Solution Far450 UITM- Jan 2013
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Final Exam Paper FAR450...
Description
Suggested solution FAR450 – January 2013 Question 1 a. Goodwill on acquisition of Muffin Consideration transferred 20,000 + (60% x 100,000 x ½ x RM3)
RM’000 110,000
(40% x 116,000 )
NCI 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 Consolidat ed Statement of Comprehensive Income for Cake Bhd Group for the year ending 30June 2012
RM’000
Revenue (320,000+270,000) +(180,000x6/12) -40,000 Cost of Sales (110,000+70,000) +(70,000x6/12) -40,000 +4,800 Gross profit Investment income (3,000 - (2,500x80%) - (1,000x80%) + 3,000) Other operating expenses (140,000+113,000) +(29,000x6/12) - 400+1,000 Bargain purchase Profit before tax Taxation (20,000+30,000) +(25,000x6/12) Profit after tax Other comprehensive income: Loss on reduction of NCI Total comprehensive income Profit after tax attributable to: Equity holders of parent NCI
640,000 (179,800) 460,200 3,200 (268,100) 6,400 201,700 (62,500) 139,200 W1(7,000) W1(7,000) 132,200
Total comprehensive income attributable to: Equity holders of parent NCI
119,760 W2 19,440 139,200
112,760 19,440 132,200
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W1: Gain/loss on subsequent acquisition/ Reduction in NCI
RM’000
nd
Cons. trans on 2 acq Net assets on 2 nd acq. date OSC Share Premium FV Adjust. Retained Profit : b/f : CY (60,000 x 3/12)
48,800 100,000 2,000 2,000 90,000 15,000
105,000 209,000 X 20%
Loss
(41,800) 7,000
W2: Profit after tax attributable to NCI Muffin Bhd Before 1/10/2011 Profit for the year 60,000 x3/12 x40% After 1/10/2011 Profit for the year 60,000 x9/12 x20% Bun Bhd Profit for the year URP Amortisation
56,000 x 6/12 2,000 x 6/12
28,000 (4,800) (1,000)
RM’000
RM’000
6,000 9,000
15,000
22,200x20%
4,440 19,440 48 x1/3 = 16 marks
c. Consolidated Statement of Changes in Equity for Cake Bhd Group for the year ending 30 June 2012 RP NCI RM’000 RM’000 W3 111,600 W4 77,600 Balance as at 1 July 2011 Profit for the year 112,760 19,440 W5 42,600 Acquisition of subsidiary during the year 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
RM’000
W3: Retained profit b/f Cake Bhd: 85,000 – 20,200 Muffin Bhd: (90,000 - 12,000) x 60% W4:NCI b/f Muffin Bhd OSC Retained Profit Share premium FV adjustment
64,800 46,800 111,600
RM’000 100,000 90,000 2,000 2,000 194,000
X40%
77,600
2
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
RM’000 100,000 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 Goodwill Impairment
Cherry 78%
RM’000
RM’000
240,000
40,000 64,000 52,800 156,800
80,000 320,000
200,000 12,000 10,000
80,000 x80% 22% x 60,000 x RM4
120,000 7,000 -
2,000 _6,000 (90,000x10%)
(230,000) 90,000 (9,000) 81,000
5,000 _______ (132,000) 24,800
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Investment in Associate (Lychee) Consideration Transferred 40% x 22,500 xRM3.00 Share of post acquisition profit 2,000 x 6/12x40% URP – Inventory Impairment
1,000 x 40%
RM’000 27,000 400 27,400 (400) (2,000) 25,000 NCI Berry (20%)
RM’000
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 (2,000/5 x 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)
80,000 (16,000) (1,800)
NCI Cherry (22%)
RM’000
GRP
RM’000
52,800 (7,200)
35,000 (12,000) 23,000 (250) (4,000) 1,000 (800) (10,000) 3,600 12,550
2,510
15,000 (7,000) 8,000 (1,000) (6,000) 1,000
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
10,040
220
64,710
780
46,000 (400) (17,500) 8,000 1,800 400 (2,000) 53,020 39,920
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Consolidated Statement of Financial Position for Grape Bhd Group as at 30 June 2012
RM’000
Non-current Assets Property, plant and equipment (251,000+210,000+130,000) +2,000 -800-4,000+1,000+5,000 -1,000 Intangibles-Brand Goodwill (81,000 + 24,800) Investment in Associates 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 )
593,200 6,000 105,800 25,000
56,750 46,000 5,000 3,000 840,750
Equity Ordinary share @RM2.00 each Share Premium Retained Profit Non Controlling Interest
350,000 50,000 39,920 117,730
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 parent ’s 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)
5
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 parent’s 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
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Question 4 Furher Berhad Group Consolidated Statement of Cash Flow for the year ended 30 June 2012
RM’000 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
(49,798) 9,800 (18,840) 222
RM’000 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
√ √√ √ √ √ √√ √√ √√ √ √√
√√√√√ √ √√ √ (58,616)
6,000 10,538 (10,724) (1,334)
√√√ √ √√√ √√√ 4,480 (10,176) 2,984 √√ (7,192) 38√ x ½ = 19 marks Presentation: 1 mark
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Workings Taxation payable
RM’000 Tax paid c/f
√ 7,030 b/f 6,164 SoCI
RM’000 5,652 √ 7,542
PPE
RM’000 b/f Acq of sub Revaluation Additions
163,028 √ 22,500 √12,250 √49,798
Depreciation Disposal c/f
RM’000 √ 13,982 √ 6,928 226,666
ARR
RM’000 c/f
20,302
RM’000 b/f PPE
10,502 9,800
OSC
RM’000 c/f
RM’000
b/f Acq of subs 57,522 New issue
45,522 √ 10,000 √ 2,000
Share premium
RM’000 c/f
24,036
RM’000 b/f New issue
20,036 √ 4,000
Goodwill
RM’000 b/f Acq of S
600 √6,444
Impairment c/f
RM’000 √1,888 5,156
Non controlling interest Div pd c/f
RM’000
RM’000
10,724
9,179 √√ 6,164 √ 6,654
b/f Acq of S 11,273 TCI Retained earnings
RM’000 Div payable c/f
2,274 79,995
RM’000 b/f SoCI
65,949 √√ 16,320
Dividend payable
RM’000 Div pd c/f
1,334 6,620
RM’000 b/f RP √
5,680 2,274
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