Prepared consolidated statement of Financial Position of Alto Bhd Group
Alto Bhd has subsidiaries, Combo Bhd and Pico Bhd. The following information is extracted from the Statements of Financial Position of Alto Bho and its subsidiaries as at 31 December 2019: Alto Bhd Combo Bhd Pico Bhd RM million RM million RM million Assets Property, Plant & Equipment (CV) 102 19 45 Investment in Combo Bhd 23 Investment in Pico Bhd 5 30 Investment in Valle Bhd 5 Inventories Trade and bills receivables 20 16 16 Current account - Combo Bhd 14 Cash and bank 11 12 Total 187 72 78 Liabilities Long-term loan 14 Trade and bills payables 18 Current account - Alto Bhd ON ~ Equity 5% Preference shares of RM1.00 each 10 Ordinary shares of RM1.00 each 100 N 30 Retained earnings 39 Other reserves 6 Total 187 72 Acquisition of Combo Bhd Alto Bhd acquired 21 million ordinary shares of Combo Bhd on 1 January 2018. On the date of the acquisition, the retained earnings and other reserves of Combo Bhd stood at RM5 million and RM0.8 million respectively. The acquisition was settled by cash consideration of RM22 million. The non-controlling interest in Combo Bhd was valued using the partial goodwill method. On the acquisition date, a professional valuation revealed that all assets of Combo Bhd reflect the carrying values as stated in the accounts. However, Alto Bhd had recognised a brand which was previously not recognised by Combo Bhd at a value of RM2 million. On 1 January 2019, Alto Bhd acquired 50% of Combo Bhd's 5% preference shares at RM1 million. Acquisition of Pico Bhd Alto Bhd and Combo Bhd acquired 10% and 60% ordinary shares of Pico Bhd respectively on 1 January 2019 when the retained earnings and other reserves of Pico Bhd were RM8 million and RM1.2 million respectively. Alto Bhd and Combo Bhd paid cash of RM5 million and RM30 million for their acquisition respectively. The goodwill on the acquisition was fully impaired by the year end when impairment test was conducted. The non-controlling interest in Pico Bhd was valued at its proportionate share of the net assets of the subsidiary on the acquisition date. Acquisition of Valle Bhd Alto Bhd acquired 40% ordinary shares of Valle Bhd on 1 January 2019 for RM5 million. Bargain purchase on the acquisition was RM0.25 million. Valle Bhd posted profits of RM0.8 million for the accounting year 2019. Inter-Company Transactions 1. Alto Bhd lent RM14 million short-term loan to Combo Bhd. Combo Bhd sent a cheque of RM4 million as partial payment of the loan. However, the cheque was still in transit as at the accounting year end. 2. On 1 July 2019, Combo Bhd purchased a special machine from Alto Bhd by 12 equal monthly instalments of RM0.3 million each. The cost of the machine was RM3 million but Alto Bhd sold it to Combo Bhd at RM 3.6 million. The machine has 3 years useful life and being depreciated using the straight line method (no residual value) on monthly basis. Since July 2019, Combo Bhd duly paid all monthly instalments when they were due. 3. On 1 September 2019, Alto Bhd sold goods to Pico Bhd at a profit of RM1 million. Pico Bhd managed to sell all the goods to Cordoba Bhd by the year end. 4. Pico Bhd has amount outstanding (not paid) for the legal fees and advices to the tune of RM800,000 to the parent company. The amount is recorded as bills payable. 5. Pico Bhd sold a plant to Alto Bhd at a price of RM1.4 million which was also the carrying value of the plant (no profit). The plant has 4 years remaining useful life. By the year end, Alto Bhd still not paid the purchase price to Pico Bhd. 6. In December 2019, Alto Bhd sold goods to Valle Bhd at a profits of RM0.2 million. Required: Prepared the Consolidated Statement of Financial Position of Alto Bhd Group as at 31 December 2019. (30 marks)
