3.1 and 3.2: issuance and redemption of loan instruments
8.3 Given below is the statement of financial position of Syarikat Raven. The owner, Mr Ravi, has converted the sole proprietorship into a limited liability company. Syarikat Raven Statement of Financial Position as at 31 December x4 RM RM Capital 500,000 Current liabilities Trade payables 22,000 522,000 Non-current assets Plant and machinery (cost) 400,000 Accumulated depreciation (36,000) 364,000 Furniture and fittings (cost) 80,000 Accumulated depreciation (38,000) 42,000 406,000 Current assets Inventories 50,000 Trade receivables 64,000 Bank 2,000 1 16,000 522,000 Gimmik Sdn Bhd was incorporated to purchase the business of Syarikat Raven on 31 December x4. The terms of the sale and purchase of Syarikat Raven are as follows: Gimmick Sdn Bhd is to take over all the assets (except cash at bank) and liabilities of Syarikat Raven for RM650,000. Syarikat Raven has a homegrown brand which is not recognised in its financial statements but will be recognised by Gimmick. The consideration transferred is 100,000 fully paid preference shares valued at RM100,000 and 500,000 fully paid ordinary shares of RM1. 10 per share in Gimmick Sdn Bhd. The fair values of the assets on 31 December x4 are: RM Plant and machinery 340,000 Furniture and fittings 40,000 Inventories 60,000 Trade receivables 60,000 Brand 100,000 The liquidation expenses of RM1,000 are to be paid by Syarikat Raven. Required: i. Calculate the goodwill on business purchase. i. Close the books of Syarikat Raven (journal entries). . Prepare ledger entries to record the transactions in the books of Gimmick Sdn Bhd. iv. Prepare the initial statement of financial position of Gimmick Sdn Bhd.8.6 Colour Bhd was formed to acquire all the assets and liabilities of Blue Sdn Bhd and Red Son Bho as at 31 December x7 The following are the statements of financial position of Blue Sdn Bhd and Red Son Bho as at 31 December x7 Blue Red RM RM 32,000 Goodwill 600,000 400,000 Non-current assets 150,000 80,000 Current assets 782,000 480,000 632,000 420,000 Ordinary shares 100,000 100,000 preference shares 30,000 10,000 Retained earnings 762,000 430,000 20,000 50,000 Liabilities 782,000 480,000 Number of ordinary shares 600,000 400,000 Additional information: a. The registered capital of Colour Bhd consists of preference shares and ordinary shares. b. The fair values of the assets are as follows: Blue Red RM RM Non-current assets 650,000 420,000 Current assets 120,000 60,000 C. The consideration paid by Colour Bhd to Blue and Red is as follows: Blue Red To the preference shareholders RM RM Preference shares To the ordinary shareholders 1 10,000 Ordinary shares (valued at RM1 each) 660,000 450,000 All of the abovementioned shares were fully paid up. Required: i. Determine what a holder of 100 preference shares and a holder of 500 ordinary shares of Blue would receive on liquidation. ii. Prepare the journal entries to close the books of Blue and open the books of Colour Bhd. iii. Prepare the statement of financial position of Colour Bhd immediately after the amalgamation.3.1 On 1 January x1, Arrow Bhd issued 40 million 5 percent redeemable preference shares for RM40 million. These shares are redeemable in five years' time at a premium of 13.5 percent. The effective interest rate is 8 percent. Arrow Bhd measures the preference shares at amortised cost. Required: Show the extracts from the statements of profit or loss and the statements of financial position for the years 31 December x1 and 31 December x2. 3.2 On 1 January x1, CNA Bhd issued 25 million 4 percent redeemable preference shares at RM1 each redeemable at a premium of 18 percent on 31 December x4. The effective interest rate is 8 percent and the interest date is 31 December. The market price of the shares in years x1 to x4 is shown below: RM 31 December x1 1.06 31 December x2 1.10 31 December x3 1.12 31 December x4 1.18 Required: Discuss the accounting treatment where the preference shares are measured at: 1. Amortised cost. ii. Fair value through profit or loss
