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SEM A112 TUTORIAL 10 STATEMENT OF CASH FLOW QUESTION 10_1 In the beginning of year 2011, SEDAR Bhd already

acquired two subsidiaries, JAGA Bhd and LENA Bhd with an equal interest of 80% each. However, during the year, major restructuring process has incurred in the group. An interest in JAGA Bhd was totally disposed and 60% interest in the new subsidiary, KELIP Bhd was acquired by SEDAR Bhd on the same date, 1 September 2011. Besides the two subsidiaries, SEDAR Bhd also acquired 40% interest in PEJAM Bhd for almost two years. Below information is considered important in restructuring process for the group: 1. At the date of disposal, JAGA Bhds statement of financial position was as follows: RM000 200 Land 40 Equipment 160 Accumulated depreciation Inventory ___ Cash 400 RM000 160 180 (40) 80 20 400

Share Capital Retained profit Account payable

2. SEDAR Bhd acquired 60% interest in KELIP Bhd and at the date of acquisition, the statement of financial position of this new subsidiary was as follows: RM000 200 Land 40 Plant 160 Accumulated depreciation Inventory ___ Cash 400 RM000 160 180 (40) 80 20 400

Share Capital Retained profit Long term loan

3. The PARTIALLY of statement of comprehensive income and a statement of changes in equity of PEJAM Bhd and LENA Bhd for year ended 31 December 2011 were as follows: PEJAM Bhd: Statement of Comprehensive Income RM000 Profit before tax 200 Tax (60) Profit after tax 140

Statement of Changes in Equity RM000 Beginning retained profit 200 Profit for the year 140 Dividend (10) Ending retained profit 330 1

LENA Bhd: Statement of Comprehensive Income RM000 Profit before tax 200 Tax (80) Profit after tax 120

Statement of Changes in equity RM000 Beginning retained profit 600 Profit for the year 120 Dividend (20) Ending retained profit 700

The following are the consolidated statement of comprehensive income and PART OF consolidated statement of financial position prepared by SEDAR Bhd for the financial year 2011. SEDAR BHD GROUP CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2011 RM 2,023,000 825,000 1,198,000 18,000 7,500 1,223,500 399,000 3,000 30,000 791,500 80,000 871,500 259,000 24,000 283,000 588,500

Sales Cost of Sales Gross Profit Other Income Gain on sale of machine Administration expenses Finance cost Other expenses Operating profit Share of associated companys profit Profit before tax Tax Share of associated companys tax Profit after tax

SEDAR BHD GROUP CONSOLIDATED STATEMENT OF FINANCIAL POSITION (PARTIAL) AS AT 31 DECEMBER 2011 2011 (RM000) 2010 (RM000) ASSETS Non-Current Assets Property Plant & Equipment 1,303,000 1,200,000 Accumulated depreciation (487,500) (412,500) Land 271,500 225,000 Investment in PEJAM Bhd 64,500 12,500 Goodwill 45,000 52,500

Current Assets Cash Account receivable Inventories Total Assets Non-Current Liabilities Long term loan Current Liabilities Account payable Total Liabilities Additional information:

884,125 217,500 117,750 2,415,875

528,750 178,500 75,000 1,859,750

7,500 80,250 87,750

45,000 105,000 150,000

1. JAGA Bhd was disposed for a cash consideration RM200,000. 2. A 60% interest of KELIP Bhd was being acquired its for a cash consideration of RM200,000. 3. Dividend was paid by LENA Bhd and PEJAM Bhd in year 2011 to all its shareholders by cash. However, new subsidiary, KELIP Bhd not paid any dividend in year 2011. 4. A dividend of RM300,625 was paid by SEDAR Bhd during the year 2011. 5. A profit before tax is computed after considering the following non-cash operating expenses under the administration expenses: Impairment of goodwill RM7,500 Depreciation expenses RM105,000 Share of associated companys profit RM??? 6. A piece of equipment costing RM45,000 which had been depreciated RM30,000 was sold for cash RM7,500. SEDAR Bhd then bought new plant on 30 September 2011 for cash. It is the policy of company not to charge depreciation expense in the year of acquirement for new asset but to depreciate in full in the year of disposal without considering the date for those events occurred. 7. In September 2011, another piece of land was acquired for cash. This land was revalued in December 2011 and it was undervalued by RM12,500. Immediate adjustment was done in the companys record. REQUIRED: Prepare the consolidated cash flow statement by using indirect method for the year ended 31 December 2011.

QUESTION 10_2 Amsyar Bhd, a company incorporated in Malaysia 10 years ago, has a 100% owned subsidiary and 35% interest in an associate. On 1 July 2010, Amsyar Bhd acquired Berkala Bhd for a cash consideration of RM912,000. The draft consolidated financial statements for Amsyar Bhd for the year ended 30 June 2011 are as follows: Amsyar Bhd and subsidiaries Consolidated Statement of Financial Position as at 30 June 2011 2010 RM000 Non-current assets: Property, plant and equipment Investment in associated companies Goodwill on consolidation Total non-current assets Current assets Inventories Trade receivables Interest receivables Cash and bank balances Total current assets Total assets Capital and reserves Share capital Share premium Retained profit Non controlling interest Total capital and reserves Long-term liabilities Loans Current liabilities Trade payables Other payables Taxation Total current liabilities Total equity and liabilities 33,008 5,458 38,466 2011 RM000 37,254 5,580 272 43,106

