QUESTION 4:

1. Does a controlling interest always imply majority ownership? Examine. (5 marks )

2. AA holds 90% of equity shares of BB and 60% equity interest in CC. BB holds 60% equity interest in DD.

1. Who is the ultimate parent and immediate parent? (4 marks)

2. Who should prepare the consolidated financial statements? (2marks)

3. SAS paid RM55 million to acquire 100% of the issued ordinary share capital of LBS on 1 December 2017. At that date the carrying amount and fair value of the net assets were as follows:

	Carrying value (RM)	Fair value (RM)
Property, plant and equipment (except land)	20,000,000	25,000,000
Land	10,000,000	12,000,000
Current assets	8,000,000	8,000,000
liabilities	7,000,000	7,000,000
Brand	Not recognized by LBS	2,000,000

On 1 December, the directors of SAS estimated the value of land to be RM13 million and recognized brands at 2 million. The year-end of both companies is 31 December. On 1 March, the valuation report showed the fair value of land to be RM15 million and brands at RM3 million.

Required:

1. Calculate the initial goodwill on consolidation. (6 marks)

2. How would the valuation report affect the initial accounting? (3 marks)

(Total: 20 Marks)