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CASE STUDY Irish warto un ASEAN for the Year Ended 31 December Thom s en Da dividends puble Betina pritur Statement of Financial Position as a 31 December 2018 Daiv hd mush RM Property, pland equipment 5450 3.00 H 5.260 Intries Trade valdes Total assets 3.10 2.000 Equity Ordery shoes Retailed prot General reserves 35,000 10000 4000 1,440 400 CHAPTER 17 Changes in Group Structure Changes in Group 525 Iris Bhd RM 000 Daisy Bhd RM 000 Crocus Bhd RM 000 Non-current liabilities 5. Debentures Current liabilities Trade payables Tax payable 600 460 260 770 110 Ordinary dividends payable Total equity and liabilities 200 100 40 100 40 51,380 80 Additional information: 6,620 3,710 (1) Number of ordinary shares in issue as at 31 December 20x8: Iris Bhd Daisy Bhd 35,000,000 Crocus Bhd 4,000,000 2,000,000 None of the companies have increased their shares since incorporation. (ii) On 1 April 20x0, Iris Bhd acquired 800,000 ordinary shares of Daisy Bhd for RM880,000 when the retained profit of Daisy Bhd had a debit balance of RM40,000. On 1 April 20x6, Iris Bhd acquired another 2,400,000 ordinary shares of Daisy Bhd for RM2,880,000 when the retained profit and general reserves of Daisy Bhd had a credit balance of RM200,000 and RM100,000 respectively. (iii) On 1 March 20x8, the fair value of the land of Iris Bhd was RM100,000 more than its book value. No adjustment has been made in its accounts to incorporate this new value. Ignore the deferred tax on revaluation surplus. (iv) On 1 January 20x8, Iris Bhd acquired 50% of Crocus Bhd's issued ordinary shares for RM1,500,000. The terms of acquisition of the shares give Iris Bhd joint control in the operations of Crocus Bhd. (v) During the year, Daisy Bhd sold goods at a price of RM1 million to Iris Bhd, making a profit of 25% on cost. One-quarter of these goods remain unsold in Iris Bhd at 31 December 20x8. (vi) Included in the trade receivables of Daisy Bhd is RM500,000 due from Iris Bhd. Iris Bhd remitted RM100,000 on account of this debt on 28 December 20x8, which was received by Daisy Bhd on 4 January 20x9. (vii) Included in the trade payables of Iris Bhd is RM100,000 due to Crocus Bhd. Financial Accounting and Reporting 3 (viii) Goodwill on acquisition of Daisy Bhd was not impaired, but the investment in Crocus Bhd was impaired by RM5,000 as at 31 December 20x8. (ix) Iris Bhd has not recognized its share of dividends from its investees. (x) It is the group's policy to measure the non-controlling interests at their proportionate share of the subsidiary's net assets. Required: (a) Explain the relationship of the three companies mentioned above. (b) Prepare the consolidated financial statements for Iris Bhd for the year ended 31 December 20x8. Show all workings. CASE STUDY Irish warto un ASEAN for the Year Ended 31 December Thom s en Da dividends puble Betina pritur Statement of Financial Position as a 31 December 2018 Daiv hd mush RM Property, pland equipment 5450 3.00 H 5.260 Intries Trade valdes Total assets 3.10 2.000 Equity Ordery shoes Retailed prot General reserves 35,000 10000 4000 1,440 400 CHAPTER 17 Changes in Group Structure Changes in Group 525 Iris Bhd RM 000 Daisy Bhd RM 000 Crocus Bhd RM 000 Non-current liabilities 5. Debentures Current liabilities Trade payables Tax payable 600 460 260 770 110 Ordinary dividends payable Total equity and liabilities 200 100 40 100 40 51,380 80 Additional information: 6,620 3,710 (1) Number of ordinary shares in issue as at 31 December 20x8: Iris Bhd Daisy Bhd 35,000,000 Crocus Bhd 4,000,000 2,000,000 None of the companies have increased their shares since incorporation. (ii) On 1 April 20x0, Iris Bhd acquired 800,000 ordinary shares of Daisy Bhd for RM880,000 when the retained profit of Daisy Bhd had a debit balance of RM40,000. On 1 April 20x6, Iris Bhd acquired another 2,400,000 ordinary shares of Daisy Bhd for RM2,880,000 when the retained profit and general reserves of Daisy Bhd had a credit balance of RM200,000 and RM100,000 respectively. (iii) On 1 March 20x8, the fair value of the land of Iris Bhd was RM100,000 more than its book value. No adjustment has been made in its accounts to incorporate this new value. Ignore the deferred tax on revaluation surplus. (iv) On 1 January 20x8, Iris Bhd acquired 50% of Crocus Bhd's issued ordinary shares for RM1,500,000. The terms of acquisition of the shares give Iris Bhd joint control in the operations of Crocus Bhd. (v) During the year, Daisy Bhd sold goods at a price of RM1 million to Iris Bhd, making a profit of 25% on cost. One-quarter of these goods remain unsold in Iris Bhd at 31 December 20x8. (vi) Included in the trade receivables of Daisy Bhd is RM500,000 due from Iris Bhd. Iris Bhd remitted RM100,000 on account of this debt on 28 December 20x8, which was received by Daisy Bhd on 4 January 20x9. (vii) Included in the trade payables of Iris Bhd is RM100,000 due to Crocus Bhd. Financial Accounting and Reporting 3 (viii) Goodwill on acquisition of Daisy Bhd was not impaired, but the investment in Crocus Bhd was impaired by RM5,000 as at 31 December 20x8. (ix) Iris Bhd has not recognized its share of dividends from its investees. (x) It is the group's policy to measure the non-controlling interests at their proportionate share of the subsidiary's net assets. Required: (a) Explain the relationship of the three companies mentioned above. (b) Prepare the consolidated financial statements for Iris Bhd for the year ended 31 December 20x8. Show all workings