IV. INVENTORY TURNOVER?

TASK 2: On 31 December 2016, Simone Bhd. acquired 150,000 RM1 ordinary shares in Peres Sdn. Bhd. for a consideration of RM300,000. The consideration was settled by Peres Sdn. Bhd.'s shareholders accepting 100,000, RM1 ordinary shares in Peres Sdn. Bhd. valued at RM3.00 each. On the same day, Simone Bhd bought 20,000 8% preference shares in Peres Sdn. Bhd. for a cash consideration of RM30,000 The statements of financial position of Simone Bhd. and Peres Sdn. Bhd. at 31 December 2018 were as follows: Peres Sdn. Bhd. Simone Bhd. RM RM RM RM Property, plant and equipment: 372,500 198,950 Freehold land, at cost 501,500 113,400 Plant, at net book value 120,000 150,000 Machinery and equipment 40,000 20,000 Patents and trademarks Investments in Peres Sdn. Bhd.: 150,000 ordinary shares 300,000 20,000 preference shares Loans to Peres Sdn. Bhd 30,000 59,000 Current assets: 130,000 Inventories 62,650 88,000 Trade receivables 30,000 Other receivables 37,500 5,000 Bank 10,000 265,500 6,000 103,650 586,000 1,688,500 Ordinary shares of RM1 each 200,000 800,000 8% preference shares of RM1 each 100,000 Share premium account 10,000 300,000 General reserves 50,000 12,000 Retained profits 284,000 38,400 360,400 Shareholders' funds 1,434,000 Loan from Simone Bhd. 59,000 Current liabilities Trade payables 98,500 52,600 Other payables 50,000 80,000 76,000 Taxation 254,500 64,000 166,600 586,000 1,688,500 1 The followings are the relevant information: a) On 31 December 2016, Peres Sdn. Bhd. had RM8,000 and RM20,000 in the general reserves and retained profits respectively. The share premium account of RM10,000 arose prior to 31 December 2016 b) The freehold land of Peres Sdn. Bhd. had a fair value of RM100,000 in excess of its book value at 31 December 2016. No adjustment had been made in the accounts of Peres Sdn Bhd. for this fair value. c) On 31 December 2016, the inventories of Peres Sdn. Bhd. were assessed to be over-valued by RM20,000. These inventories at acquisition date were fully realized in 2017 and 2018. d) On 31 December 2016, Simone Bhd. revalued Peres Sn. Bhd.'s plant at RM164,000, at which time its written down book value was RM140,000. Peres Sdn. Bhd.'s account was not adjusted to give effect to the revaluation. There were neither plant additions nor disposals by Peres Sdn. Bhd. in 2017 or 2018. Depreciation on plant was calculated at the rate of 10% per annum on the reducing balance method e) The preference shares of Peres Sdn. Bhd. were classified and presented as equity. The preference dividends of 2018 were paid by Peres Sdn. Bhd. on 31 December 2018. Required: Prepare a consolidated statement of financial position of Simone Bhd. as at 31 December 2018. (Total: 20 marks) 2 TASK 2: On 31 December 2016, Simone Bhd. acquired 150,000 RM1 ordinary shares in Peres Sdn. Bhd. for a consideration of RM300,000. The consideration was settled by Peres Sdn. Bhd.'s shareholders accepting 100,000, RM1 ordinary shares in Peres Sdn. Bhd. valued at RM3.00 each. On the same day, Simone Bhd bought 20,000 8% preference shares in Peres Sdn. Bhd. for a cash consideration of RM30,000 The statements of financial position of Simone Bhd. and Peres Sdn. Bhd. at 31 December 2018 were as follows: Peres Sdn. Bhd. Simone Bhd. RM RM RM RM Property, plant and equipment: 372,500 198,950 Freehold land, at cost 501,500 113,400 Plant, at net book value 120,000 150,000 Machinery and equipment 40,000 20,000 Patents and trademarks Investments in Peres Sdn. Bhd.: 150,000 ordinary shares 300,000 20,000 preference shares Loans to Peres Sdn. Bhd 30,000 59,000 Current assets: 130,000 Inventories 62,650 88,000 Trade receivables 30,000 Other receivables 37,500 5,000 Bank 10,000 265,500 6,000 103,650 586,000 1,688,500 Ordinary shares of RM1 each 200,000 800,000 8% preference shares of RM1 each 100,000 Share premium account 10,000 300,000 General reserves 50,000 12,000 Retained profits 284,000 38,400 360,400 Shareholders' funds 1,434,000 Loan from Simone Bhd. 59,000 Current liabilities Trade payables 98,500 52,600 Other payables 50,000 80,000 76,000 Taxation 254,500 64,000 166,600 586,000 1,688,500 1 The followings are the relevant information: a) On 31 December 2016, Peres Sdn. Bhd. had RM8,000 and RM20,000 in the general reserves and retained profits respectively. The share premium account of RM10,000 arose prior to 31 December 2016 b) The freehold land of Peres Sdn. Bhd. had a fair value of RM100,000 in excess of its book value at 31 December 2016. No adjustment had been made in the accounts of Peres Sdn Bhd. for this fair value. c) On 31 December 2016, the inventories of Peres Sdn. Bhd. were assessed to be over-valued by RM20,000. These inventories at acquisition date were fully realized in 2017 and 2018. d) On 31 December 2016, Simone Bhd. revalued Peres Sn. Bhd.'s plant at RM164,000, at which time its written down book value was RM140,000. Peres Sdn. Bhd.'s account was not adjusted to give effect to the revaluation. There were neither plant additions nor disposals by Peres Sdn. Bhd. in 2017 or 2018. Depreciation on plant was calculated at the rate of 10% per annum on the reducing balance method e) The preference shares of Peres Sdn. Bhd. were classified and presented as equity. The preference dividends of 2018 were paid by Peres Sdn. Bhd. on 31 December 2018. Required: Prepare a consolidated statement of financial position of Simone Bhd. as at 31 December 2018. (Total: 20 marks) 2