UKAF3073 Corporate Reporting (May 2020)

UNIVERSITI TUNKU ABDUL RAHMAN

FACULTY OF ACCOUNTANCY AND MANAGEMENT

ACADEMIC YEAR 2020/2021

BACHELOR OF ACCOUNTING (HONS)
TUTORIAL 6
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CSOFP) - PART 2
____________________________________________________________________________

Question 1 (Q10.11)

The Statement of Financial Position of Hills Bhd and Shores Bhd as at 30 June 20x3:
Hills Bhd (RM’000) Shore Bhd (RM’000)
Non-current assets
Land at cost 400
Plant 140 200
Investment in Shore 520
300,000 ordinary shares

Sundry net assets 740 300

Total Assets 1,400 900

Ordinary Shares 1,000 500

Retained Profit as at 1 July 20x2 180 100
Profit for the year 220 200

Non-current Liabilities
10% Debentures nil 100
1,400 900

Additional information:
i. The ordinary share capital of Hills consists of 200,000 ordinary shares and that of Shores
consists of 500,000 ordinary shares. Hills purchased 300,000 ordinary shares in Shore on
1 July 20x2
ii. The fair value of land of Shore on 1 July 20x2 was RM500,000. Shore did not incorporate
this value in its accounts. Subsequently, the fair value increased by RM50,000. There
were no additions or disposals of land during the current year.
iii. The fair value of the plant of Shore was RM100,000 more than its carrying amount on 1
July 20x2. The remaining economic life of the plant was five years as at 1 July 20x2.
iv. The group wants to disclose the land at fair value.
v. Goodwill recognised is limited to the parent's share
vi. Goodwill on consolidation is impaired by 20%.

Required:
Prepare the consolidated statement of financial position of Hills Bhd as at 30 June 20x3.

1
UKAF3073 Corporate Reporting (May 2020)

Question 2 (Q11.5)

The Statement of Financial Position of Aero Bhd and Space Bhd as at 31 Dec 20x7:

Aero Bhd (RM’000) Space Bhd (RM’000)

Non-current assets 790 1,200
Investment in Space at cost:
600,000 Ordinary shares 700
7% RPS (25% of the issued RPS) 50
RM20,000 Debentures 20

Current assets
Interest receivable from Space 2
Trade and other receivables 60 30
Bank 28 70
Total Assets 1,650 1,300

1,000,000 Ordinary Shares 1,000

800,000 Ordinary shares 800
7% RPS 300 200
Retained Profit 200 150

8% Debentures 100
10% Debentures 100

Current Liabilities
Debenture interest payable 8 10
Trade payables 42 40
1,650 1,300

Additional information:
i. Aero bought the ordinary share and redeemable preference shares of Space on 1 January
20x7 when the retained profit of Space was RM60,000.

ii. Both Aero and Space have not provided for redeemable preference shares dividend for year
20x7. Dividends are paid on paid-up capital.

iii. Other receivables of Space include RM5,000 due from Aero but Aero has remitted RM2,000
of it which was not yet received by Space.

iv. Goodwill on consolidation is impaired by 20%.

Required:
Prepare the consolidated statement of financial position of Aero Bhd Group as at 31 December
20x7.

2
UKAF3073 Corporate Reporting (May 2020)

Question 3 (Q11.7)

Given below are the statements of financial position of May and Park as at 31 December x7.

May Park
RM'000 RM'000
700,000 Ordinary shares 800
150,000 Ordinary shares 230
100,000 Redeemable preference shares 100
Retained profit 1 January x7 50 30
Profit for the year 40 50
10% debentures -- 100
890 510
Investments in Park at cost
-Ordinary shares 135 --
-Redeemable preference shares 30 --
-RM45,000 10% debentures 45 --
Sundry net assets 680 510
890 510
Additional information:

a) May acquired the shares and debentures in Park on 1 January x7. The consideration
transferred was as follows:

Financial assets acquired Consideration

Cash Ordinary shares in May
RM
135,000 ordinary shares 135,000 33,000 shares - market value RM3 each
30,000 preference shares 30,000
RM45,000 10% debentures 45,000

May has only recorded the cash paid to acquire the securities.

b) On 1 January x7, May recognised an intangible asset (other than goodwill) in Park and the
fair value of which was RM40,000. The estimated economic life of the asset was four years.
Park has not recorded it. Ignore deferred tax.

c) As at year-end, provision or the year's dividends on preference shares and second half-
year's debenture interest have not been provided by Park. Preference dividends accrued are
RM10,000.

Required:

Prepare the consolidated statement of financial position as at 31 December x7.

Question 4 (Q10.16) (Self learning -answer: Goodwill:280, GRE:680,NCI:1,160, Total assets:7,441)

3
UKAF3073 Corporate Reporting (May 2020)

From the information given below you are required to prepare the consolidated statement of
financial position as at 31 December x8.

