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QUESTION 1 (31 MARKS) Following are the financial statements of Jax Berhad, Peri Berhad, Luz Berhad and Alo Berhad for year ended 2019. Statement of Profit or Loss and Other Comprehensive Income for financial year ended 31 March 2019 (RM'Mil) Jax Peri Luz Alo Profit before taxation 585 448 298 138 Less Taxation (130) (100) (70) (30) Profit after taxation 455 348 228 108 Other Comprehensive Income Revaluation reserve 20 15 18 Fair value reserve (30) 16 (53) Total Other Comprehensive Income 50 36 (38) Total Comprehensive Income 505 384 190 132 80 6 24 Statement of Financial Position as at 31 March 2019 (RM' Million) Jax Peri Luz Alo Assets Non-current Property, plant and equipment 67,305 50,334 26,530 23,202 Investment in Peri 39,000 Investment in Luz 22,400 Investment in Alo 6,400 Other Assets 16,970 8,366 3,747 2,006 152,075 58,700 30,277 25,208 Current Inventories 1,200 900 350 150 Other assets 5,800 2,600 760 280 Total assets 159,075 62,200 31,387 25,638 Liabilities Non-current Bonds 2,000 1,500 800 600 Other liabilities 1,800 1,200 600 300 3,800 2,700 1,400 900 Current Payables 600 400 150 50 Total liabilities 4,400 3,100 1,550 950 Equities Share capital @ RM 1 15,000 10,000 8,000 8,000 Revaluation reserve 15,280 5,020 2,415 1,368 Fair value reserve 11,970 6,866 2,447 1,206 Retained profits 112,425 37,214 16,975 14,114 Total equities 154,675 59,100 29,837 24,688 Total equities and liabilities 159,075 62,200 31,387 25,638 Additional information: 1. Following is information about Jax Berhad's investment in Peri, Luz and Alo: Item/Company Peri Luz Purchase date 1 April 2010 1 October 2012 Share price on purchase date RM5.50 RM3.80 Percentage acquired 60% 70% Net assets at purchase date: Share capital @RM 1 (RM' Million) 10,000 8,000 Revaluation reserve (RM' Million) 3,200 1.800 Fair value reserve (RM' Million) 2,800 960 Retained profits (RM" Million) 10,500 6,200 Alo 1 February 2014 RM3.00 25% 8,000 600 420 8.800 The shareholdings in Peri and Luz, give Jax controlling interest in the companies. Whilst, the shareholdings in Alo gives Jax significant influence in the company. The payment of shares in Luz include transfers of a factory to former owner of Luz, Quaint Sdn. Bhd. On the purchase date of Luz, the carrying amount of the factory was RM27 million with remaining economic life of 18 years. Its fair value was RM28.8 million. No record has been made yet on the transfer of the factory. 2. Following is information about Jax's sales of shares: On 1 October 2018, Jax sold 10% of its shareholdings in Luz at RM5.50 per share. On 1 December 2018 Jax sold 40% of its shareholdings in Peri at RM7.00 per share. Remaining shares in Peri gives Jax significant influence in the company On 1 February 2019, Jax sold 50% of its shareholdings in Alo at RM4.50 per share. Remaining shares in Alo is classified as investment in financial asset through reserve. As at 31 March 2019, the share price in Alo was RM4.10. All the sales of shares in Luz, Peri and Alo above have not been recorded yet. 3. The estimated present value of 12-month expected credit losses for Jax, Peri and Luz's other non- current financial assets is RM12 million, RM6 million and RM4 million, respectively. On 1 April 2018, these amounts have not been recorded yet. 4. At reporting date 31 March 2019: There is no significant deterioration on the credit quality of Peri's and Luz's other non-current financial assets. Thus, the two companies estimated present value of 12-month expected credit losses are equal to the amount as at 1 April 2018. There is significant fall in the credit quality for Jax's other non-current financial assets. The present value of the re-estimated lifetime expected credit losses for this asset is RM57 million. 5. As at 31 March 2018, Luz has RM85 million worth of goods purchased from Jax at a 30% profit margin on selling price. On 1 January 2019, Jax purchased RM120 million goods from Luz at a price of 25% profit margin on selling price. As at 31 March 2019, 60% of these goods still remain in Jax's account 6. On 1 July 2018, Luz's board of directors has agreed on resolution to sell one of the company's factories. Later on 1 September 2018, agents were hired to actively advertise the factory for sale and find buyers to make the sale of the factory happens in a year's time. The carrying amount of the factory on 1 April 2018 was RM120 million and with remaining economic life of 12 years. On 1 September 2018, the estimated fair value of the factory is RM108 million. The estimated cost to sell the factory (including agent fee) is 15% of the factory's fair value. On 15 March 2019, Luz accepted RM112 million offer price and sold the factory. All of the above transactions have not been recorded yet in the accounts of Luz. 7. As at 31 March 2019, due to continuous deteriorating performance in several cash generating units in Luz, the group estimated impairment loss on goodwill for investment in Luz is RM215 million. The amount has not been recorded yet in the group account. 8. The company policy is to measure non-controlling interest at fair value of market. 