QUESTION 2 (30 MARKS)

Given below are the Statements of Financial Position of the parent company.

	Parent RM000		Subsidiary RM000
Ordinary shares at RM1 each	715,000		506,000
Revaluation reserves	165,000		44,000
Retained profit	275,000		110,000
Liabilities	44,000		64,000
Building	1,199,000 365,000		724,000 364,000
Machinery	350,000		250,000
Inventory	88,000		44,000
Trade receivables	77,000		44,000
Cash at bank	319,000		22,000
	1,199,000		724,000

Parent company purchased all the ordinary shares of subsidiary company on 1 January 2020 for RM200,000 which was discharged by payment of cash and so offered ordinary shares of subsidiary company one ordinary share in subsidiary company valued RM1.50 per shares.

Required:

1. Prepare journal entries in the books of a parent company to record the acquisition of shares in the subsidiary company.

(4 marks)

2. Prepare the Statement of Financial Position of parent company immediately after the takeover.

(10 marks)

3. Prepare the Consolidated of Financial Statement as at 31 December 2020.