QUESTION 1 Given below are the Statements of financial position of two companies, Dragon Bhd and Fly Bhd as at 31 December 2016. Dragon Bhd RM Fly Bhd RM 240,000 300,000 184,000 Assets Land Building at carrying amount Motor vehicles at carrying amount Investment in ordinary shares of Fly Bhd Investment in preference shares of Fly Bhd Inventories Accounts receivables Bills receivable Loan to Fly Bhd Bank Current account - Fly Bhd Total 280,000 400,000 160,000 360,000 120,000 60,000 20,000 20,000 40,000 110,000 30,000 1,600,000 50,000 40,000 10,000 30,000 854,000 200,000 300,000 198,000 Equities and Liabilities Ordinary shares of RM1 Preference shares Retained profits 6% Debenture Accounts payable Bills payable Loan from Dragon Bhd Current account - Dragon Bhd Total 800,000 120,000 420,000 60,000 190,000 10,000 75,000 35,000 20,000 26,000 854,000 1,600,000 Additional Information: 1. On 1 January 2016, Dragon Bhd acquired 160,000 ordinary shares of Fly Bhd by issuing 100,000 ordinary shares and paying cash of RM60,000. The fair value of one (1) unit of ordinary shares of Dragon Bhd on 1 January 2016 was RM3.00. On the same date, Dragon Bhd also acquired 120,000 preference shares of Fly Bhd. The nominal value of the shares was RM120,000. On 1 January 2016, retained profits of Fly Bhd had the balance of RM28,000. 2. On 1 January 2016, Dragon Bhd revalued the land and building of Fly at a surplus of RM60,000 and RM50,000 respectively. The remaining life of the building as at 1 January 2016 was 10 years. No adjustments were made in the book of Fly Bhd regarding the valuation. 3. During the year, Fly Bhd sold a motor vehicle with a carrying amount of RM60,000 for RM80,000 to Dragon Bhd. The remaining useful life is 5 years. 4. During the year, Dragon Bhd sold inventories valued at RM30,000 to Fly Bhd. On 31 December 2016, RM15,000 of these inventories were unsold. Dragon Bhd sold its inventories at cost plus 50 percent. 5. On 31 December 2016, bills payable of Fly Bhd of RM15,000 were drawn in favour of Dragon Bhd. Dragon Bhd had discounted RM8,000 of these bills. 6. On 30 December 2016, Fly Bhd remitted RM20,000 on account of the loan. Dragon Bhd received the remittance on 2 January 2017. 7. The difference in the current account was due to cash in transit. 8. Provision is to be made for the interest on debenture. 9. The directors of Dragon Bhd have declared a bonus issue of one (1) for every ten (10) for ordinary shares held on 1 January 2016. These shares were not entitled for the year-end dividend. The retained profits were to be used for the bonus issue. 10. On 5 December 2016, Dragon Bhd and Fly Bhd declared dividend of 10% to its ordinary shareholders. All the preference shareholders of Dragon Bhd and Fly Bhd were also entitled to RM16,000 and RM10,000 of dividend respectively. The preference shares for both companies have no fixed rate of dividend. At year end, no adjustments were yet to be done in the books of both companies. 11. The non-controlling interest was not measured at fair value. 12. At the year end, goodwill on consolidation was to be impaired by 20%. Required: Consolidated Statement of Financial Position of Dragon Bhd and its subsidiary, Fly Bhd as at 31 December 2016. Show all workings