Stag Ltd is an outdoor activities equipment manufacturer with investments in two companies Deer Ltd and Foal Ltd. The companies all have 31 December year end dates and the draft Statements of Financial Position as at 31 December 2020 are shown below: Stag Ltd Deer Ltd Foal Ltd 300,000 45,000 27,000 ASSETS Non-current assets Property, plant and equipment Investments: Shares in Deer Shares in Foal Current assets Inventories Trade Receivables Cash and cash equivalents TOTAL ASSETS 50,000 12,500 15,000 5,500 2,500 385,500 4,000 3,500 750 53,250 2,500 3,000 1,050 33,550 EQUITY AND LIABILITIES Ordinary Shares 1 Retained Earnings 250,000 110,500 360,500 25,000 385,500 48,000 2,250 50,250 3,000 53,250 25,000 4,050 29,050 4,500 33,550 Current Liabilities TOTAL EQUITY AND LIABILITIES Notes: 1. Stag Ltd owns 36,000 shares in Deer Ltd. At the date of acquisition the balance of the retained earnings of Deer was 1,050. No additional shares have been issued by Deer Ltd. Page 6 of 8 2. Stag Ltd also owns 7,500 shares in Foal Ltd. The retained earnings of Foal at the date of acquisition were 2,500. No shares have been issued by Foal since that date. 3. Deer Ltd made sales of 2,500 units to Stag Ltd during 2020 at an invoiced value of 5,000. These were sold at a profit margin of 20%. 1,000 of these items remained in the inventories of Stag at 31 December 2020. 4. It is Stag Group policy to use the partial goodwill approach. There has been no impairment of the goodwill recognised on the acquisition of shares in Deer Ltd. 5. At 31 December 2020 Deer Ltd showed a receivable amount due from Stag Ltd of 2,000 and a corresponding amount was shown in the payables of Stag Ltd. REQUIRED a) Prepare the Consolidated Statement of Financial Position for the Stag Group as at 31 December 2020. (15 marks) b) Explain the difference between a subsidiary and an associate, using Deer Ltd and Foal Ltd as examples, and how these types of company are accounted for in the consolidated financial statements of a group. (10 marks)