Question FourThe Draft summarised Statement of Financial Position at 30 September 2011 for threeentities, PH, SU and AJ are given below: PH$000SU$000AJ$000Non-current AssetsProperty, plant and equipment 50,390 57,590 41,270Investments:48,000,000 Ordinary shares in SU at cost 75,590Loan to SU 12,6008,000,000 Ordinary shares in AJ at cost 16,400 . .154,980 57,590Current Assets41,270Inventory 10,160 14,410 10,260Current account with SU 10,000Trade receivables 21,400 13,200 11,940Cash and cash equivalents 1,260 3,600 3,58042,820 31,210Total Assets25,780197,800 88,800 67,050Equity and LiabilitiesEquity shares of $1 each 126,000 48,000 24,000Retained earnings 26,500 15,600 28,800152,500 63,600Non-current liabilities52,800Long term borrowings 32,700 12,600Current liabilities11,800Trade payables 12,600 5,400 2,450Current account with PH 0 7,200 012,600 12,600Total Equity and Liabilities2,450197,800 88,800 67,050Additional information:(i) PH acquired all of SU’s equity shares on 1 October 2010 for $75,590,000 when SU’sretained earnings were $7,680,000. PH also advanced SU a ten year loan of$12,600,000 on 1 October 2010.(ii) The fair value of SU’s property, plant and equipment on 1 October 2010 exceeded itsbook value by $1,300,000. The excess of fair value over book value was attributed tobuildings owned by SU. At the date of acquisition these buildings had a remaininguseful life of 20 years. PH’s accounting policy is to depreciate buildings using thestraight line basis.(iii) At 30 September 2011 $90,000 loan interest was due on the loan made by PH to SUand had not been paid. Both PH and SU had accrued this amount at the year end.Financial Operations 15 November 2011(iv) PH purchased 8,000,000 of AJ’s equity shares on 1 October 2010 for $16,400,000when AJ’s retained earnings were $24,990,000. PH exercises significant influence overall aspects of AJ’s strategic and operational decisions.(v) SU posted a cheque to PH for $2,800,000 on 29 September 2011 which did not arriveuntil 7 October 2011.(vi) No dividends are proposed by any of the entities.(vii) PH occasionally trades with SU. In September 2011 PH sold SU goods for $4,800,000.PH uses a mark-up of one third on cost. On 30 September 2011 all the goods wereincluded in SU’s closing inventory.End of Question PaperMaths Tables and Formulae are on Pages 17 and 18TURN OVERRequired:(a) Define what is meant by control and explain how this is determinedaccording to IAS 27 Consolidated and Separate Financial Statements.(5 marks)(b) Prepare the consolidated statement of financial position for the PH group of entitiesas at 30 September 2011, in accordance with the requirements of InternationalFinancial Reporting Standards.Notes to the financial statements are not required but all workings must be shown.

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