Given below are the statements of financial position of Rojak, Salad and Juice as at 31
December x8.
Rojak Salad Juice
RM'000 RM'000 RM'000
Equity
Ordinary share capital 3,400 2,000 1,800
Preference share capital 500
Retained profit 500 300 250

Current Liabilities
Current account
- Salad 80
- Juice 100 60
Trade payables 190 80 220
4,770 2,440 2,270

Non-current Assets
Land at cost 1,000 1,000 1,200
Other non-current assets 400 1,000 700

Investments in subsidiaries
Salad -1,200,000 ordinary shares at cost 2,000
Juice - 800,000 ordinary shares at cost 800

Current Assets
Inventory 160 30 40
Trade receivables 280 150 80
Current accounts
- Rojak 90 100
- Salad 70
Bank 130 170 80
4,770 2,440 2,270
No. of OSC 3,000 1,600 1,000

Additional information:

i. On 1 January x3, Rojak bought 75 percent of the issued ordinary shares of Salad when
the retained profit of Salad was RM200,000. On that date, the fair value of a piece of
land of Salad was RM400,000, whose carrying amount was RM200,000. No adjustment
was made to reflect the fair value.

ii. On 1 January x8, Rojak bought 80 percent of the issued ordinary shares of Juice. The
cost of the business combination was an immediate cash payment of RM800,000,
further cash payment of RM484,000 in two years' time and an issue of 150,000 ordinary
shares in Rojak. The fair value of Rojak's ordinary shares on 1 January x8 was RM4
each. Rojak has to date only recorded the immediate cash payment. The cost of capital
of Rojak is 10 percent and the present value of the deferred payment is RM400,000.

4
UKAF3073 Corporate Reporting (May 2020)

iii. On 1 January x8, the retained profit of Juice was RM50,000 and the fair value of the land
of Juice was RM1,500,000 but no adjustment was made to reflect the fair value. The fair
value on 31 December x8 was RM1,750,000. Juice has not bought or sold any land.

iv. The differences in the current accounts are due to cash in transit.

v. Included in the trade payables of Rojak is RM25,000 due to Salad and RM12,000 due to
Juice. Salad has factored RM8,000 of the amount owing on account of the receivable
from Rojak.

5
UKAF3073 Corporate Reporting (May 2020)

Suggested solution for Question 4 (Q10.16) (Self learning -answer: Goodwill:280, GRE:680,NCI:1,160,
Total assets:7,441)

W1 Group Structure

Rojak

75% 80%

Salad Juice

W2 Draw up a proforma consolidated financial statement

    Rojak Salad Juice adj adj Consol

  RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
Ordinary shares 3400     600   4,000
Preference shares 500       500
Retained profit ( w4) 500       695
Revaluation reserves ( W5)       200 200
NCI ( w 5)         1145
Liabilities current a/c          
- Salad 80     (80)   0
- Juice 100 60   (60) -100 0
Trade Payable 190 80 220 (29)   461
Deferred payment         440
  4770         7441
           
Land at cost 1000 1000 1200 200 250 3950
        300    
Other non-current assets 400 1000 700   2100
Investment in subsidiaries          
Salad - 1.2 m ordinary shares 2000        
Juice - 800,000 ordinary shares 800        
Goodwill ( w2)         280
Inventory 160 30 40   230
T. receivable 280 150 80 (29)   481
Current a/c Rojak   90 100 (80) -100 0
        -10  
Salad     70 (60) -10 0
Bank 130 170 80 20   400
               
4770 2440 2270     7441

6
UKAF3073 Corporate Reporting (May 2020)

W3 Goodwill computation Salad

    RM'000 RM'000
Consideration- 75%   2000
NCI-25% x 2,400   600
    2600
Less: Net assets as acquisition date    
Shares capital 2000  
Pre-acquisition profit 200  
Fair value adjustment - land 200 (2400)
     
Goodwill     200

      Juice
  RM'000 RM'000
Consideration- 85%    
- cash   800
- deferred payment   400 Deferred payment
- New shares ( 150k x $4)   600
NCI-20% x 2,150   430 Dr. COI 400
    2230 Dr. GRE- fin chgs 40
Less: Net assets as acquisition date    
Shares capital 1800   Cr. Deferred Pymt 440
Pre-acquisition profit 50  
Fair value adjustment - land 300 (2150)
     
Goodwill     80

W4 Group Retained Earnings

    Rojak Salad Juice
    Rm'000 Rm'000 Rm'000
Retained profits   500 300 250
Less; pre-acquisition profit   (200) (50)
    100 200
Share of subsidiaries ' profit   75% 80%
- Salah ( 100 x 75%)   75    
- Juice ( 200 x 80%)   160    
       
Finance charges   (40)    
    695    

W5 Non-controlling Interest (NCI)

7
UKAF3073 Corporate Reporting (May 2020)

Salad Juice
      RM'000 RM'000  
At acquisition ( from W3)   600 430  
Post- acquisition profit        
- 100 x 25%   25    
- 200 x 20%     40  
Revaluation of land (1.75m-1.5m) x 20%   50  
Total     625 520 1145