The summarised statements of financial position and income statements for Hill plc, Holt plc and Hesham plc are as follows: Balance Sheets as at 31/12/2015 Hill Holt Hesham Non current assets 000's E 000's [ 000's Property, plant, equipment 745.200 318.500 198,400 Investment in subsidiary 310.000 Investment in associate 95.200 1,150,400 318,500 198,400 Current assets Inventories 287,100 113,700 72,100 Trade receivables 246,300 197.500 76,300 Current account Holt 20.4001 Current account Hosham 12.800 Bank 146,900 49,100 12,000 713,500 360,400 160,400 Total assets 1,863,900 678,900 358,800 Equity and reserves Share capital General Reserve Retained earnings Shareholders' funds 750,000 250.000 175.000 150,000 50,000 25,000 379,300 122.100 53,800 1,279,300 422,100 253,800 Non current liabilities Loan 200.000 75.000 40.000 Current liabilities Trade payables 284,600 126,400 42.200 Current account Hill 20,400 12,800 Dividend payable 100,000 35,000 10,000 384.600 181.800 65.000 Total equity and liabilities 1,863,900 678,900 358,800 Income statements for year ended 31/12/2015 Hill Holt Hesham 000's 000's 000's Sales 1,875,000 476.400 247,200 Cost of sales -1.312,500|-333,480-197,760 Gross profit 562,500 142,920 49,440 Expenses -225,000 -57,168 -19,776 Income statements for year ended 31/12/2015 Hill Holt Hesham E000's E 000's 000's Sales 1.875.000 476.400 247200 Cost of sales -1.312500-333.480-197.760 Gross profit 562,500 142,920 49,440 Expenses -225.000 -57,168 -19,776 Operating profit 337,500 85,752 29,664 Dividends received from Holt and Hesham 26.500 Profit before tax 364.000 85,752 29,664 Income tax expense -72.800 -17.150 -5,933 Profit after tax 291,200 68,602 23,731 Dividends payable 100,000 35,000 10.000 Other information: Hill acquired a 70% holding in Holt on 1st April 2013 when the general reserve of Holt was 20 million and the retained earnings were 41.3 million. At the date of acquisition, the fair value of the land and buildings was considered to be 40 million higher than the book value. No adjustment has been made in the financial statements for this amount .) Following an impairment review, Hill has decided to write off 30% of the value of goodwill arising upon the acquisition of Holt. During the year, Hill had sold goods to Holt with a sales value of 250 million, including a 25% mark up on cost. At the year-end, 30% of these goods remained in stock. iv) On 15 May 2013 Hill purchased a 20% holding in Hesham, when the general reserve was 12 million and the retained earnings were 12.4 million. The fair values were the same as the book values. Required: a) Prepare the consolidated statement of financial position and the consolidated income statement for Hill pic for the year ended 31 December 2015, complying, as far as the information permits, with the requirements of IFRS 10 Consolidated Financial Statements, IAS 28 Investments in Associates and Joint Ventures and IFRS 3 Business Combinations. Non-controlling interests are to be measured using method 1. (28 marks) when the general reserve of Holt was 20 milli and the retained earnings were 41.3 million. At the date of acquisition, the fair value of the land and buildings was considered to be 40 million higher than the book value. No adjustment has been made in the financial statements for this amount. :) Following an impairment review, Hill has decided to write off 30% of the value of goodwill arising upon the acquisition of Holt. During the year, Hill had sold goods to Holt with a sales value of 250 million, including a 25% mark up on cost. At the year-end, 30% of these goods remained in stock. iOn 15 May 2013 Hill purchased a 20% holding in Hesham, when the general reserve was 12 million and the retained earnings were 12.4 million. The fair values were the same as the book values. Required: a) Prepare the consolidated statement of financial position and the consolidated income statement for Hill plc for the year ended 31st December 2015, complying, as far as the information permits, with the requirements of IFRS 10 Consolidated Financial Statements, IAS 28 Investments in Associates and Joint Ventures and IFRS 3 Business Combinations. Non-controlling interests are to be measured using method 1. (28 marks) b) The criteria for determining whether a company should be considered a subsidiary or an associated is detailed within IFRS 10 Consolidated Financial Statements and also in IAS 28 Investments in Associates and Joint Ventures. A key issue in this determination is the distinction between significant influence and control. You are required to critically evaluate this criteria and evaluate its effectiveness from the perspective of the usefulness of consolidated financial statements. (12 marks) (Total 40 marks) The