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460 Chapter 12 Advanced Level Questions 12.7 Tag acqured 120 milon ordinary shares of Kki on 1 January x9 on the following terms Immediate cash payment of RM100 million, Share exchange of one share in Tag for every one share in Kki, RM55 million zero interest loan stock payable on 1 January x10, and RM33 million cash the profts of Kilki increase by 20 percent over the next year To date only the cash payment of RM100 millin has been recorded. Tag's cost of captal is 10 percent The fair value of Tag's and Kki's shares on 1 January x9 were RM2.50 and RM3.50 each, respectively On the acquisiton date, the retained proft of Kid was RM20 milion. Shortly after the acquisition date, Kiki declared and paid ordinary dividends of RM20 million. Tag received its share of the dividends on 10.January x9 and recognised t in its statement of profit or loss. Given below are the statements of financial position of Tag and Kiki as at 31 December x9. Tag RM000 660,000 250,000,000 ordinary shares 300,000,000 ordinary shares Retained profit 10 percent debentures Trade payables 400.000 136,000 200,000 44,000 60,000 30,000 540,000 Land and buildings Plant and equipment Research and development nvestment in Kik Trade receivables 450,000 180,000 160,000 100,000 45,000 50,000 55,000 1,040,000 250,000 160,000 Ni 25,000 40,000 65,000 540,000 Bank Additional informaion a. On 1 January x9, the fair value of Kiki's plant and equipment was RM250 milion. Kiki did not adjust the fnancial statements to reflect the new value. Both the companies depreciate plant and equipment at 20 percent using the reducing balance method. The carrying amount of the plant and equipment of RM160 milion as shown in the statement of financial position of Kii is after providing for year x9 depreciation charge. Kiki did not purchase nor dispose of any plant and equipment during year x9. b. Kki has an organically grown house brand that is identifiable and separable from its other assets. The fair value of the brand is RM30 million, with indefinite useful life. c. Provision is made for the second haltf-year's debenture interest for both the companies. d. Half of the inventories of Kiki were purchased from Tag. Tag made a profit of 25 percent on the invoice price on the inventories sold to Kiki, out of which 10 percent was to cover transport costs. Unrealised profit in the opening inventories of Kiki was RM1 million. e. During the year, Kiki sold to Tag a completed research and development project which was capitalised at RM150 million for RM200 milion. The economic life of this research and The amount shown in the statement of financial position of Tag is net of amortisation. Trade receivables of Tag include RM25 million due from Kiki. However, Kiki remitted RM5 million on 31 December x9, which was received by Tag on 3 January x10. development project is five years g. Twenty percent of the full goodwll was impaired by 31 December x9. the information given, above you are required to prepare the consolidated statement of financial position for the group 460 Chapter 12 Advanced Level Questions 12.7 Tag acqured 120 milon ordinary shares of Kki on 1 January x9 on the following terms Immediate cash payment of RM100 million, Share exchange of one share in Tag for every one share in Kki, RM55 million zero interest loan stock payable on 1 January x10, and RM33 million cash the profts of Kilki increase by 20 percent over the next year To date only the cash payment of RM100 millin has been recorded. Tag's cost of captal is 10 percent The fair value of Tag's and Kki's shares on 1 January x9 were RM2.50 and RM3.50 each, respectively On the acquisiton date, the retained proft of Kid was RM20 milion. Shortly after the acquisition date, Kiki declared and paid ordinary dividends of RM20 million. Tag received its share of the dividends on 10.January x9 and recognised t in its statement of profit or loss. Given below are the statements of financial position of Tag and Kiki as at 31 December x9. Tag RM000 660,000 250,000,000 ordinary shares 300,000,000 ordinary shares Retained profit 10 percent debentures Trade payables 400.000 136,000 200,000 44,000 60,000 30,000 540,000 Land and buildings Plant and equipment Research and development nvestment in Kik Trade receivables 450,000 180,000 160,000 100,000 45,000 50,000 55,000 1,040,000 250,000 160,000 Ni 25,000 40,000 65,000 540,000 Bank Additional informaion a. On 1 January x9, the fair value of Kiki's plant and equipment was RM250 milion. Kiki did not adjust the fnancial statements to reflect the new value. Both the companies depreciate plant and equipment at 20 percent using the reducing balance method. The carrying amount of the plant and equipment of RM160 milion as shown in the statement of financial position of Kii is after providing for year x9 depreciation charge. Kiki did not purchase nor dispose of any plant and equipment during year x9. b. Kki has an organically grown house brand that is identifiable and separable from its other assets. The fair value of the brand is RM30 million, with indefinite useful life. c. Provision is made for the second haltf-year's debenture interest for both the companies. d. Half of the inventories of Kiki were purchased from Tag. Tag made a profit of 25 percent on the invoice price on the inventories sold to Kiki, out of which 10 percent was to cover transport costs. Unrealised profit in the opening inventories of Kiki was RM1 million. e. During the year, Kiki sold to Tag a completed research and development project which was capitalised at RM150 million for RM200 milion. The economic life of this research and The amount shown in the statement of financial position of Tag is net of amortisation. Trade receivables of Tag include RM25 million due from Kiki. However, Kiki remitted RM5 million on 31 December x9, which was received by Tag on 3 January x10. development project is five years g. Twenty percent of the full goodwll was impaired by 31 December x9. the information given, above you are required to prepare the consolidated statement of financial position for the group