ACC302: S Ltd and T Ltd were Incorporated in Singapore in January 20×8 They Adopt Singapore Financial Reporting Standards and Present Yearly Financial Statements: Advanced Financial Reporting Assignment, SUSS, Singapore

S Ltd and T Ltd were incorporated in Singapore in January 20×8. They adopt Singapore Financial Reporting Standards and present yearly financial statements with 31 December year-end.

S Ltd acquired 50% interest in T Ltd on 31 December 20×8.

The financial statements of S Ltd and T Ltd for the year 20×8 are as follows:

• Statements of financial position as of 31 December20x8

• Statements of profit or loss and other comprehensive income (partial) for the year ended 31 December 20×8

Assume that S Ltd is permitted to account for T Ltd either as a subsidiary or as an associate. The management of S Ltd is seeking your view as to whether it is more advantageous from the viewpoint of accounting consequences to account for T Ltd as a subsidiary or as an associate.

Required:

Prepare a report to advise the management of S Ltd whether T Ltd should be accounted for as a subsidiary or as an associate, from the viewpoint of accounting consequences. Support your advice with S Ltd’s 20×8 consolidated statement of financial position (where T Ltd is accounted for as a subsidiary), and S Ltd’s 20×8 statement of financial position (where T Ltd is accounted for as an associate), and the related financial analysis. (Consolidation journal entries and worksheets are not required.)