Question 6 Leo Bhd started business many years ago. Over the years, the company has successfully acquired 5. Revaluation of Tiger Bhd's asset on the acquisition date revealed that a land has increased in several smaller companies. The Statements of Profit or Loss of Leo Bhd and its subsidiaries are value by RM 1.7 millon compared to its carrying value. Tiger Bhd has not adjusted its book to presented below. account for the increase. Leo RM000 Tiger RM000 Cat RM000 6. Cat Bhd disposed equipment to Tiger Bhd on 1 February 2020 at a gain of RM0.4 million. The Revenue 125,000 54,000 46,000 equipment vas depreciated at 20% per annum using the reducing balance method. 7. During the financial year, Leo Bhd sold inventories to Cat Bhd as follows: Cost of Sales (36,000) (15,000) (20,000) Date of sale Selling Price (RM'000) Note Gross profit 89,000 39,000 26,000 Cat Bhd has sold the entire goods to a third Gain on Disposal of 20.03.2020 3,000 party, Assets 1,200 500 15.07.2020 4,000 Cat Bhd kept 20% of the inventory purchased. Administrative expenses (25,000 (18,000) (15,500) 10.11.2020 2,000 Cat Bhd managed to sell 50% ofthe inventory. Distribution costs (10,000 (8,000) 2,000) It is the group's policy to earn proit margins of 10% on intercompany sale ofinventories. 8. Tests conducted on 31 December 2020 showed that an impaiment of RM300,000 was Finance costs (2,700) (3,000) (2,000) required for goodwill on acquisition of Tiger Bhd. 9. Leo Bhd valued the non-controlling interest in its subsidiaries using the partial goodwill method. Proft before tax 52,500 10,000 7,000 Required: Income tax expense (13,100) 2,500) (1,800) Prepared the Consolidated Statement of Profit or Loss and Other Comprehensive Income and the Consolidated Statement of Changes in Equity of Leo Bhd for the year ending 31 December Profit for the year 39,400 7,500 5,200 Retained Profit as at 1.1.2020 62,700 25,800 5,200 Additional information: 1. On 1 January 2019, Leo Bhd acquired 75% of Tiger Bhd's 25 million RM 1 ordinary shares for RM35 million when Tiger Bhd's retained eamings was RM 18 million 2. On 1 January 2020, Leo Bhd acquired 80% of Cat Bhd's 10 million RM 1 ordinary shares for RM13 million 3. Leo Bhd entered into a joint venture business with Lion Bhd where Leo Bhd has 50% share. As at 31 December 2020, the business incurred a loss of RM 1.6 million. 4. Leo Bhd disposed 3.75 million of its shares in Tiger Bhd for RM 7 million on 31 December 2020 There was no change in the ordinary shares issued by Tiger Bhd since 1 January 2019. Question 6 Leo Bhd started business many years ago. Over the years, the company has successfully acquired 5. Revaluation of Tiger Bhd's asset on the acquisition date revealed that a land has increased in several smaller companies. The Statements of Profit or Loss of Leo Bhd and its subsidiaries are value by RM 1.7 millon compared to its carrying value. Tiger Bhd has not adjusted its book to presented below. account for the increase. Leo RM000 Tiger RM000 Cat RM000 6. Cat Bhd disposed equipment to Tiger Bhd on 1 February 2020 at a gain of RM0.4 million. The Revenue 125,000 54,000 46,000 equipment vas depreciated at 20% per annum using the reducing balance method. 7. During the financial year, Leo Bhd sold inventories to Cat Bhd as follows: Cost of Sales (36,000) (15,000) (20,000) Date of sale Selling Price (RM'000) Note Gross profit 89,000 39,000 26,000 Cat Bhd has sold the entire goods to a third Gain on Disposal of 20.03.2020 3,000 party, Assets 1,200 500 15.07.2020 4,000 Cat Bhd kept 20% of the inventory purchased. Administrative expenses (25,000 (18,000) (15,500) 10.11.2020 2,000 Cat Bhd managed to sell 50% ofthe inventory. Distribution costs (10,000 (8,000) 2,000) It is the group's policy to earn proit margins of 10% on intercompany sale ofinventories. 8. Tests conducted on 31 December 2020 showed that an impaiment of RM300,000 was Finance costs (2,700) (3,000) (2,000) required for goodwill on acquisition of Tiger Bhd. 9. Leo Bhd valued the non-controlling interest in its subsidiaries using the partial goodwill method. Proft before tax 52,500 10,000 7,000 Required: Income tax expense (13,100) 2,500) (1,800) Prepared the Consolidated Statement of Profit or Loss and Other Comprehensive Income and the Consolidated Statement of Changes in Equity of Leo Bhd for the year ending 31 December Profit for the year 39,400 7,500 5,200 Retained Profit as at 1.1.2020 62,700 25,800 5,200 Additional information: 1. On 1 January 2019, Leo Bhd acquired 75% of Tiger Bhd's 25 million RM 1 ordinary shares for RM35 million when Tiger Bhd's retained eamings was RM 18 million 2. On 1 January 2020, Leo Bhd acquired 80% of Cat Bhd's 10 million RM 1 ordinary shares for RM13 million 3. Leo Bhd entered into a joint venture business with Lion Bhd where Leo Bhd has 50% share. As at 31 December 2020, the business incurred a loss of RM 1.6 million. 4. Leo Bhd disposed 3.75 million of its shares in Tiger Bhd for RM 7 million on 31 December 2020 There was no change in the ordinary shares issued by Tiger Bhd since 1 January 2019