summarised statements of financial position and income statements for Hill plc, Holt plc and Hesham plc are as follows: Balance Sheets as at 31/12/2015 Hill Holt Hesham Non current assets 000's E 000's [ 000's Property, plant, equipment 745.200 318.500 198,400 Investment in subsidiary 310.000 Investment in associate 95.200 1,150,400 318,500 198,400 Current assets Inventories 287,100 113,700 72,100 Trade receivables 246,300 197.500 76,300 Current account Holt 20.4001 Current account Hosham 12.800 Bank 146,900 49,100 12,000 713,500 360,400 160,400 Total assets 1,863,900 678,900 358,800 Equity and reserves Share capital General Reserve Retained earnings Shareholders' funds 750,000 250.000 175.000 150,000 50,000 25,000 379,300 122.100 53,800 1,279,300 422,100 253,800 Non current liabilities Loan 200.000 75.000 40.000 Current liabilities Trade payables 284,600 126,400 42.200 Current account Hill 20,400 12,800 Dividend payable 100,000 35,000 10,000 384.600 181.800 65.000 Total equity and liabilities 1,863,900 678,900 358,800 Income statements for year ended 31/12/2015 Hill Holt Hesham 000's 000's 000's Sales 1,875,000 476.400 247,200 Cost of sales -1.312,500|-333,480-197,760 Gross profit 562,500 142,920 49,440 Expenses -225,000 -57,168 -19,776 Income statements for year ended 31/12/2015 Hill Holt Hesham E000's E 000's 000's Sales 1.875.000 476.400 247200 Cost of sales -1.312500-333.480-197.760 Gross profit 562,500 142,920 49,440 Expenses -225.000 -57,168 -19,776 Operating profit 337,500 85,752 29,664 Dividends received from Holt and Hesham 26.500 Profit before tax 364.000 85,752 29,664 Income tax expense -72.800 -17.150 -5,933 Profit after tax 291,200 68,602 23,731 Dividends payable 100,000 35,000 10.000 Other information: Hill acquired a 70% holding in Holt on 1st April 2013 when the general reserve of Holt was 20 million and the retained earnings were 41.3 million. At the date of acquisition, the fair value of the land and buildings was considered to be 40 million higher than the book value. No adjustment has been made in the financial statements for this amount .) Following an impairment review, Hill has decided to write off 30% of the value of goodwill arising upon the acquisition of Holt. During the year, Hill had sold goods to Holt with a sales value of 250 million, including a 25% mark up on cost. At the year-end, 30% of these goods remained in stock. iv) On 15 May 2013 Hill purchased a 20% holding in Hesham, when the general reserve was 12 million and the retained earnings were 12.4 million. The fair values were the same as the book values. Required: a) Prepare the consolidated statement of financial position and the consolidated income statement for Hill pic for the year ended 31 December 2015, complying, as far as the information permits, with the requirements of IFRS 10 Consolidated Financial Statements, IAS 28 Investments in Associates and Joint Ventures and IFRS 3 Business Combinations. Non-controlling interests are to be measured using method 1. (28 marks) when the general reserve of Holt was 20 milli and the retained earnings were 41.3 million. At the date of acquisition, the fair value of the land and buildings was considered to be 40 million higher than the book value. No adjustment has been made in the financial statements for this amount. :) Following an impairment review, Hill has decided to write off 30% of the value of goodwill arising upon the acquisition of Holt. During the year, Hill had sold goods to Holt with a sales value of 250 million, including a 25% mark up on cost. At the year-end, 30% of these goods remained in stock. iOn 15 May 2013 Hill purchased a 20% holding in Hesham, when the general reserve was 12 million and the retained earnings were 12.4 million. The fair values were the same as the book values. Required: a) Prepare the consolidated statement of financial position and the consolidated income statement for Hill plc for the year ended 31st December 2015, complying, as far as the information permits, with the requirements of IFRS 10 Consolidated Financial Statements, IAS 28 Investments in Associates and Joint Ventures and IFRS 3 Business Combinations. Non-controlling interests are to be measured using method 1. (28 marks) b) The criteria for determining whether a company should be considered a subsidiary or an associated is detailed within IFRS 10 Consolidated Financial Statements and also in IAS 28 Investments in Associates and Joint Ventures. A key issue in this determination is the distinction between significant influence and control. You are required to critically evaluate this criteria and evaluate its effectiveness from the perspective of the usefulness of consolidated financial statements. (12 marks) (Total 40 marks)