QUESTION 2 (30 MARKS) 70,000 600 40,000 Contributed ordinary shares General reserve Revaluation reserve-properties Retained profits 200,000 11,400 2,400 64,060 Separate financial statements of Putra Bhd, Suria Bhd and Putri Bhd for the year ended 31 December 2020 are as follows: 24,080 16,150 Statements of Profit or Loss & Other Comprehensive Income & Retained Profits for the year ended 31 December 2020 Non-current liabilities Long term loans 1,050 760 Putra Bhd Putri Bhd Current liabilities: Trade payables Taxation 9,950 6,560 295,420 13,490 11,240 120,170 6.240 3,450 65.840 Sales Cost of sales Gross profit Operating expenses Finance costs Profit before tax Taxation Profit after tax Additional information: Suria Bbd RM'000 44,000 (26,500 17,500 (1,980 (450) 15,070 (5,260) 9.810 RM'000 72,000 (32,500) 39.500 (2,280 (334) 36,886 (7,746) 29,140 RM'000 22,000 (12,8002 9,200 (1,700) 7,500 (2,150 5,350 Other comprehensive income: Surplus on revaluation of properties 800 Total comprehensive income for the year 29,940 9.810 5,350 a) On 1 January 2017, Putra Bhd acquired 80% of the equity shares of Suria Bhd by paying cash when the retained earnings and general reserve of Suria Bhd at the acquisition date were RM8 million and RM600,000 respectively. The fair values of the nets assets were equal to the carrying amounts. b) On the same date, Suria Bhd acquired 60% of the equity interests of Putri Berhad, a public limited company. The purchase consideration was cash of RM36 million. Putri's identifiable net assets were fair valued at RM44 million and the NCI had a fair value of RM14 million at that date. c) During the year 2020, Suria Bhd sold goods to Putra Bhd for invoices totaling RM5,000,000 and one-fourth of these inventories remained unsold by year-end. The profit margin to Suria Bhd was 25% on selling price. d) Trade payables of Putra Bhd include RM450,000 due to Suria Bhd. e) All profits are assumed to accrue evenly throughout the year and there is no impairment on consolidated goodwill. f) It is the group's policy to measure non-controlling interest at acquisition-date fair value. Ignore tax effects of fair value adjustments and unrealized profits arising on intragroup transactions. 10,800 Movements in Retained Profits Retained profits brought forward Profit for the year Available for appropriation Dividends paid Retained profits carried forward 35,320 29,140 64,460 (400) 64.060 14,270 9.810 24,080 5,350 16,150 24.080 16.150 / Statements of Financial Position as at 31 December 2020 Required: 0 Effective controlling interest is important in the preparation of the consolidated financial statement. Explain this concept and its implication if the company wrongly determine the effective controlling interest in the subsidiary. (5 Marks) Putra Bhd Putri Bhd Suria Bbd RM'000 RM'000 RM'000 138,320 52,670 37,240 Non-current assets: Property, plant and equipment Investments at cost Ordinary shares in Suria Bhd Ordinary shares in Putri Bhd, Prepare the consolidated statement of profit or loss and other comprehensive income and consolidated statement of financial position of Putra Bhd for the financial year ended 2020. Show all your workings. (25 Marks) 81,200 36,000 Current assets: Inventories Trade receivables Bank 44.400 14.750 16.750 295,420 19,600 4,300 7,600 120,170 16,500 2.300 9,800 65,840 Financed by QUESTION 2 (30 MARKS) 70,000 600 40,000 Contributed ordinary shares General reserve Revaluation reserve-properties Retained profits 200,000 11,400 2,400 64,060 Separate financial statements of Putra Bhd, Suria Bhd and Putri Bhd for the year ended 31 December 2020 are as follows: 24,080 16,150 Statements of Profit or Loss & Other Comprehensive Income & Retained Profits for the year ended 31 December 2020 Non-current liabilities Long term loans 1,050 760 Putra Bhd Putri Bhd Current liabilities: Trade payables Taxation 9,950 6,560 295,420 13,490 11,240 120,170 6.240 3,450 65.840 Sales Cost of sales Gross profit Operating expenses Finance costs Profit before tax Taxation Profit after tax Additional information: Suria Bbd RM'000 44,000 (26,500 17,500 (1,980 (450) 15,070 (5,260) 9.810 RM'000 72,000 (32,500) 39.500 (2,280 (334) 36,886 (7,746) 29,140 RM'000 22,000 (12,8002 9,200 (1,700) 7,500 (2,150 5,350 Other comprehensive income: Surplus on revaluation of properties 800 Total comprehensive income for the year 29,940 9.810 5,350 a) On 1 January 2017, Putra Bhd acquired 80% of the equity shares of Suria Bhd by paying cash when the retained earnings and general reserve of Suria Bhd at the acquisition date were RM8 million and RM600,000 respectively. The fair values of the nets assets were equal to the carrying amounts. b) On the same date, Suria Bhd acquired 60% of the equity interests of Putri Berhad, a public limited company. The purchase consideration was cash of RM36 million. Putri's identifiable net assets were fair valued at RM44 million and the NCI had a fair value of RM14 million at that date. c) During the year 2020, Suria Bhd sold goods to Putra Bhd for invoices totaling RM5,000,000 and one-fourth of these inventories remained unsold by year-end. The profit margin to Suria Bhd was 25% on selling price. d) Trade payables of Putra Bhd include RM450,000 due to Suria Bhd. e) All profits are assumed to accrue evenly throughout the year and there is no impairment on consolidated goodwill. f) It is the group's policy to measure non-controlling interest at acquisition-date fair value. Ignore tax effects of fair value adjustments and unrealized profits arising on intragroup transactions. 10,800 Movements in Retained Profits Retained profits brought forward Profit for the year Available for appropriation Dividends paid Retained profits carried forward 35,320 29,140 64,460 (400) 64.060 14,270 9.810 24,080 5,350 16,150 24.080 16.150 / Statements of Financial Position as at 31 December 2020 Required: 0 Effective controlling interest is important in the preparation of the consolidated financial statement. Explain this concept and its implication if the company wrongly determine the effective controlling interest in the subsidiary. (5 Marks) Putra Bhd Putri Bhd Suria Bbd RM'000 RM'000 RM'000 138,320 52,670 37,240 Non-current assets: Property, plant and equipment Investments at cost Ordinary shares in Suria Bhd Ordinary shares in Putri Bhd, Prepare the consolidated statement of profit or loss and other comprehensive income and consolidated statement of financial position of Putra Bhd for the financial year ended 2020. Show all your workings. (25 Marks) 81,200 36,000 Current assets: Inventories Trade receivables Bank 44.400 14.750 16.750 295,420 19,600 4,300 7,600 120,170 16,500 2.300 9,800 65,840 Financed by