Solution Far450 - Jan 2013

Suggested solution
FAR450 January 2013

Question 1
a. Goodwill on acquisition of Muffin
Consideration transferred
20,000 + (60% x 100,000 x x RM3)
NCI
RM000
110,000
(40% x 116,000)
FV of net assets on d.o.a

OSC
Retained Profit
Share Premium
FV Adjustment
Goodwill
Impairment
46,400
156,400
100,000
12,000
2,000
2,000
(116,000)
40,400
(20,200)
20,200
12 x 1/3 = 4 marks
b. Consolidated Statement of Comprehensive Income for Cake Bhd Group for the
year ending 30June 2012
RM000
Revenue (320,000+270,000) +(180,000x6/12) -40,000
640,000
Cost of Sales (110,000+70,000) +(70,000x6/12) -40,000+4,800
(179,800)
Gross profit
460,200
Investment income (3,000 - (2,500x80%) - (1,000x80%) + 3,000)
3,200
Other operating expenses (140,000+113,000) +(29,000x6/12) - 400+1,000
(268,100)
Bargain purchase
6,400
Profit before tax
201,700
Taxation (20,000+30,000) +(25,000x6/12)
(62,500)
Profit after tax
139,200
Other comprehensive income:
Loss on reduction of NCI
W1(7,000)
Total comprehensive income
132,200
Profit after tax attributable to:
Equity holders of parent
NCI
Total comprehensive income attributable to:
Equity holders of parent
NCI
119,760
W2 19,440
139,200
112,760
19,440
132,200
W1: Gain/loss on subsequent acquisition/ Reduction in NCI

Cons. trans on 2nd acq
Net assets on 2nd acq. date
OSC
Share Premium
FV Adjust.
Retained Profit : b/f
: CY (60,000 x 3/12)
RM000
48,800
100,000
2,000
2,000
90,000
15,000
105,000
209,000
X 20%
Loss
W2: Profit after tax attributable to NCI
Muffin Bhd
Before 1/10/2011
Profit for the year
60,000x3/12x40%
After 1/10/2011
Profit for the year
60,000x9/12x20%
Bun Bhd
Profit for the year
URP
Amortisation
56,000x
6/12
2,000 x 6/12
(41,800)
7,000
RM000
6,000
RM000
9,000
15,000
22,200x20%
4,440
28,000
(4,800)
(1,000)
19,440
48x1/3 = 16 marks
c. Consolidated Statement of Changes in Equity for Cake Bhd Group for the year
ending 30 June 2012
RP
NCI
RM000
RM000
Balance as at 1 July 2011
W3 111,600
W4 77,600
Profit for the year
112,760
19,440
Acquisition of subsidiary during the year
W5 42,600
Reduction in NCI
(41,800)
Transfer to general reserve
(1,000)
Ordinary dividend
(5,000) (2.5x20%+1x20%
(700)
)
Balance as at 30 June 2012
218,360
97,140
W3: Retained profit b/f
Cake Bhd: 85,000 20,200
Muffin Bhd: (90,000 - 12,000) x 60%
RM000
64,800
46,800
111,600
W4:NCI b/f
Muffin Bhd
OSC
RM000
100,000
90,000
2,000
2,000
194,000
Retained Profit
Share premium
FV adjustment
X40%
77,600
W5:Acquisition of Bun during the year

OSC 50,000 x RM2
General reserves
Share premium
FV adjustment
Retained profit : b/f
: CY 56,000 x 6/12
RM000
100,000
3,000
2,000
10,000
70,000
28,000
213,000
X20%
42,600
(24x1/3 = 8 marks)
d. If Cake Bhd recognised non-controlling interest at fair value,the goodwill shall be

