Accounting For Associate- Financial Accounting and Reporting

On 1 January 2002, CF Bhd (CFB) purchased 25% of the ownership interest in BN Bhd (BNB) for RM700,000. On the date of acquisition, the net assets of KMB were fairly represented by its shareholders funds as follows:

	RM
Share capital	1,600,000
Assets revaluation reserve	300,000
Retained Earnings	100,000
	2,000,000

The following are the financial Statements of the two companies at the end of the financial year 31 December 2005.

	CF Bhd	BN Bhd
Sales	320,000	310,000
Opening Inventory	(66,600)	(59,500)
Purchases	(124,000)	(99,500)
Ending Inventory	73,600	86,000
Gross Profit	203,000	237,000
Expenses	(91,500)	(80,900)
Dividend Income	75,000	-
Operating profit before tax	186,500	156,100
Income tax expenses	(56,000)	(45,100)
Operating income after tax	130,500	111,000
Extraordinary Item (Net of Tax)	-	50,000
Retained Earnings 1/1/05	300,000	200,000
Interim dividends paid	(140,000)	(100,000)
Final dividends declared	(160,000)	(200,000)
Retained earnings 31/12/05	130,500	61,000
Statement of Financial Positions as at 31 December 2005
Share Capital	2,000,000	1,600,000
Assets Revaluation Reserve	300,000	400,000
Retained Earnings	130,500	61,000
Dividends Payable	160,000	200,000
Other Liabilities	54,500	48,000
	2,645,000	2,309,000
Cash	44,400	43,600
Inventory	73,600	86,000
Other current assets	527,000	550,000
Long term assets	1,300,000	1,629,400
Investment in BN Bhd	700,000	-
	2,645,000	2,309,000

You are required to:

a). Prepare the consolidation journal entries. Assume that there is no impairment of goodwill recorded for the current year.

b). Prepare Equity Consolidation Worksheet.