QUESTION 1 (40 Marks) The statements of financial position and comprehensive income for North Bhd, East Bhd & South Bhd is shown below: Statements of Financial Position at 31 December 2019 North Bhd East Bhd South Bhd Assets RM RM RM Non-current assets Land & Buildings 900,000 400,000 250,000 Plant & Machinery 350,000 340,000 270,000 Investment Properties 100,000 60,000 Investments 700,000 20,000 2,050,000 820,000 520,000 Current assets Stocks 300,000 100,000 100,000 Trade Debtors 240,000 40,000 70,500 Inter-company current account 70,000 Cash & cash equivalents 170,000 43,950 30,000 Total assets 2.830,000 1.003.950 720.500 Equity & Liabilities Equity Ordinary share capital 600,000 400,000 250,000 7% Redeemable Preference Shares 50,000 0 Reserves 742,000 236,900 200,150 1,342,000 686,900 450,150 Current liabilities Trade payables 1,000,000 112,950 105,000 Dividend Proposed 60,000 Inter-company current account 20,000 Loans & Borrowing 428,000 204,100 145,350 Total Equity and Liabilities 2.830.000 1.003.950 720.500 Statements of Changes in Retained Earnings for the year ended 31 December 2019 North Bhd East Bhd South Bhd RM RM RM Balance at 1 January 2019 405,000 160,000 180,000 Profit for the year 397,000 96.900 32,650 Less: Dividends (60,000) (20,000) (12,500) Balance at 31 December 2019 742,000 236,900 200,150 Statements of Comprehensive Income for year to 31 December 2019 North Bhd East Bhd South Bhd RM RM RM Revenue 850,000 420,000 210,000 Cost of sales (330,000) (260,000) (153,050) Gross profit 520,000 160,000 56,950 Operating expenses (90,000) (33,600) (8.300) Profit before tax 430,000 126,400 48,650 Finance Cost (3,500) Dividend Income 19,000 2,000 Tax expense (52,000) (28,000) (16,000) Profit for the year 397,000 96,900 32,650 The following information is relevant to the preparation of the group financial statements of the North Group: i) North Bhd acquired 70% of the ordinary shares in East Bhd on 1 July 2018 for RM380,000 when the accumulated profits of East Bhd was RM60,000. There have been no changes in East Bhd's ordinary shares since then. ii) At the date of acquisition, East's plant and machinery had a fair value of RM50,000 higher than its book value. This revaluation has not been reflected in the books of East. At the date of acquisition, plant and machinery had an estimated life of 5 years. North Bhd acquired 40% of the ordinary shares in South Bhd on 1 January 2019 for RM196,000 when the retained profits of South Bhd was RM180,000. iv) During 2019, East Bhd sold inventories to North Bhd at invoice value of RM150,000. The goods cost RM125,000 and 10% of these goods were still in the inventory of North Bhd at 31st December 2019. v) On 1st December 2019, South Bhd sold inventories to North Bhd at invoice value of RM20,000. The profit was RM2,000 and 50% of these goods were still in the inventory of North Bhd at 31st December 2019. vi) On 28 December 2019 East Bhd sent a cheque for RM50,000 to North Bhd. The cheque was recorded in the books of North Bhd on 5 January 2020. vii) The goodwill arising on consolidation on East Bhd had been impaired by RM6,000 up to 31 December 2018, with a further impairment of RM5,000 in the current year ended 31 December 2019. viii) On 31 December 2019, the directors of North Bhd proposed a dividend of 10 cents per shares. East Bhd and South Bhd had paid an ordinary dividend of 5 cents per share on 3 December 2019. On 31 December 2019 East Bhd paid a dividend of 7% on its redeemable preference shares. ix) It is group policy to value the non-controlling interest using the proportion of net assets method All revenues and expenses are expected to accrue evenly throughout the year. Required: a) Prepare a consolidated statement of comprehensive income for North Bhd and its group of companies for the year to 31 December 2019 (23 marks) b) Prepare a consolidated statement of financial position for North Bhd and its group of companies as at 31 December 2019. (17 