1 117 / 18 - 30/ 6/ 19 FAR610 1/8 Feb-June 2020 Test 1 Time: 1 hour 30 minutes Biscotti Bhd is executing its strategic business investment by investing in Cannoli Bhd, Gelato Bhd and Granita Bhd Given below are the statements of financial position of Biscotti Bhd, Cannoli Bhd, Gelato Bhd and Granita Bhd. Statement of Financial Position as at 30 June 2019 Biscotti Cannoli Gelato Granita Bhd Bhd Bhd Bhd RM Million RM Million RM Million RM Millon Assets Non-current assets (carrying value) 71.0 50.0 20.0 10.0 Investment in Cannoli Bhd 70.0 Investment in Gelato Bhd 4.8 9.6 Investment in Granita Bhd 6.0 Inventories 13.6 15.2 4.0 8.5 Trade Receivables 24.7 16.8 2.2 2.2 Bill Receivables 18.2 7.2 Bank 28.18 2.8 4.0 2.8 236.48 101.6 30.2 23.5 Equities Ordinary share capital 112.9 40.0 Retained profit as at 1 July 2018 20.0 16.0 53.2 24.2 2.0 Retained profit for the year 12.6 7.5 4.8 Other reserve as at 1 July 2018 1.2 15.0 8.0 Other reserve transfer for the year 5.0 2.0 Liabilities Trade Payables 19.48 11.9 Ordinary dividend payables 2.4 4.3 6.0 Bill Payables 2.0 0.9 12.3 6.0 2.1 236.48 101.6 30.2 23.5 Additional information: 1. Biscotti Bhd purchased 80% of the issued ordinary shares of Cannoli Bhd on 1 July 2018. The acquisition of the ordinary shares was settled by cash payment of RM6 million and issuance of 20 million shares in Biscotti Bhd. The share's market prices of Biscotti Bhd and Cannoli Bhd on 1 July 2018 were RM3.20 and RM2.00 respectively. 2. At the acquisition date, Cannoli Bhd's land was revalued at RM5 million more than the carrying value.3. On 1 August 2018, Biscotti Bhd and Cannoli Bhd acquired 20% and 40% of Gelato Bhd's ordinary shares respectively. The market price of Gelato Bhd's ordinary share on 1 August 2018 was RM1.50 each. 4. Biscotti Bhd acquired 30% ordinary shares of Granita Bhd on 1 January 2019 for RM6 million. Since the acquisition date, Biscotti Bhd applies equity accounting to account for its investment in Granita Bhd. Investment in Granita Bhd was impaired by RMO.1 million on 30 June 2019. 5. On 1 October 2018, Biscotti Bhd sold one of its plant to Gelato Bhd at RMO.2 million O more than its carrying value. It is the group policy to depreciate plants at 10% on net book value. G - C 50x 1/2 x 207, * 1 6. On 1 January 2019, Gelato Bhd sold goods, on credit, to Cannoli Bhd invoiced at RM1 million at 20% margin. Half (1/2) of these goods were still remained in Cannoli Bhd's inventory on 30 June 2019. Cannoli Bhd has not paid the amount outstanding. 7. 50% of bills payable in Cannoli Bhd were in favor of Biscotti Bhd, of which 60% has been discounted to non-related parties. BR - BP - 1: 2n 8. Neither Biscotti Bhd nor Cannoli Bhd has recorded income from their respective investment. 9. Goodwill on the acquisition of Cannoli Bhd had been impaired and should be written down by 20%. 10. The non-controlling interest is measured at the fair value at the acquisition date. 11. All profits are deemed to accrue evenly throughout the year. 12. Ignore deferred tax on fair value adjustment and inter-company sale of assets. Required: Prepare the consolidated statement of financial position of Biscotti Bhd group as at 30 June 2019. (40 marks) END OF