BKAR3043__ CONFI CONFIDENTIAL _ FINAL EXAMINATION SECOND SEMESTER 2021/2022 SESSION BKAR3043 FINANCIAL ACCOUNTING AND REPORTING IV 20 JULY 2022 (WEDNESDAY) COURSE CODE/NAME DATE TIME 2.30 PM — 5.30 PM (3 HOURS) VENUE DMs INSTRUCTIONS ‘This paper contains FIVE (5) questions on ELEVEN (11) printed pages excluding the cover page. ‘Answer ALL questions in the answer booklet. Candidates are bound by the UUM's RULES AND PROCEDURES ON ACADEMIC. FRAUD. wn MATRIC NO. : (in words) IDENTIFICATION CARD NO.: LECTURER’S NAME: GROUP: TABLE NO.: DO NOT OPEN THIS EXAMINATION PAPER UNTIL INSTRUCTED CONFIDENTIALBKAR3043 FINANCIAL ACCOUNTING AND REPORTING IV QUESTION 1 (30 MARKS : 54 MINUTES) On 1 January 2018, Rahmat Bhd (RB) acquired 70% interest in Gema Bhd (GB) for a consideration of RM1,960,000. GB has 1,000,000 ordinary shares issued at RM1.00 each. The retained earnings and revaluation reserve of GB on this date were RM1,500,000 and RM30,000 respectively. The price paid by RB for the acquisition in GB was representative of the fair value of GB. On 1 May 2019, RB acquired 15% interest in Pelangi Bhd (PB) for a consideration of RM360,000 when the retained earings of PB were RM800,000. PB has 1,000,000 ordinary shares issued at RM1.00 each. The market price of PB’s shares on this date was RM2.40 per share. The financial statements of the three companies for the year ended 31 December 2021 were as follows: Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2021. RB GB PB RM’000 _RM’000. M7000 Revenue 2,000 600 1,050 Cost of sales 050) ___ (345) (670) Gross profit 950 255 480 Operating expenses (390) (120) (150) Profit from operations 560 135 330 Other income 606 48 Profit before tax 7,166 183 330 Tax (292) (46) (82) Profit for the year 874 137 248, Other comprehensive income: 0 Gain on revaluation of property 30 - - Total comprehensive income for the 904 year 137 248 Movement in retained earnings: Retained earnings 1 January 2021 4,800 1,650 2,010 Profit for the year 874 137 248, Dividends paid ___Q10) (3) (60) Retained earnings 31 December 2021 5464 1,712 2,198BKAR3043 FINANCIAL ACCOUNTING AND REPORTING IV. ‘Statement of Financial Position as at 31 December 2021 RB GB PB Assets RM’000_ _RM’000__RM°000 Property, plant and equipment 6,052 930 3,474 Investments, at cost: Investment in GB 1,960 Investment in PB 240 2,100 Current assets 4,470 1,115 4,230 Total assets 12,722 4,145 7,704 Equity and Liabilities — — Share capital, issued at RMI each 2,000 1,000 1,000 Retained earnings 5,464 1,712 2,198 Revaluation reserve 60 30 ‘Non-current liabilities 3050 653 2,346 Current liabilities 2148 750 2,160 12,722 4145 7,704 Additional information: 1. GB acquired 80% interest in PB on 30 September 2019 for a consideration of RM2,100,000 when the retained earnings of PB were RM975,000. The market price of PB’s shares on this date was RM2.50 per share, The net assets of PB were stated at fair value except for its building. The building was recorded at its historical cost although the market value of the land was RM100,000 higher than the historical cost. No revaluation has been made to the value of the building. The building has a remaining useful life of 20 years. 2. On 1 April 2021, RB sold one-third of its interest in PB for 180,000. Gain or loss on disposal of shares was included within other income. 3. During 2021, GB sold inventories for RM100,000 to RB. As at 31 December 2021, RM33,500 remained in the ending inventories of RB. The corresponding intragroup sales and ending inventories for the 2020 financial year were RM65,000 and RM20,000, respectively. The profit margin to GB was 30% on selling price. 4. RB sold machine to PB on I May 2021 for RM300,000, The book value of the machine on that date was RM280,000. The machines were depreciated at 20% per year, Full year depreciation was recorded in the year of purchase. Gain or loss on disposal of machine was included within other income. 