271.000 C 249.000 D 2153.000