accounted for as follows:
1. Goodwill arising from acquisition of Muffin Bhd will be shared between parent and
NCI since full goodwill is applied.
2. Impairment of goodwill will be written off according to the percentage of interest.
40% will be reducing the NCI of Muffin Bhd and 60% will be written off against
group retained profit.
3. The calculation of reduction in NCI on 2 nd acquisition will take into consideration
the goodwill belonging to NCI by writing off part of goodwill according to the
decrease in the NCI percentage
(5x1= 5 marks)
Question 2A
a.
Goodwill
Berry 80%
Consideration Transferred
Direct
100,000 x 80%x RM3
Indirect
NCI
(20% x 100,000 x RM4)
FV of net assets on d.o.a
OSC
Retained Profit
Share Premium
FV Adjustment:
Equipment
Plant
Brand
Cherry 78%
RM000
240,000
80,000
320,000
200,000
12,000
10,000
80,000x80%
22% x 60,000 x RM4
RM000
40,000
64,000
52,800
156,800
120,000
7,000
-
2,000
_6,000 (230,000)
5,000
_______
(132,000)
Goodwill
Impairment
(90,000x10%)
Investment in Associate (Lychee)

Consideration Transferred
40% x 22,500xRM3.00
Share of post acquisition profit
2,000 x 6/12x40%
URP Inventory
Impairment
1,000 x 40%
90,000
(9,000)
81,000
RM000
27,000
400
27,400
(400)
(2,000)
25,000
NCI
Berry
(20%)
RM000
80,000
(16,000)
(1,800)
NCI
NCI @ Acquisition date
Investment in Cherry (80,000 x 20%)
Impairment of goodwill
Retained Profit Berry
Balanced b/d (25,000+10,000)
-pre
Post
URP Inv (3,000x50%x20/120)
URP-Equip(30,000-26,000)
Over depreciation
Under depreciation (2,000/5x 2yrs)
Dividend payable (5%x200,000)
Dividend receivable from Cherry
(6,000 x 60%)
Retained Profit Cherry

Balanced b/d (7,000+8,000)
pre
Post
Under depreciation (5,000/5)
Dividend payable(5% x 120,000)
24,800
NCI
Cherry
(22%)
RM000
52,800
GRP
RM000
(7,200)
35,000
(12,000)
23,000
(250)
(4,000)
1,000
(800)
(10,000)
3,600
12,550
15,000
(7,000)
8,000
(1,000)
(6,000)
1,000
2,510
10,040
220
780
Retained Profit Grape

Balanced b/d (30,000+16,000)
URP Inventory
Dividend payable (5% x 350,000)
Dividend receivable : Berry (80% x 10,000)
: Cherry (30% x 6,000)
Share of profit in Lychee
Impairment of investment in Lychee
CSOFP
64,710
53,020
46,000
(400)
(17,500)
8,000
1,800
400
(2,000)
39,920
Consolidated Statement of Financial Position for Grape Bhd Group as at 30 June 2012
RM000
Non-current Assets
Property, plant and equipment
593,200
(251,000+210,000+130,000) +2,000-800-4,000+1,000+5,000-1,000
Intangibles-Brand
6,000
Goodwill (81,000 + 24,800)
105,800
Investment in Associates
25,000
Current Assets
Inventory (25,000+23,000+9,000) -250
Account Receivable (20,000+19,000+7,000)
Bank (14,000+12,000+6,000) -27,000
Cash in transit (2,000+1,000)
56,750
46,000
5,000
3,000
840,750
Equity
Ordinary share @RM2.00 each
350,000
50,000
39,920
117,730
Share Premium
Retained Profit
Non Controlling Interest
Non-current Liabilities
8% Debentures (140,000+77,000)
217,000
Current Liabilities
Account Payables (14,000+20,000+12,000)
Ordinary Dividend Payable : Parent
: Non-controlling Interest (2,000+600)
46,000
17,500
2,600
840,750
( 87 x 1/3 = 29 marks)
Presentation: 1 mark
Total: 30 marks
b) 4 conditions the parent can be exempted from preparing consolidated financial statement
1. The parent itself is a wholly owned subsidiary, or is a partially owned subsidiary and
the other owner are informed and do not object to the parent not presenting
consolidated Financial Statement,
2. The parents debt or equity instruments are not traded in a public company,
3. The parent is not in the process of issuing in a public market its debt or equity
instrument by filing its financial statements with the regulatory authorities like the
Securities Commission; and
4. The ultimate or any other intermediate parent produces consolidated financial

