BestFood Berhad is one of established Malaysian companies specialized in food manufacturing industries. BestFood Berhad acquired 80% interest of Lazat Berhad for a cash consideration of RM95,000,000 on 31 December 2016. The fair value of identifiable net assets of Lazat Berhad at the acquisition is RM93,000,000 with the retained earnings amounting to RM10,000,000. The excess of the fair value of the identifiable net assets at acquisition is due to an increase in the value of non-depreciable asset. At that date of acquisition, the share price of BestFood Berhad and Lazat Berhad is RM3.50 and RM1.50 The group policy is to measure its noncontrolling interest at an acquisition-dates fair value. Further on 1 January 2019, BestFood Berhad invested in another firm at 30% interest of Sihat Berhad for a cash consideration of RM25 000,000 with retained earnings at the date of acquisition of RM63,000,000. The financial statements of the companies for the year 2020 were as follows: Statement of Profit or Loss and Other Comprehensive Income For the year ended 31 December 2020 BestFood Berhad Lazat Berhad Sihat Berhad RM000 RM000 RM000 Sales 1,067,000 634,000 312,000 Less: Cost of sales 421,000 311,000 143,000 Gross profit 646,000 323,000 169,000 Add: Other income Dividend income 35,000 5,000 - Gain from disposal of PPE 60,000 15,000 8,000 741,000 343,000 177,000 Less: Expenses Administration expense 42,100 31,000 15,800 General expense 31,700 15,700 4,300 Salary & allowances 124,800 68,000 39,000 Selling and distribution 48,000 23,000 23,000 Profit before tax 494,400 205,300 94,900 Less: Tax expense 120,000 51,000 23,000 Profit after tax 374,400 154,300 71,900 Statement of Changes in Equity For the year ended 31 December 2020 BestFood Berhad Lazat Berhad Sihat Berhad RM000 RM000 RM000 Retained earnings 1 January 2020 452,000 45,000 83,000 Add: Profit for the year 374,400 154,300 71,900 Less: Dividend 135,200 20,000 12,000 Retained earnings 31 December 2020 691,200 179,300 142,900 2 Statement of Financial Position As at 31 December 2020 BestFood Berhad Lazat Berhad Sihat Berhad RM000 RM000 RM000 Non-current assets Property, plant and equipment 430,000 197,000 212,000 Investment in : Lazat Berhad 95,000 - - Sihat Berhad 25,000 - - Investment in securities 57,000 48,000 - Loan to Lazat Berhad 41,000 - - 648,000 245,000 212,000 Current assets Inventories 64,000 30,100 51,000 Accounts receivable 121,000 62,000 38,000 Bank 53,000 19,000 26,800 238,000 111,100 115,800 Total assets 886,000 356,100 327,800 Equity Share capital of RM1.00 each 100,000 80,000 50,000 Retained earnings 691,200 179,300 142,900 Total equity 791,200 259,300 192,900 Non-current liabilities Deferred tax 12,000 5,800 - Loan from BestFood Berhad - 41,000 - Loan 32,000 18,000 112,000 44,000 64,800 112,000 Current liabilities Accounts payable 35,000 21,600 17,300 Tax payable 15,800 10,400 5,600 50,800 32,000 22,900 Total liabilities 94,800 96,800 54,900 Total equity and liabilities 886,000 356,100 327,800 Additional information: 1. During the year 2020, Lazat Berhad sold merchandise to BestFood Berhad for invoiced amounts totaling RM5,000,000 of which RM2,000,000 remained in the closing inventory of BestFood Berhad at 31 December 2020. The profit margin was 20% on selling price. The corresponding ending inventories amount in the prior year was RM1,000,000. 2. On 1 August 2020, Sihat Berhad sold goods to BestFood Berhad amounting to RM4,000,000. At year end, RM3,000,000 inventories with profit 25% on selling price were held by BestFood Berhad. 3. Lazat Berhad and Sihat Berhad declared and paid dividend of RM20,000,000 and RM12,000,000 accordingly in year 2020. 3 4. In the year 2020 there was impairment of goodwill at 5%. The impairment of goodwill to be recognized as the administration expense. 5. Bestfood Berhad sold land to Lazat Berhad at RM15,000,000 on 1 March 2020 where the land originally bought at cost RM8,000,000. Lazat Berhad held the land until 28 February 2021 when it was sold to outside party for RM20,000,000. 6. On 30 December 2018, Lazat Berhad sold an equipment to BestFood Berhad for RM6,300,000. The equipment was bought by Lazat Berhad on 1 February 2016 at a cost of RM8,000,000. The estimated useful life of the equipment is 10 years. The group policy is to depreciate the property, plant and equipment (PPE) on a straight line basis on a full years depreciation. The depreciation is charged within administration expense. 7. On 1 January 2020 Sihat Berhad sold a machinery to BestFood Berhad for RM12,000,000. This machinery was bought by Sihat Berhad on 1 January 2018 at cost of RM16,000,000 with full year depreciation policy using the straight-line basis at 20% per annum. This profit is included within gain from disposal of PPE in the books of Sihat Berhad and depreciation is charged within administration expense. 8. The companys income tax rate for the year was 24%. REQUIRED: (a) Compute goodwill for consolidation for BestFood Berhad. (3 Marks) (b) Prepare the consolidation journal entries at 31 December 2020. (50 Marks) (c) Prepare the Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2020. (19 Marks) (d) Prepare the Consolidated Statement of Financial Position as at 31 December 2020. (28 Marks)