On 1 Jan 2019, Float Bhd. acquired 25% of the shares of Lite Bhd. for RM475,000. At this date, all the identifiable assets and liabilities of Lite Bhd. were recorded at amounts equal to fair value and its equity consisted of:

Share Capital RM1,000,000

General reserve 300,000

Assets revaluation reserve 200,000

Retained earnings 200,000

During the year, the followings were reported in Lite Bhd.:

profit of RM250,000

assets revaluation surplus increase by RM50,000 (reported as OCI)

paid dividend of RM40,000

transferred RM30,000 to general reserve

Required:

1. Calculate the excess of the consideration paid over interest acquired in Lite Bhd.

2. Show the journal entries for:

a. Recognition of the investment in Lite Bhd.

b. All necessary recognition for changes of net assets of Lite Bhd. for the year

3. Determine the balance of Float Bhd.s investment in Lite Bhd. at the end of the financial year. Show a note on investment in associate for Float Bhd. in Lite Bhd.

4. Assume that Float Bhd. is a parent and prepares a consolidated financial statement, what changes in the journal entries in (2) above.

5. In the years following the acquisition of interest in Lite Bhd., the followings occurs:

a. Lite Bhd. incur losses for three consecutive years at RM1,160,00 in 2020, RM1,000,000 in 2021 and RM500,000 in 2022

b. Lite Bhd. regain competency in the market and started to make profit again at RM600,000 in 2023

Show the journal entries for the effects of occurrences in (a) and (b) above.