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Tutorial 1 Topic 1 QUESTION

financial accounting reporting IV

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56 views

Tutorial 1 Topic 1 QUESTION

financial accounting reporting IV

Uploaded by

nurirdinaismail3110
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Tutorial 1

On 1 January 2001, P Bhd acquired an 80% interest in the equity capital of S Bhd for a cash
consideration of RM8,000,000. On this date, the retained profits of S were RM3,000,000. The
financial statements of the two companies for the year ended 31 December 2004 were as
follows:

Statements of Profit or Loss and Other Comprehensive Income


For the year ended 31 December 2004
P Bhd S Bhd
RM’000 RM’000
Sales 12,000 6,000
Cost of goods sold:
Beginning inventories 4,000 3,000
Purchases 9,000 4,000
13,000 7,000
Ending inventories (5,000) (8,000) (3,000) (4,000)
Gross profit 4,000 2,000
Operating expenses (880) (400)
Gain on sale of properties 1,140 1,000
Profit from operations 4,260 2,600
Finance costs (120) (100)
Dividend income 560 ____-
Profit before tax 4,700 2,500
Tax 900 450
Profit for year 3,800 2,050
Other comprehensive income:
Gain on financial assets 1,200 800
Total comprehensive income 5,000 2,850

Movements in Retained Profits:


Retained profits 1 Jan 2004 5,000 4,650
Profit for the year 3,800 2,050
8,800 6,700
Dividends paid (1,300) (700)
Retained profits 31 Dec 2004 7,500 6,000

Statements of Financial Position


As at 31 December 2004
P Bhd S BhD
RM’000 RM’000
Property, plant and equipment 10,500 5,800
Investment in S 8,000 -
Financial assets 5,000 3,000
Current assets:
Inventories 5,000 3,000
Trade receivables 5,000 3,000
Other receivables 280 1,000
Bank balances 980 2,500
11,260 9,500
34,760 18,300

Share capital 16,000 4,000


Fair value reserve of financial assets 2,000 2,000
Retained profits 7,500 6,000
25,500 12,000

Long-term loans 1,200 1,000


Provision for claims 3,000 2,000
Deferred tax 1,300 1,000
Current liabilities:
Trade payables 1,700 1,400
Other payables 510 125
Tax payable 900 425
Bills payable 650 350
3,760 2,300
34,760 18,300

Additional information:

1. Included in the property, plant and equipment of S is a freehold land recorded at cost
of RM1,000,000. At acquisition date, the land had a fair value of RM3,000,000. No
adjustment has been made in the account to reflect the fair value.
2. Non-controlling interest is measured at acquisition date fair value.

REQUIRED:

(a) Compute goodwill on consolidation.


(b) Prepare consolidation journal entries at 31 December 2004.
(c) Prepare the Consolidated Statement of Profit or Loss and Other Comprehensive
Income for the year ended 31 December 2004.
(d) Prepare the Consolidated Statement of Financial Position as at 31 December 2004.

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