QUESTION 1 (20 MARKS)

Koala Group, a manufacturing company situated in Taiping, Perak. Given below are the consolidated financial statements of Koala Group.

QUESTION 2 (20 MARKS)

The summarized statements of profit or loss of Henna, Selasih and Zehra for the year ended 31 December 2021 and their summarized statements of financial position at 31 December 2021 are given below :

Income Statements

Revenue	Henna RM'000 2,500	Selasih RM'000 1,000	Zehra RM'000 2,000
Expenses	(1,600)	(1,200)	(1,600)
Operating profit	900	(200)	400
Dividend from Zehra		30
Profit before tax	900	(170)	400
Taxation	(300)	40	(100)
Profit after tax	600	(130)	300
Dividends paid	200		100
Retained profit b/f at 1 January 2021	500	(270)	200

Additional information :

1. The number of issued ordinary shares is as follows :

Henna	1,000,000
Selasih	600,000
Zehra	400,000

2. Henna purchased the shares in Selasih on 1 January 2018 when the retained profit of Selasih was RM100,000.
3. During the year, Henna sold stock to Selasih for RM400,000 (including a mark up of 331/3 percent). Haf of these goods remain unsold in Selasih. The unrealised profit in Selasihs opening stock amounted to RM15,000.
4. Goodwill on consolidated of Selasih was fully impaired.

Required :

Prepare the consolidated statements of profit or loss for the year ended 31 December 2021 and a consolidated statement of financial position as at that date.

(20 marks)

.

QUESTION 3 (30 MARKS)

Heavy Rainy Bhd's financial year ends on 31 December 2020. The company was registered with an authorised capital of 10,000,000 ordinary shares of RM1 each. The financial statements will be authorised for issue on 30 April 2021. The following is the trial balance as at 31 December 2020:

The following additional information is relevant for the preparation of financial statements:

1. Heavy Rainy Bhd revalued its building to RM1,240,000 on 1 January 2016. The carrying amount of the building as at that date was RM750,000 and has a remaining useful life of 50 years. The company makes an annual transfer from the revaluation reserve to retained earnings as the asset is being used and depreciated.

The building was subsequently revalued on 1 January 2020 at its fair value of RM920,000.

Depreciation on building is charged as administrative expenses.

Land was subsequently revalued to RM1,500,000 on 1 January 2020. The land was first revalued to RM1,450,000 on 1 January 2016, resulting in a deficit of RM40,000.

The current year revaluation of the land and building has not been accounted for inthe books of Heavy Rainy Bhd.

2. On 1 January 2020, one of the machinery was sold at its fair value of RM175,000 and leased back immediately under an operating lease agreement. The machinery was acquired two years ago at a cost of RM250,000. The leaseback is for 2 years at an annual rental of RM40,000. No entries have been made in respect of this transaction. Depreciation on plant and machinery is charged as part of cost of sales. All plant andmachinery are depreciated over 5 years on monthly basis.

3. The company decided to sell one of its machinery on 1 July 2020. The machinery was acquired on 1 January 2017 at a cost of RM300,000 and has a carrying amount of RM90,000. The machinery is available for immediate sale. A buyer has been located and the sale is expected within one year. The fair value less cost to sell is RM80,000.

4. Inventories on 31 December 2020 included goods which were obsolete and slow moving. The costs of the goods were RM200,000 and these were eventually sold on 30 January 2021 for RM185,500.

5. The directors have estimated the income tax for the year ended 31 December 2020 at RM150,000 excluding the transfer to deferred tax. The deferred tax provision at 31 December 2020 is RM160,000.

Required:

Prepare the following statements in the form suitable for publication and in compliance with the relevant Malaysian Financial Reporting Standards:

1. Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2020. (Disclosure of Earnings Per Share is required).

(10 marks)

2. Statement of Changes in Equity for the year ended 31 December 2020.

(5 marks)

3. Statement of Financial Position as at 31 December 2020. (Note on Property, Plant and Equipment is required)

(15 marks)

.

.

