Question 5 The Spring Group carries on business as a distributor of building materials into the country. Spring was incorporated in 2011 to distribute building materials. It diversified its activities during 2014 to include the import and distribution of water meter, and expanded its operations by the acquisition of shares in Summer in 2016 and in Autumn in 2018. Accounts for all companies are made up to 31 December. The draft income statements for Spring, Summer, Autumn and Winter for the year ended 31 December 2021 are as follows. Spring Summer Autumn Winter RM'000 RM'000 RM'000 RM'000 Revenue 45,600 24,700 22,800 Cost of Sales (18,050) (5,463) (5,320) 610 (310) Gross profit 27,550 19,237 17,480 300 Distribution costs (3,325) (2,137) (1,900) (70) Administrative (3,475) (950) (1,900) (10) expenses Finance costs (325) Profit before tax 20,425 16,150 13,680 220 Income tax expense (8,300) (5,390) (4,241) (120) Profit for the year 12,125 10,760 9,439 100 The draft statements of financial position as at 31 December 2021 are as follows. Non-current assets Property, plant and 35,483 24,273 13,063 270 equipment (NBV) Investments Shares in Summer 6,650 Shares in Autumn 3,800 Current assets 1,568 9,025 8.883 200 Total Assets 43,701 37,098 21,946 470 Equity RM1 ordinary shares 8,000 3,000 2,000 100 Retained earnings 22,638 24,075 19,898 300 Current liabilities 13,063 10,023 48 70 Total Equity and Liabilities 43,701 37,098 21,946 470 The following information is available relating to Spring, Summer, Autumn and Winter. i. On 1 January 2016 Spring signed the purchase agreement to acquire 2,700,000 of ordinary shares in Summer at cost of RM2.7 million for RM6,650,000 at which date there was a credit balance on the retained earnings of Summer of