5. All dividends were paid during the current year. Dividend income was included within other income. 6. RB measures non-controlling interest at fair value. . ‘Tax effects on unrealized profit or loss on inter-company transactions should be ignored. 8. Assume revenue accrued evenly throughout the year,BKAR3043 FINANCIAL ACCOUNTING AND REPORTING IV REQUIRED: (@) Calculate goodwill on consolidation in GB and PB. Show allocation of goodwill to parent in PB. ( Marks) () Prepare the relevant consolidation journal entries of RB and its subsidiaries for the year ended 31 December 2021 using one-stage method. (17 Marks) (©) Prepare the Consolidated Statement of Profit or Loss and Other Comprehensive Income of RB and its subsidiaries for the year ended 31 December 2021. (8 Marks)BKAR3043 FINANCIAL ACCOUNTING AND REPORTING IV QUESTION 2 (20 MARKS: 36 MINUTES) Hidup Ditentu Bhd was incorporated 21 years ago. The consolidated financial statements of Hidup Ditentu Bhd for the year ended 30 April 2022 are as follows: ‘Widup Ditentu Bhd Consolidated Statement of Financial Position —_____asat30April2022 0 2 302i RM’000 RM’000 ASSETS Non-current Assets Property, plant and equipment (net) 2,890 3,820 Intangible assets (net) 260 298 Goodwill (net) 235 260 Investment in joint venture 205 180 Investment in associate 610 530 Total non-current assets F200 5,088 Current Assets Inventories 2,650 850 Trade receivables 650 430, Cash 1,748 360 Total current assets 5,041 1,660 TOTAL ASSETS 9,248 6,748 EQUITY AND LIABILITIES Equity Share capital, issued at RMI each 2,050 2,050 Retained earnings 3,132 1,850 5,182 3,900 ‘Non-controlling interests 400 1,468 Total Equity 5582, 5,368 Non-current liabilities Long term loan 1,356 250 Total non-current liabilities 1,356 250) Current liabilities Trade payables Tax payable Dividends payable Total current liabilities Total liabilities TOTAL EQUITY AND LIABILITIESBKAR3043 FINANCIAL ACCOUNTING AND REPORTING IV Hidup Ditentu Bhd Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 April 2022 2022-2021 RM’000 —-RM°000 Revenue 10,000 7,000 Cost of sales 3,563) (2,450) Gross profit 6,437 4,550 Other income 500 - Depreciation expense (1,558) (1,162) Amortization expense (38) (38) Goodwill impairment loss 23) : Finance cost (230) (235) Other expenses (1,300) (949) Loss on disposal of subsidiary (525) - Share of results in joint venture 25 20 Share of profit in associate 185 22 Profit before tax 3474 2,208 Taxation (815) (542) Profit after tax 2,656, 1,666 Attributable to: Owners of the company 2,082 1,228 ‘Non-controlling interest S74 438 —— 2,856 __1,666 Additional information: 1. During the year, Hidup Ditentu Bhd purchased an equipment for RM3,778,000 in eash. 2. In October 2021, Hidup Ditentu Bhd sold one of its investments in associates valued at RM350,000 for cash consideration of RM450,000. The gain of disposal was recorded in other income. 3. On 15 February 2022, Hidup Ditentu Bhd acquired a 25% interest in Pandu Peta Bhd by cash amounted to RM275,000. During the year, Pandu Peta Bhd paid dividend to the shareholders of Hidup Ditentu Bhd. 4, In December 2021, the company disposed one of its subsidiaries, Ubah Arah Bhd for a cash consideration of RM1,005,000. Hidup Ditentu Bhd acquired Ubah Arah Bhd at 70% equity interest in 2016 and the share price at the date of disposal was RM2.40. The non- controlling interest was measured at fair value. Information relating to the disposal of Ubah Arah Bhd were as follows:BKAR3043 FINANCIAL ACCOUNTING AND REPORTING IV + M000 Rw000 Property, plant and equipment Share capital, issued at (net) 3,150 RMI each 2,250 Inventories 450 Retained earnings 900 Trade receivables 225 Long term loan. 450 Cash 90 