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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

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:

Simone Bhd.

Peres Sdn. 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

30,000

Loans to Peres Sdn. Bhd.

59,000

Current assets:

Inventories

130,000

62,650

Trade receivables

88,000

30,000

Other receivables

37,500

5,000

Bank

10,000

265,500

6,000

103,650

1,688,500

586,000

Ordinary shares of RM1 each

800,000

200,000

8% preference shares of RM1 each

-

100,000

Share premium account

300,000

10,000

General reserves

50,000

12,000

Retained profits

284,000

38,400

Shareholders funds

1,434,000

360,400

Loan from Simone Bhd.

-

59,000

Current liabilities:

Trade payables

98,500

52,600

Other payables

80,000

50,000

Taxation

76,000

254,500

64,000

166,600

1,688,500

586,000

The followings are the relevant information:

  1. 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.
  2. 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.
  3. 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.
  4. On 31 December 2016, Simone Bhd. revalued Peres Sdn. 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.
  5. 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.

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