Panda Bhd is a company that listed on Bursa Malaysia. It has finally succeeded in acquiring a controlling interest in Happyland Bhd. On 1 July 2020, Panda acquired 80% of Happyland Bhd equity shares. The consideration consisted of two elements: a share exchange of three shares in Panda for every five acquired shares in Happyland and the issue of a RM100 6% loan note for every 500 shares acquired in Happyland. None of the purchase consideration, both share issue and issue of the loan notes has yet been recorded by Panda. At the date of acquisition, shares in Panda had a market value of RM5 each and the shares of Happyland had a stock market price of RM3.50 each. The retained earnings of Happyland on the date of acquisition was RM18,000. Panda group uses the fair value method to value the non-controlling interest. At the date of acquisition, the share price of Happyland can be deemed to be representative of the fair value of the shares held by the non controlling interest. On 1 July 2020, the fair value of an item of plant in Happyland was RM2,500 more than carrying amount and no changes have been made in the financial statements of Happyland regarding to the fair value adjustment. The plant had a remaining useful life of 25 months at 1 July 2020. All profits and losses accrued evenly throughout the year. On 1 October 2020, Happyland sold a machine worth RM8,000 to Panda for RM12,800. Panda is adopting straight line depreciation at the rate of 15% per annum. Panda had traded with Happyland for many years before the acquisition. Sales from Happyland to Panda throughout the year ended 31 March 2021 were consistently RM12,000 per month. Happyland sells trading inventories to Panda at cost plus 40% and Panda had RM4,000 of these goods in inventory as at 31 March 2021. Trade receivables of Panda include RM1,500 due from Happyland. Panda has factored RM1,000 of these receivables to a third party. It is approaching the year end, the CFO wants to understand how the above acquisition and transactions will be reported, both in the financial statements and elsewhere. She is concerning the issues regarding the acquisition and the conceptual reasons underlying the financial reporting. Given below are the statements of financial position of Panda Bhd and Happyland Bhd as at 31 March 2021.

Statements of financial position as at 31 March 2021 4 Panda Happyland Non current assets Property, plant and equipment 315,000 108,000 Current assets Inventory 19,600 12,800 Trade receivables 13,800 10,000 Bank 11,500 3,500 44,900 26,300 Total assets 359,900 134,300 Equity Ordinary shares of RM1 each 203,900 55,850 Retained earnings 78,000 46,800 281,900 102,650 Non current liabilities 6% loan notes 22,000 Nil Current liabilities Trade payables 33,000 25,450 Other current liabilities 23,000 6,200 78,000 31,650 Total equity and liabilities 359,900 134,300

a. Propose solution that relate to the acquisition of Happyland in group reporting with the consolidated statement of financial position as at 31 March 2021.