Trade payables 225 __ Tax payable 90 3,915 3,915 5. Hidup Ditentu Bhd paid dividend of RM800,000 during the year. REQUIRED: Prepare the Consolidated Statement of Cash Flows of Hidup Ditentu Bhd for the financial year ended 30 April 2022 in accordance with MFRS 107 Statement of Cash Flows using the indirect method. (20 Marks)BKAR3043 FINANCIAL ACCOUNTING AND REPORTING IV. QUESTION 3 (10 MARKS: 18 MINUTES) A. The Chief Executive Officer of Eazy Bhd plans to report its five business operations in reportable segments, The financial results of these segments for the year ended 31 December 2021 are as follows: Business Total revenue Profit (loss) Total assets Agriculture 18,100, 3,090, 20,700 Property 12,800 1,080 20,200 Hotel 1,300 (920) 8,900 Health 1,800 (520) 6,200 Engineering 1,500 480 7,500 REQUIRED: Demonstrate whether each business segment is a reportable segment based on the MFRS 8 Operating Segments. Justify your answers. Round your answers to TWO (2) decimal places. ( Marks) B. Mr, Redwan is the managing director of Best Supplies Group Bhd, a chain of supply stores on Malaysia's in Kedah, Penang and Perak. The following transactions occur in the financial year ended 2021: (a) Mr. Foo is the Senior General Manager of Best Supplies Group Bhd's sales and marketing division, where he is in charge of all important pricing and discount decisions. (b) Mr Redwan’s wife, Puan Shima, is also the CEO of Fantastic Bhd, which provides cleaning services to Best Supplies Group Bhd. (©) TTR Berhad is the distributor of Best Supplies Group Bhd products for all its stores in Kedah, Penang and Perak. REQUIRED: (@) Identify whether the above individual or entity is a related party based on MFRS 124 Related Party Disclosure. (Marks) (b) Discuss how the above transactions should be dealt with in the financial statements of Best Supplies Group Bhd for the financial year ended 2021. (2 Marks)‘BKAR3043 FINANCIAL ACCOUNTING AND REPORTING IV + QUESTION 4 (20 MARKS: 36 MINUTES) On 1 January 2020, Maleate Bhd acquired a wholly owned subsidiary, Bulawe Limited, in Bulgaria. At the date of acquisition, the net assets of Bulawe Limited was BGN2,000,000 including share capital of BGN1,800,000 and a credit balance of BGN150,000 and BGNS50,000 for its retained earnings and revaluation reserves, respectively. The revaluation reserve account comprises the revaluation of non-depreciable asset only which was acquired on 31 October 2020 at cost of BGN90,000. This non-depreciable asset was revalued on 31 December 2021. The financial statements of the subsidiary for the year ended 31 December 2021 were as follows: Bulawe Limited Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2021 BGN Lev Sales 360,000 Cost of sales (221,000) Gross profit 139,000 Operating expenses (56,000) Profit before taxation 83,000 Taxation (24,900) Profit after taxation 58,100 Revaluation surplus 40,000 Total comprehensive income Movement in retained earnings: Retained earnings 1 January 2021 165,000 Profit for the year 58,100 Retained eamings 31 December 2021 223,100 Bulawe Limited Statement of Financial Position as at 31 December 2021 BGN Lev ‘Non-curtent assets 1,869,000 Current assets: Inventories 41,000 Trade receivables 50,000 Cash 280,000 Total assets 2,240,000 Current liabilities: Trade payables (62,000) Tax payable (24,900) Non-current liebilities: Long term loan (70,000) Net assets 2,113,100 8BKAR3043 FINANCIAL ACCOUNTING AND REPORTING IV Share capital 1,800,000 Revaluation reserve 90,000 Retained earnings 223,100 Total Equity 2,113,100 ‘The following information were provided: 1, The relevant exchange rates were as follows: Date BGN to RM T January 2020 2.40 Average for the year ended 31/12/2020 2.35 Average for the year ended 31/12/2021 230 31 December 2020 2.45 31 December 2021 2.32 2, Bulawe Limited