Comvid Group (CG) has two subsidiary companies, Smart Packaging Berhad (SPB) and Mandora Berhad (MB), which were acquired in business combination exercises fifteen years ago. In line with CG diversification business strategy, both subsidiary companies operate in two different industries. SPB, which operates in an industrial product sector, manufactures special containers for transporting chemical substance. One of the features of the container is an in-built insulation device that will keep the content of the containers cold. Meanwhile, Digital Wise Berhad (DWB), a company that committed with renewable and green energy, has produced a device which, when attached to the outside of a container, could display the actual temperature of the liquid inside. However, the appropriate way to attach the device to the containers yet to be specifically determined. As SPB was concerned that its competitors may acquire the device from DWB, SPB paid RM1.1 million for the exclusive rights to use the devise with containers. With regard to the issue in attaching the device to the containers, SPB believed that its research and development team had the skills that would enable the company to determine the best way to do so.

Meanwhile, as part of the group diversification strategy, in the fourth quarter of 2019, SPB acquired ProB Sdn Bhd, a small and unlisted company that specialised in providing distribution service for chemical related products. The current return to shareholders for a company in the same industry as ProB is 8% although it is expected that an additional risks premium of 2% will be applicable to ProB due to its smaller size and unlisted status. Meanwhile, a similar listed company to ProB has recently floated on the share market. The company has earnings per share of RM0.70 and a current share price of RM12. ProB Sdn Bhd recorded profit after tax for year 2017 and 2018 of RM298,000 and RM336,000 respectively. Meanwhile, based on several available data such as ProB historical performance and cash flows as well as its market prospect, ProB's estimated cash flow for the next four years are as shown in Table 1 with the cash flow of ProB beyond year four is expected to be indefinite.

Table 1: ProB's estimated cash flows

Year Net cash flow before tax (RM) 2020 256,000

2021 273,000

2023 286,000

2024 310,200

On the other hand, MB produces silver and silver coated jewelry and products. MB anticipated that it needs to purchase 12,000 grams of silver in March 2020 for jewelry to be sold for festival season.Due to uncertainty of the market, MB concerned that the price of silver may increase significantly due to shortage of silver supply. Hence, on 1 October 2019 MB entered into a silver forward contract, which will expire on 31 March 2020, to hedge the risks of increased silver prices.The contract is designated as a cash flow hedge of the anticipated silver purchase. The notional amount of the contract is 12,000 grams of silver and the terms of the contract gave MB the right and the obligation to purchase silver at a price of RM550 per gram.

On 31 March 2020, MB purchased 12,000 grams of silver for RM551 per gram and made settlement on the futures contract. MB processes the silver into silver jewelry and products and the total cost of the finished products excluding the silver inventory purchased in March 2020 is RM638,000. MB managed to sell all its silver jewellery and products in June 2020 for RM10,540,000.

Both SPB's and MB's accounting year ends on 31 December.

what is journal entries with regard to the hedging instrument, the purchase of silver inventory and the sale of the finished products.