The Murray Corporations Trial Balance as at December 31, 2014 is shown below.

Prepare the financial statements for the year to 31 December 2014 for Murray Corp. in accordance with International Financial Reporting Standards as far as the information permits. They should include:

1. An Income Statement; (12 marks)

1. A Statement of Changes in Equity (8 marks)

1. At a recent board meeting of the Murray Corporation a member of the board questioned the policy of the organization in making dividend declaration. He presented some theories of dividend policy but failed to explain the Signalling theory. As the financial controller of the company you were asked to explain the Signalling theory.

Briefly explain the Signalling theory. (5 marks)