conducted their business transactions in Bulgarian currency “Lev” (BGN Lev). REQUIRED: (Round your answers to TWO (2) decimal places) (@) Compute the translation gain/loss in 2021. (5 Marks) (6) Prepare a set of translated financial statements of Bulawe Limited in accordance with MERS 121 The Effect of Changes in Foreign Exchange Rate for an entity, which include: (Statement of Comprehensive Income for the year ended 31 December 2021. (6 Marks) (ii) Statement of Financial Position as at 31 December 2021. (7 Marks) (©) Discuss the accounting treatment for foreign currency transactions at both initial recognition date and subsequent date. (2 Marks)‘BKAR3043 FINANCIAL ACCOUNTING AND REPORTING IV QUESTION 5 (20 MARKS: 36 MINUTES) Kilauan Emes Bhd was incorporated in 2013 and it offers a wide range of gold and gemstones jewelries. Mr. Jackel, a new accounting officer of Kilauan Emas Bhd was given a task in determining the basic and diluted earnings per share for the year ended 2020 and 2021. Partial ‘Statement of Financial Positions of Kilauan Emas Bhd as at 1 January were as follows: 2021 2020 RM’000 RM’000 Share eapital Ordinary shares, 50,000,000 units issued and fully paid 250,000 250,000 12%, ‘cumulative convertible preference shares, 200,000 200,000 20,000,000 units issued and fully paid Reserves Retained earnings 500,000 680,000 Other reserves 30,000 50,000 Total equity 980,000 1,180,000 Long-term debt 10%, convertible bond 200,000 200,000 Total equity and total liabilities 1,180,000 1,380,000 Additional information: 1 On 31 March 2021, the board of directors of Kilauan Emas Bhd authorised the exercise of bonus issues of TWO (2) shares for each ordinary share outstanding. The 12% cumulative, convertible preference shares were issued on 1 January 2018. Each preference share is convertible into 10 ordinary shares. On 30 Jun 2021, 2,000,000 units of convertible preference shares were converted into ordinary shares. The 10% convertible bond was issued on 3 January 2019. Each RMI1,000 of the bond is convertible into 200 ordinary shares. On 30 September 2021, 25% of the 10%, convertible bond was converted into ordinary shares. Kilauan Emas Bhd approved an employee share option scheme (ESOS) on 1 January 2019 with an exercise price of RM1O per share for all key executive directors of the company as follows: Name of directors Units at 1 Jan 2021 Dato” Habeeb 1,250,000 Dato’ Seri Wah Chan 1,000,000 ‘Tan Sti Poh Kong 500,000 Dato” Anuar 250,000, Only 40% of the total ESOS has been exercised on 31 October 2021. The average market price of the shares for the year 2020 was RMI5 while the share price on 31 December 2019 was RM14. 10BKAR3043 FINANCIAL ACCOUNTING AND REPORTING IV ‘The 12% cumulative, convertible preference shares were issued on 1 January 2018. Each preference share is convertible into TEN (10) ordinary shares. On 30 Jun 2021, 2,000,000 units of convertible preference shares were converted into ordinary shares. 6. Kilauan mas Bhd issued 1,000,000 ordinary shares for cash at a price of RMI1.00 per share on 30 November 2021 7. Net income for the year ended 31 December 2020 and 2021 were RM60,000,000 and RM100,000,000 respectively. 8. The corporate tax rate was constant for both years at 24%. REQUIRED: (Round your answers to TWO (2) decimal points) (@) Calculate comparative basic earings per share (BEPS) for Kilauan Emas Bhd for the years ended 31 December 2020 and 2021. (8 Marks) (b) Prepare a table of eamings per incremental share (EPIS) for all potential ordinary share (POS) for the year ended 31 December 2021. Indicate whether each POS is dilutive or anti-dilutive, (10 Marks) (©) Calculate diluted earnings per share (DEPS) for Kilauan Emas Bhd for the year ended 31 December 2021 in accordance with MFRS 133 Earnings Per Share. (2 Marks) END OF QUESTIONS n