QUESTION 4 (25 MARKS)

Below are the Statements of Profit or Loss of two companies for the year ended 31 December 2020:

.Additional information:

1. Dayang was incorporated on 1 January 2019 with 400,000 ordinary shares and 200,000 of 10.5% cumulative preference share.

2. On 1 January 2020 Puteri acquired 300,000 of the issued ordinary shares of Dayang for RM500,000.

3. Retained profit on 1 January 2020 and dividends for year 2020 were as follows:

4. Puteri charges Dayang for professional service rendered which is included in the Statement of Profit or Loss of Puteri. These expenses are included in the operating expenses of Dayang.

5. During the year Puteri sold inventories costing RM10,000 for RM12,000 to Dayang. Dayang has sold all of them.

6. The group recognizes partial goodwill and it is impaired by RM10,000.

Required:

a) Prepare the Consolidated Statements of Profit or Loss of Puteri Group for the year ended 31 December 2020 assuming profits is accrued evenly throughout the year. (20 marks)

b) Compute the retained profit to be carried forward to the Consolidated Statements of Financial Position as at 31 December 2020.

Puteri RM 50,000 Dayang RM 40,000 Retained profit 1 January 2020 Dividends paid Ordinary Preference for half-year only 20,000 10,000 10,500