On 1 January 2015, Star Ltd acquired 75% of the ordinary shares of Shine Ltd in Hong Kong to form Star-Shine Group (SSG). At that date the balance on the retained earnings of Shine Ltd was Hong Kong Dollars (HK$) 1,700,000. The non-controlling interest in Shine was measured as the proportionate share of the net assets of the subsidiary. No shares have been issued by Shine since acquisition. The summarised income statements and balance sheets of Star Ltd and Shine Ltd as at 31 December 2019 were as follows: Income Statement for the year ended 31 December 2019 Star Shine GBE HK$ Sales 37,422,000 9,504,000 Opening inventories 4,158,000 1,259,280 Purchases 20,790,000 5,346,000 Closing inventories 1,485,000 1,021,680 Cost of sales 23,463,000 5,583,600 Gross profit 13,959,000 3,920,400 Depreciation Other expenses Interest paid Total expenses 2,376,000 629,640 415,800 3,421,440 712,800 237,600 118,800 1,069,200 Profit before tax Taxation Profit after tax 10,537,560 2,673,000 7.864.560 2,851,200 712,800 2,138,400 Shine HK$ 5,464,800 1,021,680 1,306,800 Balance Sheet as on 31 December 2019 Star GBE Non-current assets 8,316,000 Investment in Shine Ltd 267300 Current assets Inventories 1,485,000 Trade receivables 3,593,700 Shine Ltd 85,950 Cash 653,400 Total current assets 5,818,050 Total Assets 14,401,350 Current liabilities: Trade payables 3,564,000 Star Ltd Taxation 1,188,000 Total current liabilities 4,752,000 Debentures 2,970,000 Total assets less liabilities 6,679,350 47,520 2,376,000 7,840,800 1,069,200 880,988 831,600 2,781,788 950,400 4,108,612 Capital and reserves Share capital Retained earnings 2,922,300 3,757,050 6,679,350 359,750 3,748,862 4,108,612 The following further information is available: (0) An amount of HK$ 200,000 was written off goodwill as an impairment charge in the current year and HK$ 140,000 in the previous year. (ii) On 23 March 2019, Star Ltd sold goods 2,250,000 to Shine Ltd, making a profit of 20% on cost. At the year end, one third of these raw materials were still in the inventory of Shine Ltd, and the inter-company transactions have not been eliminated from the financial statements. The goods were recorded by Shine at the exchange rate ruling on 23 March 2019. Exchange rates were as follows: At 1 January 2015 GBE 1= HK$ 15.52 Average for the year ending 31 December 2019 GBE 1= HK$ 10.05 At 31 December 2018/1 January 2019 GBE 1= HK$ 9.92 At 31 December 2019 GB 1= HK$ 10.25 Required: (a) If the functional currency of Shine Ltd is HK$, which translation method is applicable to translate Shine's financial statements to GB and why? (b) Showing clearly all your workings: (i) Calculate the goodwill arising from the acquisition of Shine Ltd in GBE. (ii) Compute SSG's retained earnings and non-controlling interest as at 31 December 2019. (iii) Prepare SSG's Consolidated Income Statement for the year ended 31 December 2019. (iv) Prepare SSG's Consolidated Balance Sheet for the year ended 31 December 2019