QUESTION 4 (10 MARKS)

Wawasan Indera, a developer company situated in Petaling Jaya. Company has some cases to be considered in relation to MFRS 124 Related Party Disclosure. Below is the cases during year ending 31 December 2021 :

1. Wawasan Indera Bhd sold goods at a margin of 0.5% lower than the market to its subsidiary Viva Bhd.
2. Wawasan Indera Bhd invested in Hinda Bhd where Wawasan Indera Bhd has significant influence but not controlling interest. However, there were no transactions between the two entities in 2021.
3. The son of Wawasan Indera Bhds CEO has been the CEO of Aneka Baru Bhd since 2019. It is a normal practice for senior staff movement between the two entities. In 2021, the board of directors of Wawasan Indera Bhd approved the temporary secondment of its CFO to Aneka Baru Bhd. However, Aneka Baru Bhd is not a subsidiary of Wawasan Indera Bhd.
4. Three of the top management of Wawasan Indera Bhd are also the top three management of Solefit Bhd. Wawasan Indera Bhd sold goods to Johor Indah Bhd, on a credit basis at prevailing market terms.

Required:

Explain and discuss how the above cases should be reported (if any) in the financial statements of Wawasan Indera Bhd.

(10 marks)

Consolidated Statements of Financial Position as at 31 December 2021 2020 RM'000 RM1000 Ordinary share capital 19,500 12,000 Retained profits 10.325 3,000 29,825 15,000 Non-controlling interest 5.505 4,000 35,330 19,000 Non-current liabilities 10% debentures Deferred tax 3,000 2,400 2,000 2,800 1,200 Current liabilities Bank overdraft Tax payable Trade payable 2.500 44.430 800 200 2,000 26.800 Non-current assets Property, plant and equipment Non-current investment Goodwill on consolidation 24,725 10,000 1,500 15,000 4,000 1,800 1,500 Current assets Inventory Tax recoverable Trade receivables Financial assets held for sale Bank 1,800 1,800 100 1,400 500 4,405 44.430 2.700 26.800 Additional information: a Retained profits for the year were arrived at after providing, charging and crediting RM'000 35,000 15,000 Sales Cost of sales Operating expenses (including depreciation of RM600,000 and impairment of goodwill) Gain on disposal of subsidiary Gain on disposal of property, plant and equipment Interest expense Investment income (net) Tax expense Profit after tax attributable to non-controlling interest 8,000 375 200 250 500 2,000 1,500 b. Financial assets held for trading qualify as cash equivalents. c. During the year, property, plant and equipment of carrying amount RM1 million was sold for RM1.2 million d. Koala sold off all of its 75% interest in Rumah Hutan in July 2021 for RM3.2 million. The consideration was in the form of cash. The net assets of Rumah Hutan on that date were as follows: Property, plant and equipment Inventory Trade receivables Trade payables Deferred tax Bank (debit) RM'000 3,000 400 300 300 400 500 The carrying amount of goodwill pertaining to Rumah Hutan was RM200,000. e. In October 2021, Koala bought 80% equity interest in Lembah Indah for RM6 million. The price was settled by issuing 2 million ordinary shares in Koala which had a market value RM3 million and the balance was paid in cash. The net assets of Lembah Indah on the date of acquisition were : RM'000 Property, plant and equipment Inventory Non-current investments Cash at bank Trade receivables Trade payables Deferred tax 10% debentures 5,000 800 1,000 400 700 200 300 500 Required: Prepare the Consolidated Statements of cash flow for Koala for the year ended 31 December 2021 using indirect method. Show all accompanying calculation notes. (20 marks) Statements of financial position Henna RM'000 Selasih RM'000 250 Zehra RM'000 Property, plant and equipment Investments 480,000 shares in Selasih 120,000 shares in Zehra Current assets Loan to Zehra 200 100 130 2,500 550 1,030 Equity and liabilities Ordinary share capital Retained profit Current liabilities Loan from Henna 900 800 (400) 150 400 2,500 550 1,030 Debit Credit RM RM 2,294,500 980,840 412,360 269,740 517,450 1,167,000 743,600 1,450,000 Revenue Cost of sales Administrative expenses Distribution costs Deferred development cost Plant and machinery Cost Accumulated depreciation at 1 January 2020 Land at valuation Building: Valuation Accumulated depreciation as 1 Januar 2020 Investment property Inventory at 31 December 2020 Retained earnings at 1 January 2020 Revaluation reserve at 1 January 2020 Ordinary share capital 4% redeemable preference shares 1,240,000 99,200 900,000 434,500 424,930 450,800 2,500,000 800,000 137,000 Rental income Bank 211,750 32,000 48,000 Interim ordinary dividend paid Finance cost 8% long term loan Deferred tax Trade and other receivables Trade and other payables Tax paid 200,000 158,000 362,510 318,120 100,000 8,126,150 8,126,150