Q1. Below are statements of financial position for three companies as at 31 July 2020:

Statement of Financial Position as at 31 July 2020

Non-current assets: Property, plant and equipment Investments Current assets: Inventories Trade receivables Cash & bank Total assets Equity: Equity share capital (RM 1/share) Revaluation surplus Retained earnings Current liabilities: Trade payables Taxation Dividends proposed Total equity and liabilities

Pasha Bhd RM Mil 4,860 4,450 ----------- 9,310 ----------- 1,350 1,720 460 ----------- 3,530 ----------- 12,840 ------------ 5,000 3,000 1,790 ------------ 9,790 1,430 940 680 ------------ 3,050 ----------- 12,840 ------------

Saahir Bhd RM Mil 2,100 750 ----------- 2,850 ----------- 460 520 130 ----------- 1,110 ----------- 3,960 ------------ 1,500 1,200 1,000 ------------ 3,700 100 120 40 ------------ 260 ----------- 3,960 ------------

Faaris Bhd RM Mil 1,530 250 ------------ 1,780 ----------- 375 125 80 ----------- 580 ------------ 2,360 ------------ 800 500 950 ------------ 2,250 70 40 - ------------ 110 ----------- 2,360 ------------

Section B Q1. (Continued)

The following notes should be taken into consideration:

1. Pasha Bhd bought 900 million shares in Saahir Bhd on 1 August 2018, at a cost of RM2.50 per share paid in cash. On that date, the balance on the retained earnings reserve of Saahir stood at RM600 million, and the revaluation surplus was zero. At the date of acquisition, the net assets of Saahir were equal to their carrying values except for certain items of property, plant and equipment, which had a fair value RM400 million in excess of their carrying value. Pasha has had a policy of carrying property, plant and equipment ar fair values. This policy is implemented across all group companies from the date of acquisition. Hence, the fair value was incorporated into the books of Saahir at the acquisition date, and depreciation provided for appropriately.

2. Pasha Bhd bought 640 million shares in Faaris Bhd on 1 August 2019. The consideration for the purchase was RM3 per share in cash. In addition, it was agreed that a further payment of RM1 per share would be made on 31 July 2021 provided certain profit targets were met. The fair value of this component of the consideration was RM400 million on 1 August 2019, and RM520 million on 31 July 2020. The cash payment was recorded in the books of Pasha, but no entry was made to record the contingent element of the purchase price. On 1 August 2019, the retained earnings reserve of Faaris stood at RM830 million, and the revaluation surplus at RM450 million. Faaris has always had a policy of measuring property, plant and equipment at fair value, hence the carrying values of these assets were equal to their fair values at the acquisition date. However, Faaris controls a famous brand name, not recognized in its books, which had a fair value of RM50 million on 1 August 2019. This brand was estimated to have a useful economic life of 20 years from that date.

3. Pasha wishes to use the fair value method to measure the non-controlling interests of Saahir at the acquisition date. The share price of RM2.50 should be used for this purpose. Pasha wishes to use the proportion of net assets method to measure the non-controlling interests of Faaris at the acquisition date.

4. At 31 July 2020, goodwill was assessed for impairment, and the calculation showed that an impairment loss of RM200 million would be recognized in the case of Saahir, and RM150 million in the case of Faaris. No impairment losses had been recognized in the year to 31 July 2019.

5. During the year, Saahir bought goods from Faaris for a total sum of RM20 million. These goods cost Faaris RM15 million. 60% of the goods remained unsold by Saahir at the reporting date.

6. The dividends by both companies were proposed at 31 July 2020. No dividend was paid by any company during the financial year. Pasha has not recognized its share of Saahirs proposed dividend

Section B Q1. (Continued)

7. All workings and solutions should be completed to the nearest RM0.1 million.

Required:

(a) Outline how intra-group dividends should be accounted for in the Consolidated Statement of Profit or Loss and Other Comprehensive Income, and in the Consolidated Statement of Financial Position. (5 marks)

(b)	Prepare a Consolidated Statement of Financial Position for the Pasha Group for the year ended 31 July 2020 together with all the relevant supporting computation. (25 marks)