On 1 April 2016, Texas acquired 60% of the equity share capital of KFC in a share exchange of two shares in Texas for three shares in KFC. The issue of shares has not yet been recorded by Texas. At the date of acquisition shares in Texas had a market value of $5 each. Below are the summarised draft financial statements of both companies. STATEMENTS OF PROFIT OR LOSS FOR THE YEAR ENDED 31 MARCH 2017 Texas KFC RM000 RM000 Revenue 85,000 42,000 Cost of sales (63,000) (32,000) Gross profit 22,000 10,000 Distribution costs (2,000) (2,000) Administrative expenses (6,000) (3,200) Finance cost (300) (400) Profit before tax (13,700) (4,400) Income tax expense (4,700) (1,400) Profit for the year 9,000 3,000 STATEMENTS OF FINANCIAL POSITION AS AT 31 MARCH 2017 Texas KFC Assets RM000 RM000 Non-current assets Property, plant & equipment 40,600 12,600 Current assets 16,000 6,600 Total assets 56,600 19,200 Equity and liabilities Equity shares of RM1 each 10,000 4,000 Retained earnings 35,400 6,500 45,400 10,500 Non-current liabilities 10% loan notes 3,000 4,000 Current liabilities 8,200 4,700 Total equity and liabilities 56,600 19,200 2 You are provided with the following additional information: (i) KFC had plant in its Statement of Financial Position at the date of acquisition with carrying value of RM1,000,000 but a fair value of RM2,500,000. The plant had a remaining life of 3 years at acquisition. Depreciation is charged to cost of sales. (ii) The Texas group values the non-controlling interests at fair value. The fair value of the non- controlling interests at the date of acquisition was RM4,500,000. Goodwill is to be impaired by 10% at the reporting date and charged to administrative expenses. (iii) During the year KFC sold some goods to Texas for RM6,000,000 at a markup of 20%. 60% of the goods had been sold during the year. At the yearend, KFCs books showed a receivables balance of RM900,000 as being due from Texas. This is disagreed with the payables balance of RM300,000 in Texass books due to Texas having sent a cheque to KFC shortly before the year end which KFC had not yet received. Required Prepare the consolidated statement of profit or loss and consolidated statement of financial position for Texas for the year ended 31 March 2017.