9. Assume profits are distributed evenly throughout the year and no deferred taxation effect. Required: i. Prepare Jax Group's Consolidated Statement of Financial Position as at 31 March 2019. (Student is encouraged to provide workings). (24 Marks) QUESTION 1 (31 MARKS) Following are the financial statements of Jax Berhad, Peri Berhad, Luz Berhad and Alo Berhad for year ended 2019. Statement of Profit or Loss and Other Comprehensive Income for financial year ended 31 March 2019 (RM'Mil) Jax Peri Luz Alo Profit before taxation 585 448 298 138 Less Taxation (130) (100) (70) (30) Profit after taxation 455 348 228 108 Other Comprehensive Income Revaluation reserve 20 15 18 Fair value reserve (30) 16 (53) Total Other Comprehensive Income 50 36 (38) Total Comprehensive Income 505 384 190 132 80 6 24 Statement of Financial Position as at 31 March 2019 (RM' Million) Jax Peri Luz Alo Assets Non-current Property, plant and equipment 67,305 50,334 26,530 23,202 Investment in Peri 39,000 Investment in Luz 22,400 Investment in Alo 6,400 Other Assets 16,970 8,366 3,747 2,006 152,075 58,700 30,277 25,208 Current Inventories 1,200 900 350 150 Other assets 5,800 2,600 760 280 Total assets 159,075 62,200 31,387 25,638 Liabilities Non-current Bonds 2,000 1,500 800 600 Other liabilities 1,800 1,200 600 300 3,800 2,700 1,400 900 Current Payables 600 400 150 50 Total liabilities 4,400 3,100 1,550 950 Equities Share capital @ RM 1 15,000 10,000 8,000 8,000 Revaluation reserve 15,280 5,020 2,415 1,368 Fair value reserve 11,970 6,866 2,447 1,206 Retained profits 112,425 37,214 16,975 14,114 Total equities 154,675 59,100 29,837 24,688 Total equities and liabilities 159,075 62,200 31,387 25,638 Additional information: 1. Following is information about Jax Berhad's investment in Peri, Luz and Alo: Item/Company Peri Luz Purchase date 1 April 2010 1 October 2012 Share price on purchase date RM5.50 RM3.80 Percentage acquired 60% 70% Net assets at purchase date: Share capital @RM 1 (RM' Million) 10,000 8,000 Revaluation reserve (RM' Million) 3,200 1.800 Fair value reserve (RM' Million) 2,800 960 Retained profits (RM" Million) 10,500 6,200 Alo 1 February 2014 RM3.00 25% 8,000 600 420 8.800 The shareholdings in Peri and Luz, give Jax controlling interest in the companies. Whilst, the shareholdings in Alo gives Jax significant influence in the company. The payment of shares in Luz include transfers of a factory to former owner of Luz, Quaint Sdn. Bhd. On the purchase date of Luz, the carrying amount of the factory was RM27 million with remaining economic life of 18 years. Its fair value was RM28.8 million. No record has been made yet on the transfer of the factory. 2. Following is information about Jax's sales of shares: On 1 October 2018, Jax sold 10% of its shareholdings in Luz at RM5.50 per share. On 1 December 2018 Jax sold 40% of its shareholdings in Peri at RM7.00 per share. Remaining shares in Peri gives Jax significant influence in the company On 1 February 2019, Jax sold 50% of its shareholdings in Alo at RM4.50 per share. Remaining shares in Alo is classified as investment in financial asset through reserve. As at 31 March 2019, the share price in Alo was RM4.10. All the sales of shares in Luz, Peri and Alo above have not been recorded yet. 3. The estimated present value of 12-month expected credit losses for Jax, Peri and Luz's other non- current financial assets is RM12 million, RM6 million and RM4 million, respectively. On 1 April 2018, these amounts have not been recorded yet. 4. At reporting date 31 March 2019: There is no significant deterioration on the credit quality of Peri's and Luz's other non-current financial assets. Thus, the two companies estimated present value of 12-month expected credit losses are equal to the amount as at 1 April 2018. There is significant fall in the credit quality for Jax's other non-current financial assets. The present value of the re-estimated lifetime expected credit losses for this asset is RM57 million. 5. As at 31 March 2018, Luz has RM85 million worth of goods purchased from Jax at a 30% profit margin on selling price. On 1 January 2019, Jax purchased RM120 million goods from Luz at a price of 25% profit margin on selling price. As at 31 March 2019, 60% of these goods still remain in Jax's account 6. On 1 July 2018, Luz's board of directors has agreed on resolution to sell one of the company's factories. Later on 1 September 2018, agents were hired to actively advertise the factory for sale and find buyers to make the sale of the factory happens in a year's time. The carrying amount of the factory on 1 April 2018 was RM120 million and with remaining economic life of 12 years. On 1 September 2018, the estimated fair value of the factory is RM108 million. The estimated cost to sell the factory (including agent fee) is 15% of the factory's fair value. On 15 March 2019, Luz accepted RM112 million offer price and sold the factory. All of the above transactions have not been recorded yet in the accounts of Luz. 7. As at 31 March 2019, due to continuous deteriorating performance in several cash generating units in Luz, the group estimated impairment loss on goodwill for investment in Luz is RM215 million. The amount has not been recorded yet in the group account. 8. The company policy is to measure non-controlling interest at fair value of market. 9. Assume profits are distributed evenly throughout the year and no deferred taxation effect. Required: i. Prepare Jax Group's Consolidated Statement of Financial Position as at 31 March 2019. (Student is encouraged to provide workings). (24 Marks)