marks) QUESTION 1 (40 Marks) The statements of financial position and comprehensive income for North Bhd, East Bhd & South Bhd is shown below: Statements of Financial Position at 31 December 2019 North Bhd East Bhd South Bhd Assets RM RM RM Non-current assets Land & Buildings 900,000 400,000 250,000 Plant & Machinery 350,000 340,000 270,000 Investment Properties 100,000 60,000 Investments 700,000 20,000 2,050,000 820,000 520,000 Current assets Stocks 300,000 100,000 100,000 Trade Debtors 240,000 40,000 70,500 Inter-company current account 70,000 Cash & cash equivalents 170,000 43,950 30,000 Total assets 2.830,000 1.003.950 720.500 Equity & Liabilities Equity Ordinary share capital 600,000 400,000 250,000 7% Redeemable Preference Shares 50,000 0 Reserves 742,000 236,900 200,150 1,342,000 686,900 450,150 Current liabilities Trade payables 1,000,000 112,950 105,000 Dividend Proposed 60,000 Inter-company current account 20,000 Loans & Borrowing 428,000 204,100 145,350 Total Equity and Liabilities 2.830.000 1.003.950 720.500 Statements of Changes in Retained Earnings for the year ended 31 December 2019 North Bhd East Bhd South Bhd RM RM RM Balance at 1 January 2019 405,000 160,000 180,000 Profit for the year 397,000 96.900 32,650 Less: Dividends (60,000) (20,000) (12,500) Balance at 31 December 2019 742,000 236,900 200,150 Statements of Comprehensive Income for year to 31 December 2019 North Bhd East Bhd South Bhd RM RM RM Revenue 850,000 420,000 210,000 Cost of sales (330,000) (260,000) (153,050) Gross profit 520,000 160,000 56,950 Operating expenses (90,000) (33,600) (8.300) Profit before tax 430,000 126,400 48,650 Finance Cost (3,500) Dividend Income 19,000 2,000 Tax expense (52,000) (28,000) (16,000) Profit for the year 397,000 96,900 32,650 The following information is relevant to the preparation of the group financial statements of the North Group: i) North Bhd acquired 70% of the ordinary shares in East Bhd on 1 July 2018 for RM380,000 when the accumulated profits of East Bhd was RM60,000. There have been no changes in East Bhd's ordinary shares since then. ii) At the date of acquisition, East's plant and machinery had a fair value of RM50,000 higher than its book value. This revaluation has not been reflected in the books of East. At the date of acquisition, plant and machinery had an estimated life of 5 years. North Bhd acquired 40% of the ordinary shares in South Bhd on 1 January 2019 for RM196,000 when the retained profits of South Bhd was RM180,000. iv) During 2019, East Bhd sold inventories to North Bhd at invoice value of RM150,000. The goods cost RM125,000 and 10% of these goods were still in the inventory of North Bhd at 31st December 2019. v) On 1st December 2019, South Bhd sold inventories to North Bhd at invoice value of RM20,000. The profit was RM2,000 and 50% of these goods were still in the inventory of North Bhd at 31st December 2019. vi) On 28 December 2019 East Bhd sent a cheque for RM50,000 to North Bhd. The cheque was recorded in the books of North Bhd on 5 January 2020. vii) The goodwill arising on consolidation on East Bhd had been impaired by RM6,000 up to 31 December 2018, with a further impairment of RM5,000 in the current year ended 31 December 2019. viii) On 31 December 2019, the directors of North Bhd proposed a dividend of 10 cents per shares. East Bhd and South Bhd had paid an ordinary dividend of 5 cents per share on 3 December 2019. On 31 December 2019 East Bhd paid a dividend of 7% on its redeemable preference shares. ix) It is group policy to value the non-controlling interest using the proportion of net assets method All revenues and expenses are expected to accrue evenly throughout the year. Required: a) Prepare a consolidated statement of comprehensive income for North Bhd and its group of companies for the year to 31 December 2019 (23 marks) b) Prepare a consolidated statement of financial position for North Bhd and its group of companies as at 31 December 2019. (17 marks)