3 (25 MARKS) AgroAgrimas Sdn Bhd (AASB) is a company that operates in Johor dan Melaka. The company is principally involved in the management, operation, and maintenance of plantations. The crops are mainly oil palm, rubber, durian, meranti, acacia, eucalyptus and karas. The oil palm variety is MPSO certified (Malaysian Sustainable Palm Oil) while the natural rubber clones are certified by the Malaysian Rubber Board. Durians are of D24 and D197(Musang King) variety which is accredited by the Department of Agriculture (DOA). Additionally, AASB also received the Malaysian Good Agriculture Practice certification (MyGAP) which means that the farms and farming practices passed rigorous health, hygiene, and environmental tests enabling the durians to be exported. 3 The useful lives for oil palm, rubber, durian are as follows: EPPA4123 Semester 2 Sesi 2021/2022 Life cycle Immature period Mature period (harvest of agricultural produce) Oli palm Rubber 30 years 4 years 26 years 15 years 7 years 8 years Durian 80 years 7 years 73 years Meranti, acacia dan eucalyptus are planted for timber production for domestic and international markets. Additionally, meranti leaves, seeds and resins are marketed as ingredients for healthcare and cosmetic products. Eucalyptus leaves are also sold as decorative plants to local flower suppliers. Karas trees are planted to produce gaharu for export. Gaharu is obtained from the tree balk through inoculation process which is carried out in the fifth year. The process takes one to two years to produce gaharu. Gaharu is harvested by chipping off the karas trees in portions or wholly. Mature period for meranti, acacia, eucalyptus dan karas are as follows: Mature period (harvest of agricultural produce) Acasia Eucalyptus Karas Meranti 13 years 7 years 7 years 15 years (buah & biji) & 30 tahun (balak) Fair value for oil palm fresh fruit bunches, yet to be harvested durian fruits as well as acacia and karas trees can be estimated based on level 3 inputs of the fair value hierarchy. However fair values for meranti and eucalyptus trees cannot be measured reliably as they are in the early stages of planting. EPPA4123 Semester 2 Sesi 2021/2022 All sales of agricultural produce are carried out by way of contract with customers. Revenue from sales of agricultural produce is recognised when the product is sent to customers or at point of sales. Fresh durian fruits are for domestic market and for export to Japan, while frozen durian (whole fruit) and frozen durian fruit pulp are specifically for export to China. Fresh durian fruits for domestic market are also sold directly to customers through Laman Agromas which is in Melaka and Johor. Laman Agromas are part of plantation area which is developed as agro farm. Besides sales of agricultural produce such as durian, seasonal fruits, and herbs, Laman Agromas also offer accommodation in the form of kampung houses for rental. To generate addition income, AASB invests in debt and equity securities. However, AASB does not have control or significant influence or joint control through investment in equity securities. In early 2021 Ekovas Berhad (EB) acquired controlling interest in Wiramas Sdn Bhd (WSB) with holds 70% interest in AASB. As a result of the transaction, all companies under the WSB group are required to change their accounting period and financial reporting framework for the year ending 2022, in line with the accounting period and reporting framework of the holding company. Required: a) Explain how the acquisition of controlling interest by Ekovas Berhad effects the accounting and reporting practices of AASB for the year ended 2022