534 346 3,124 4,848 8,852 47,318

438 1,642 3,488 1,978 7,546 50,652

8,996 2,210 11,486 54 22,746

8,996 2,210 13,710 142 25,058

15,658

18,802

3,814 1,750 3,350 8,914 47,318

1,918 1,426 3,448 6,792 50,652

Amsyar Bhd and subsidiaries Consolidated Statement of Comprehensive Income for the year ended 30 June 2011 RM000 16,634 (13,336) 3,298 400 368 (452) 3,614 (1,044) 2,570 66 2,504

Operating revenue (-) Operating costs Interest income Share of profits of associates Interest and finance cost Profit before taxation Taxation expenses Profit after taxation Net profit attributable to non-controlling interest Net profit attributable to parent Additional information: 1.

Information relating to the acquisition of Berkala Bhd were as follows: The fair value of net assets: Property, plant and equipment Inventories Trade receivables Cash and bank balances Less: Trade payables Loans Non controlling interest Goodwill RM000 1,300 114 596 736 (1,698) (340) 708 (68) 640 272 912

2.

Expenses that include in the operating costs are depreciation expenses amounted to RM5,092; inventories RM450 and other operating costs RM7,794.

REQUIRED: Prepare a consolidated statement of cash flow of Amsyar Bhd for the year ended 30 June 2011 under the indirect method (show all workings).

SUGGESTED ANSWER 10_1 CONSOLIDATED CASH FLOW STATEMENT FYE 31 DEC 2008 Cash Flow From Operating Activities: Profit b4 tax Adjustment: Share of associated companys profit Depreciation Impairment loss Gain on sale of equipment Operating profit before working capital change Increase in AP (80,250 (105,000 160,000) Decrease in AR (217,500 178,500) Increase in inventories (117,750 (75,000 80k +80k) Net Cash From Operating Activities Cash Flow From Investing Activities Acquisition of subsidiary- KELIP Bhd Dividend received from associated company-PEJAM Bhd Disposal of subsidiary JAGA Bhd Sales of equipment (PPE) Purchase of machine (PPE) Purchase of land Net Cash Flow From Investing Activities Cash Flow From Financing Activities Loan paid Dividend paid Parent Dividend paid to NCI LENA Bhd Net Cash Flow From Financing Activities Net increase in cash and cash equivalent Cash and cash equivalents 2007 Cash and cash equivalent 2008 RM 871,500 (80,000) 105,000 7,500 (7,500) 896,500 135,250 39,000 (42,750) RM

W3 W2 W1 1,028,000

(180,000) 4,000 180,000 7,500 (148,000) (34,000)

W5 W6 W7 W8 (170,500)

(197,500) (300,625) (4,000)

W4 W9 (502,125) 355,375 528,750 884,125

SEDAR BHD GROUP WORKING: W1: Increase in inventory Inventory Bal b/f Sub. Acquisition Increase 75,000 80,000 42,750 197,750 W2: Decrease in AR AR Bal b/f 217,500 Decrease 39,000 Sub. disposal Bal c/f 80,000 117,750

197,750

Bal c/f 217,500 W3: Increase in AP AP Dispose Bal c/f 160,000 80,250 Bal b/f Increase

178,500 217,500

105,000 135,250

240,250

240,250

W4: Long term loan Long term Loan Paid Bal c/f 197,500 7,500 Bal b/f Subs. Acq. 45,000 160,000

205,000 W5: Acquisition of subsidiary RM200,000 -20,000 = RM180,000 W6: Disposal of subsidiary RM200,000 -20,000 = RM180,000 W7: Purchase of fixed assets PPE Bal b/f 1,200,000 Sub. Acquisition 180,000 Purchase 148,000 1,528,000

205,000

Disposal Sale Bal c/f

180,000 45,000 1,303,000 1,528,000

W8: Purchase of land Land Bal b/f Sub. Acquisition Purchase Rev. Reserve 225,000 160,000 34,000 12,500 431,500 W9: Dividend paid to NCI RM20,000 x 20% = RM4,000 W10: Dividend received from associate RM10,000 x 40% = RM4,000 Sub. Acquisition 160,000

Bal c/f

271,500

431,500

SUGGESTED ANSWER 10_2 CF from OA Net PBT Adjustments for: Depreciation Interest exp Interest income Share of profit in assc Decrease in inventories (534 + 114 438) Increase in trade rec (3284 692 1192) Decrease in trade and other payables (3814 + 1750 + 1698 1426 1918) Interest exp paid Interest income rec (3124 + 400 3488) Inc tax paid (3350 + 1044 -3448) Net cash generated from operating activities CF from IA Purchased of PPE (5092 + 37254 33008 1300) Acq of sub (912 736) Div received fr assc (5458 +368 5580) CF from FA Proceeds fr loans (18802 15658 340) Div paid to NCI (54 + 68 +66 -142) Reserves changes Net increase / dec in cce Cash beginning Cash ending

3,614 5,092 452 (400) (368) 8,390 210 (700) (3,918) 3,982 (452) 36 (946) 2,620

(8,038) (176) 246 (7,968) 2,804 (46) (280) 2,478 (2,870) 4,848 1,978

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