Question 3 Caleb Carr Berhad is a maufacturing company incorporated in Malaysia since 2015 has acquired 4,000,000 (80%) units of ordinary shares of Ninjitsu Sdn Bhd on 1 January 2019 with the following consideration transferred: a. Cash payment of RM2.08 million; RM1 million payable on 1 January 2019 and another RM1.08 million payable on 1 January 2020. b. Ordinary shares issued by Caleb Carr, 1 share of Caleb's for every 2 shares in Ninjitsu. c. 8% debentures issued by Caleb amounting RM1,000,000 Only the cash payment of RM 1 million has been recorded. Cost of capital is 8%. The following are statements of finanacial position for Caleb and Ninjitsu as at 31 December 2019: Caleb (RM) Ninju (RM) Investment in Ninjtsu 1.000.000 Non-current assets: Land 22.400,000 4,500,450 Building 8.880.700 1.900.000 Plant and machinery 12,900,500 790,200 Equipment 3.330.880 699,950 Current assets Inventory 5.554,321 1.220,600 Trade receivables 5.700,987 1,467,314 Bank 2.778,006 194,792 Total 62.545,394 10,773,354 Ordinary shares 48,000,000 6.440,000 Revaluation reserve 5.400,300 665,000 Retained earnings @1 January 2019 3.099.811 1.002.300 Profit for the year 1,144,518 889,500 Trade payables 4,900.765 1.776.554 Total 62,545,394 10,773,354 Additional Information 1. The fair value of building belonging to Ninjitsu was estimated to be RM2.5million on 1 January 2019 with useful life of 20 years. One of the machinery belonging to Ninjitsu was estimated to have a fair value of RM100,000 less than its carrying value on the date of acquisition; the useful life of this machine was estimated to be 5 years. The group uses straight line depreciation method. None of these adjustments have been recorded. 2. Land belonging to Caleb and Ninjitsu are estimated to have a fair value of RM25million and RM5 million on 31 December 2019. 3. The ordinary shares prices for Caleb and Ninjitsu can be summarised as follows: 1.1.2019 31.12.2019 Caleb RM2.00/share RM2.50/share Ninjitsu RM1.50/share M1.80/share R 4. The group uses revaluation model and full goodwill to prepare its accounts. Required: (a) Record the full investment that Caleb has in Ninjitsu. Show the relevant double entries. (4 marks) (b) Show the entries required to record goodwill in the consolidated accounts. (6 marks) (c) Record the fair value adjustments for building and machinery and the relevant depreciation adjustment (8 marks) (d) Prepare the consolidated statement of financial position as at 31 December 2018. SHOW ALL RELEVANT WORKINGS. (25 marks) Question 3 Caleb Carr Berhad is a maufacturing company incorporated in Malaysia since 2015 has acquired 4,000,000 (80%) units of ordinary shares of Ninjitsu Sdn Bhd on 1 January 2019 with the following consideration transferred: a. Cash payment of RM2.08 million; RM1 million payable on 1 January 2019 and another RM1.08 million payable on 1 January 2020. b. Ordinary shares issued by Caleb Carr, 1 share of Caleb's for every 2 shares in Ninjitsu. c. 8% debentures issued by Caleb amounting RM1,000,000 Only the cash payment of RM 1 million has been recorded. Cost of capital is 8%. The following are statements of finanacial position for Caleb and Ninjitsu as at 31 December 2019: Caleb (RM) Ninju (RM) Investment in Ninjtsu 1.000.000 Non-current assets: Land 22.400,000 4,500,450 Building 8.880.700 1.900.000 Plant and machinery 12,900,500 790,200 Equipment 3.330.880 699,950 Current assets Inventory 5.554,321 1.220,600 Trade receivables 5.700,987 1,467,314 Bank 2.778,006 194,792 Total 62.545,394 10,773,354 Ordinary shares 48,000,000 6.440,000 Revaluation reserve 5.400,300 665,000 Retained earnings @1 January 2019 3.099.811 1.002.300 Profit for the year 1,144,518 889,500 Trade payables 4,900.765 1.776.554 Total 62,545,394 10,773,354 Additional Information 1. The fair value of building belonging to Ninjitsu was estimated to be RM2.5million on 1 January 2019 with useful life of 20 years. One of the machinery belonging to Ninjitsu was estimated to have a fair value of RM100,000 less than its carrying value on the date of acquisition; the useful life of this machine was estimated to be 5 years. The group uses straight line depreciation method. None of these adjustments have been recorded. 2. Land belonging to Caleb and Ninjitsu are estimated to have a fair value of RM25million and RM5 million on 31 December 2019. 3. The ordinary shares prices for Caleb and Ninjitsu can be summarised as follows: 1.1.2019 31.12.2019 Caleb RM2.00/share RM2.50/share Ninjitsu RM1.50/share M1.80/share R 4. The group uses revaluation model and full goodwill to prepare its accounts. Required: (a) Record the full investment that Caleb has in Ninjitsu. Show the relevant double entries. (4 marks) (b) Show the entries required to record goodwill in the consolidated accounts. (6 marks) (c) Record the fair value adjustments for building and machinery and the relevant depreciation adjustment (8 marks) (d) Prepare the consolidated statement of financial position as at 31 December 2018. SHOW ALL RELEVANT WORKINGS. (25 marks)