could answer this question please

Question 4 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$) 1,700,000. The non-controlling interest in Shine was measured as the proportionate share of the net assets of th subsidiary. No shares have been issued by Shine since acquisition. The summarise income statements and balance sheets of Star Ltd and Shine Ltd as at 31 Decem 2019 were as follows: Income Statement for the year ended 31 December 2019 Star Shir GBE H Sales 37,422,000 9,504, Opening inventories 4,158,000 1,259, Purchases 20,790,000 5,346. Total expenses 415,800 3,421,440 237,600 118,800 1,069,200 Profit before tax Taxation Profit after tax Tutorial 5 10,537,560 2,673,000 7,864,560 2,851,200 712,800 2,138,400 34 Balance Sheet as on 31 December 2019 Parent subsid Star GB 8,316,000 267300 Shine HK$ 5,464,800 lon-current assets vestment in Shine Ltd Current assets: ventories rade receivables hine Ltd ash 1,485,000 3,593,700 85,950 653,400 1,021,680 1,306,800 47,520 Po eet as on 31 December 2019 Star GBE 8,316,000 267300 subsid Shine HKS 5,464,800 Non-current assets Investment in Shine Ltd Current assets: Inventories Trade receivables Shine Ltd Cash Total current assets Total Assets 1,021,680 1,306,800 1,485,000 3,593,700 85,950 653 400 5,818,050 14,401,350 47,520 2,376,000 7,840,800 6 3,564,000 Current liabilities: Trade payables Star Ltd Taxation Total current liabilities Debentures Total assets less liabilities 1,188,000 4,752,000 2,970,000 6,679,350 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: 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. 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. als were transactions have not ents. The goods were recorded by ing on 23 March 2019. (M) Exchange rates were as follows: At 1 January 2015 Average for the year ending 31 December 2019 At 31 December 2018/ 1 January 2019 At 31 December 2019 GB 1= HK$ 15.52 GB 1= HK$ 10.05 GB 1= HK$ 9.92 GB 1= HK$ 10.25 -opening Required: -HR AVER closing (a) If the functional currency of Shine Ltd is HK$, which translation method is applicable to translate Shine's financial statements to GB and why? (b) Showing clearly all your workings: (i) Calculate the goodwill arising from the acquisition of Shine Ltd in GB. Compute SSG's retained earnings and non-controlling interest as at 31 December 2019. Prepare SSG's Consolidated Income Statement for the year ended 31 December 2019. Prepare SSG's Consolidated Balance Sheet for the year ended 31 December 2019. (iii) (iv) (20 marks) Question 4 On 1 January 2015, Star Ltd acquired 75% of the ordinary shares of Shine Ltd in Hong Kong to form Star-Shine Group (SSG). At that date the balance on the retained earnings of Shine Ltd was Hong Kong Dollars (HK$) 1,700,000. The non-controlling interest in Shine was measured as the proportionate share of the net assets of th subsidiary. No shares have been issued by Shine since acquisition. The summarise income statements and balance sheets of Star Ltd and Shine Ltd as at 31 Decem 2019 were as follows: Income Statement for the year ended 31 December 2019 Star Shir GBE H Sales 37,422,000 9,504, Opening inventories 4,158,000 1,259, Purchases 20,790,000 5,346. Total expenses 415,800 3,421,440 237,600 118,800 1,069,200 Profit before tax Taxation Profit after tax Tutorial 5 10,537,560 2,673,000 7,864,560 2,851,200 712,800 2,138,400 34 Balance Sheet as on 31 December 2019 Parent subsid Star GB 8,316,000 267300 Shine HK$ 5,464,800 lon-current assets vestment in Shine Ltd Current assets: ventories rade receivables hine Ltd ash 1,485,000 3,593,700 85,950 653,400 1,021,680 1,306,800 47,520 Po eet as on 31 December 2019 Star GBE 8,316,000 267300 subsid Shine HKS 5,464,800 Non-current assets Investment in Shine Ltd Current assets: Inventories Trade receivables Shine Ltd Cash Total current assets Total Assets 1,021,680 1,306,800 1,485,000 3,593,700 85,950 653 400 5,818,050 14,401,350 47,520 2,376,000 7,840,800 6 3,564,000 Current liabilities: Trade payables Star Ltd Taxation Total current liabilities Debentures Total assets less liabilities 1,188,000 4,752,000 2,970,000 6,679,350 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: 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. 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. als were transactions have not ents. The goods were recorded by ing on 23 March 2019. (M) Exchange rates were as follows: At 1 January 2015 Average for the year ending 31 December 2019 At 31 December 2018/ 1 January 2019 At 31 December 2019 GB 1= HK$ 15.52 GB 1= HK$ 10.05 GB 1= HK$ 9.92 GB 1= HK$ 10.25 -opening Required: -HR AVER closing (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 GB. Compute SSG's retained earnings and non-controlling interest as at 31 December 2019. Prepare SSG's Consolidated Income Statement for the year ended 31 December 2019. Prepare SSG's Consolidated Balance Sheet for the year ended 31 December 2019. (iii) (iv) (20 marks)