statements
(4 x 1 = 4 marks)
2B. Grape can no longer be regarded as having significant influence since it has lost its
seat on the board. Therefore in 2013, investment in Lychee will no longer be equity
accounted for. However, Grape will account for its investment in Lychee at its
carrying value and accounted for under FRS 139.
3 x 1 = 3 marks
Question 3
a. 3 situations are as follows:
1. Shears is an extension of the parents operations. Shears obtain all materials
from the parent and sells them and remits the proceeds to the parent.
2. Sales prices are primarily responsive to exchange rate changes in the short term
and are determined primarily by competitive forces.
3. Production costs and operating expenses are obtained primarily from parent
entity
4. High volume of intragroup transactions.
5. Financing primarily from parent.
(Any 3, 1 mark each = 3 marks)
b.
Land
Machine
Accumulated depreciation
Inventory
Monetary assets
Monetary liabilities
SL million
200
80
(20)
30
60
(80)
270
Rate
0.95
0.90
0.90
0.80
0.85
0.85
RM million
190
72
(18)
24
51
(68)
251
200
40
30
270
0.95
0.95
bal. fig.
190
38
23
251
Ordinary shares
Retained earnings: pre
: post
Post acquisition reserves

Less: Retained profit for the year
Exchange difference
RM million
23
(17)
6
21 x 1/3 = 7 marks
Question 4
Furher Berhad Group
Consolidated Statement of Cash Flow for the year ended 30 June 2012
RM000
Cash flows from operating activities
Net profit before tax
Adjustments for:
Depreciation
Impairment of goodwill
Investment income
Interest expense
Gain on disposal of equipment
Operating profit before working capital changes
Increase in inventory
Decrease in trade receivables
Decrease in trade payables
Cash generated from operations
Interest paid
Tax paid
Net cash from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sale of equipment
Acquisition of subsidiary -21,100+2,260
Investment income
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Issue of 10% debenture
Dividend paid to non controlling interest
Dividend paid
Net cash in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalent at the beginning of period
Cash and cash equivalent at end of period
RM000
28,066
13,982
1,888
(222)
3112
(2,872)
43,954
(658)
12,174
(1,368)
54,102
(3,112)
(7,030)
43,960
(49,798)
9,800
(18,840)
222
(58,616)
6,000
10,538
(10,724)
(1,334)
4,480
(10,176)
2,984
(7,192)
38 x = 19 marks
Presentation: 1 mark
Workings
Tax paid
c/f
b/f
Acq of sub
Revaluation
Additions
Taxation payable
RM000
7,030 b/f
6,164 SoCI
PPE
RM000
163,028 Depreciation
22,500
12,250 Disposal
49,798 c/f
RM000
5,652
7,542
RM000
13,982
6,928
226,666
c/f
ARR
RM000
b/f
20,302 PPE
c/f
OSC
RM000
b/f
Acq of subs
57,522 New issue
RM000
45,522
10,000
2,000
c/f
Share premium
RM000
b/f
24,036 New issue
RM000
20,036
4,000
b/f
Acq of S
Goodwill
RM000
600 Impairment
6,444 c/f
RM000
1,888
5,156
RM000
10,502
9,800
Non controlling interest

RM000
10,724 b/f
Acq of S
11,273 TCI
RM000
9,179
6,164
6,654
Div payable
c/f
Retained earnings
RM000
2,274 b/f
79,995 SoCI
RM000
65,949
16,320
Div pd
c/f
Dividend payable
RM000
1,334 b/f
6,620 RP
RM000
5,680
2,274
Div pd
c/f

Solution Far450 - Jan 2013

Uploaded by

Copyright:

Available Formats

Solution Far450 - Jan 2013

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Solution Far450 - Jan 2013

Uploaded by

Copyright:

Available Formats

Suggested solution

FAR450 January 2013

FV of net assets on d.o.a

W1: Gain/loss on subsequent acquisition/ Reduction in NCI

W5:Acquisition of Bun during the year

d. If Cake Bhd recognised non-controlling interest at fair value,the goodwill shall be

Investment in Associate (Lychee)

Retained Profit Cherry

Retained Profit Grape

4. The ultimate or any other intermediate parent produces consolidated financial

Post acquisition reserves

Non controlling interest

You might also like