The summarised income statements for the three companies for the year ended 30 June 2020 are: Parker Spencer Alexander Rs 000 Rs 000 Rs 000 Revenue 112,500 58,500 60,000 Cost of sales (70,500)| (38,250) (45,000) Gross profit 42,000 20,250 15,000 Distribution costs (5,550) (2,250) (2,625) Administrative expenses (9,375) (4,500) (4,875) Finance cost (1,500) (675) Nil Profit before tax 25,575 12,825 7,500 Income tax expense (7,800) (2,700) (3,000) Profit for the year 17,775 10,125 4,500 The following information is relevant: 1. On 1 October 2019 Parker purchased 13,500,000 of a total of 18,000,000 equity shares in Spencer. The acquisition was through a share exchange of two shares in Parker for every five shares in Spencer. Both companies have shares with a par value of Rs 1 each. The market price of Parker's shares at 1 October 2019 was Rs 6.50 per share. Parker will also pay in cash on 30 September 2023 (four years after acquisition) Rs 3-50 per acquired share of Spencer. Ignore cost of capital. The reserves of Spencer on 1 July 2019 were Rs 51,750,000 2. Parker has held an investment of 25% of the equity shares in Alexander for many years. 3. The fair values of the net assets of Spencer at the date of acquisition were equal to their carrying amounts with the exception of land and property. Land and property had fair values of Rs 3,075,000 and Rs 1,800,000 respectively in excess of their carrying amounts. The property had a remaining life of twenty years (straight-line depreciation) at the date of acquisition of Spencer. All depreciation is treated as part of cost of sales. The fair values have not been reflected in Spencer's financial statements. No fair value adjustments were required on the acquisition of Alexander. 4. The fair value of non-controlling interest is estimated to be Rs 3,000,000. 5. Prior to its acquisition, Spencer had been a good customer of Parker. In the year to 30 June 2020, Parker sold goods at a selling price of Rs 1,000,000 per month to Spencer both before and after its acquisition. Parker made a profit of 20% on the cost of these sales. At 30 June 2020 Spencer still held inventory of Rs 2,250,000 (at cost to Spencer) of goods purchased in the post-acquisition period from Parker 6. An impairment test on the goodwill of Spencer conducted on 30 June 2020 concluded that it should be written down by Rs 1,500,000. The value of the investment in Alexander was not impaired. 7. All items in the above income statements are deemed to accrue evenly over the year. 8. Ignore deferred tax. REQUIRED (a) Calculate the goodwill arising on the acquisition of Spencer at 1 October 2019 and its value as at 30 June 2020. [12 marks] (b) Prepare the consolidated income statement for the Parker Group for the year ended 30 June 2020. [21 marks] (c) According to IAS 28 an associate is an enterprise in which an investor has significant influence' and which is neither a subsidiary nor a joint venture. Explain the term significant influence and identify different ways which evidence the existence of significant influence