EXERCISE On 1 August 2016, Mewah Bhd acquired 90% of the ordinary shares of Kaya Bhd when the retained profit of Kaya Bhd was RM800 million. The goodwill for this acquisition was RM20 million and 10% was impaired in the current year. On 1 September 2020, Kaya Bhd acquired 40 million of the 50 million ordinary shares in Senang Bhd for RM80 million. On that date, the carrying amount of Senang Bhd's net assets reflected their fair values except for land. The carrying amount of the land was RM25 million and it was revalued to RM30 million. At the end of the year, the fair value of the land had increased by another RM3 million. Senang Bhd did not incorporate fair value in its accounts. No impairment on goodwill for the current year. Below are the statements of profit or loss and statements of changes in equity of Mewah Bhd, Kaya Bhd and Senang Bhd for the year ended 31 December 2020. Statements of Profit or Loss for the year ended 31 December 2020 Mewah Bhd RM million Kaya Bhd RM million Senang Bhd RM million Revenue 1,880 1,250 Cost of sales (820) (540) Gross profit 1,060 710 990 (540) 450 Operating expenses (470) (290) (120) Other income 20 Dividends from subsidiary 18 12 Dividend from other investments 2.5 Finance cost (49) (31) (21) Profit before tax 581.5 401 315 Taxation (102) (24) Profit for the year 479.5 350 291 Statements of Changes in Equity for the year ended 31 December 2020 Mewah Bhd Kaya Bhd Senang Bhd. RM million RM million RM million Retained profit brought forward Profit for the year 1,205 479.5 980 590 350 291 Preference dividend (10) Ordinary dividend (30) (20) (15) Retained profit carried forward 1.654.5 1.300 866 Additional information: 1. Details of share capital as at 31 December 2020: Mewah Bhd RM million Kaya Bhd RM million Senang Bhd RM million Ordinary shares Non-redeemable Preference shares 120 100 100 80 50 2. Mewah Bhd acquired 10% ordinary shares in Senang Bhd on 1 September 2020 for RM30 million. On this date, the carrying amount of the net assets of Senang Bhd 3. 5. 6. 7. 8. reflected their fair values except for building. The fair value of this building was RM8 million more than its carrying amount and the remaining useful life of the building was 10 years. The group's policy is to measure non-controlling interest at fair value at the acquisition date. The fair value of the non-controlling interest of Kaya Bhd and Senang Bhd are as follows: 10% holding in Kaya Bhd on 1 August 2016 18% holding in Senang Bhd on 1 September 2020 RM 200 million RM 20 million On 1 January 2018, Mewah Bhd sold a machine carrying amount of RM11 million to Kaya Bhd for RM15 million. On that date, the remaining useful life of the machine was 4 years. The machine is still in Kaya Bhd's books as at 31 December 2020. In 2019, Kaya Bhd sold goods to Mewah Bhd at a profit of RM5 million. The unrealised profits in the opening inventory of Mewah Bhd were RM200.000. During the year, Senang Bhd sold goods to Mewah Bhd for RM43 million at a profit of RM3 million. At the end of the year, half of these goods remain unsold. The group policy is to depreciate all its assets using the straight-line method, giving a full year's depreciation in the year of purchase and none in the year of disposal. All profits and losses are deemed to accrue evenly throughout the year. Required: a. b. Prepare the consolidated statement of profit or loss and other comprehensive income for the year ended 31 December 2020. Prepare the consolidated statement of changes in equity for the year ended 31 December 2020, showing group retained profit and non-controlling interest