QUESTION 3

Gasoo Bhd is a public listed company that has several investments in other companies and its financial year end is on 30 June every year.In July 2012, Gasoo Bhd had acquired 80% of 10,000,000 ordinary share capital of Impiana Bhd for RM58 million.A fair valuation exercise conducted on the date of acquisition revealed that the fair value of net assets of Impiana Bhd were equal to its carrying amounts. On the date of acquisition, the fair value of the net assets of Impiana Bhd was RM45 million. Since July 2012, the goodwill on acquisition of Impiana Bhd has been impaired by RM8 million.

On 1 January 2019, Gasoo Bhd sold 45% of its investment in Impiana Bhd to Gigih Bhd for a proceed of RM95.8 million when the fair value of the net assets of Impiana Bhd was RM145 million. On the date of disposal, the fair value of the share price of Impiana Bhd was RM9.30 per share. After the disposal, Gasoo Bhd is able to exert significant influence over Impiana Bhd.

It is the group's policy to value the non-controlling interests at its proportionate share of the fair value of the subsidiary's identifiable net assets at the acquisition date.

Required:

a.Explain whether relationship between Gasoo Bhd and Impiana Bhd have change after the disposal.

(5 marks)

b.Calculate gain or loss on the disposal of the shares for Gasoo Bhd group.

(5 marks)

c.Advise Gasoo Bhd on the implication of the disposal with regard to the preparation of the consolidated statement of profit or loss for the year ended 30 June 2019 and the consolidated of financial position as at 30 June 2019.

(5 marks)