SECTION B ATTEMPT ANY TWO (2) QUESTIONS, EACH QUESTION CARRIES 25 MARKS Question 3: The Managing Director of Super ple has asked you to prepare the income statement for the group. The company has one subsidiary undertaking, Planet Ltd. The income statements of the two companies for the year ended 31 March 2016 are set out below. Super Ple Planet Ltd 000 000 Revenue 76,924 25,088 Cost of sales (45,386) (10,536) Gross profit 31,538 14,534 Other income (dividend received from Planet Ltd) 1,160 Distribution costs (12,806) (5,702) Administrative expenses (7,974) (4,932) Profit from operations 11,918 3,918 Finance costs - interest on bank loan (1,124) (360) Profit before tax 10,794 3,558 Tax (3,022) (1,246) Profit for the period 7,772 2,312 You have been given the following further information. i. Super plc acquired 75% of the ordinary share capital of Planet Ltd on 1 April 2015. ii. During the year Planet Ltd sold goods which had cost 1,100,000 to Super ple for 1,600,000. All of the goods had been sold by Super plc by the end of the year. a. Required: Prepare the consolidated Income Statement of Super Plc and its subsidiary undertaking as at 31st March 2016. (15 Marks) b. Why it is important for companies to adopt sound practices of corporate governance? Briefly describe the basic principles relating to the role of directors in the corporate governance. (10 Marks) Page 5 of 7