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Question Corona Bhd is a manufacturer of office equipment since year 2000. As part of business expansion, the company is decided to Covied Bhd, a
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Corona Bhd is a manufacturer of office equipment since year 2000. As part of business expansion, the company is decided to Covied Bhd, a supplier of office materials. Therefore, on 1 July 2019, Corona Bhd of Covied Bhd. As at the acquisition date, the following balances were available in the books of Covied Bhd:
Retained profits Share premium General reserve
RM
180,000 400,000 240,000
acquire
bought 3,200,000 ordinary shares
No new shares were issued since that date by Covied Bhd.
On the acquisition date, the freehold land of Covied Bhd had a fair value of RM400,000 more than its
carrying value. No adjustment was made in the account of Covied Bhd as to reflect its fair value.
The statements of financial position of Corona Bhd and Covied Bhd as at 30 June 2020 are as follows:
Non- current assets
Properties 1,869,000 Freehold land 7,000,000 Fixtures and fittings 450,000 Investments in Covied Bhd 6,000,000
10,900,000 1,561,000 600,000 - 13,061,000
1,186,000 14,247,000
4,000,000 600,000 400,000 300,000
8,000,000
15,319,000
Trade receivable
Amount due to Covied Bhd
Bills receivable
Bank 736,000 2,136,000
17,455,000
Equity and reserves
Ordinary shares of RM2 each 6,000,000 Ordinary shares of RM1 each
10% Preference shares of RM1 each 550,000 Share premium 200,000 General reserve 100,000 Retained profits 10,200,000
Current assets:
Inventories 540,000
155,000 890,000 - 55,000 86,000
Corona Bhd Covied Bhd RM RM RM RM
755,000 60,000 45,000
17,050,000 Non-current liabilities 200,000 17,250,000
Current liabilities
Amount due from Corona Bhd
Preference dividend payable 55,000
Bills payable 30,000
Trade payable 120,000 205,000
17,455,000
Additional information:
1. RM20,000 of the bills payable of Covied Bhd are in favour of Corona Bhd. Corona Bhd had discounted 20% of these bills.
40,000
- 35,000 72,000
13,300,000 800,000 14,100,000
147,000 14,247,000
Dr Bills payable -Covied (20,000 x 80%) 16,000 Cr Bills receivable Corona
16,000
2. During the year, Corona Bhd sold inventories to Covied Bhd at invoiced price of RM800,000 after charging a margin of 25%. As at the reporting date, 40% of these inventories are still unsold by Covied Bhd.
URP = Unsold inventory x Markup % / Invoice % = (40% x 800,000) x 25% / 125%
= 320,000 x 25%/125% = 64,000
Dr P/L (Corona) 64,000 Cr Inventory
64,000
3. The difference in amount due from Corona and amount due to Covied is due to cash in transit.
Dr Amount due from Corona Cash/ Bank
Cr Amount due to Covied
40,000 20,000
60,000
4. At the end of the year, the test on goodwill found it to be impaired by 25%.
5. The group has adopted the policy to value its non-controlling interest at its fair value.
Required:
Prepare the Consolidated Statement of Financial Position of Corona Bhd and its subsidiary, Covied Bhd as at 30 June 2020. Show all relevant workings
Question
Corona Bhd is a manufacturer of office equipment since year 2000. As part of business expansion, the company is decided to Covied Bhd, a supplier of office materials. Therefore, on 1 July 2019, Corona Bhd of Covied Bhd. As at the acquisition date, the following balances were available in the books of Covied Bhd:
Retained profits Share premium General reserve
RM
180,000 400,000 240,000
acquire
bought 3,200,000 ordinary shares
No new shares were issued since that date by Covied Bhd.
On the acquisition date, the freehold land of Covied Bhd had a fair value of RM400,000 more than its
carrying value. No adjustment was made in the account of Covied Bhd as to reflect its fair value.
The statements of financial position of Corona Bhd and Covied Bhd as at 30 June 2020 are as follows:
Non- current assets
Properties 1,869,000 Freehold land 7,000,000 Fixtures and fittings 450,000 Investments in Covied Bhd 6,000,000
10,900,000 1,561,000 600,000 - 13,061,000
1,186,000 14,247,000
4,000,000 600,000 400,000 300,000
8,000,000
15,319,000
Trade receivable
Amount due to Covied Bhd
Bills receivable
Bank 736,000 2,136,000
17,455,000
Equity and reserves
Ordinary shares of RM2 each 6,000,000 Ordinary shares of RM1 each
10% Preference shares of RM1 each 550,000 Share premium 200,000 General reserve 100,000 Retained profits 10,200,000
Current assets:
Inventories 540,000
155,000 890,000 - 55,000 86,000
Corona Bhd Covied Bhd RM RM RM RM
755,000 60,000 45,000
17,050,000 Non-current liabilities 200,000 17,250,000
Current liabilities
Amount due from Corona Bhd
Preference dividend payable 55,000
Bills payable 30,000
Trade payable 120,000 205,000
17,455,000
Additional information:
1. RM20,000 of the bills payable of Covied Bhd are in favour of Corona Bhd. Corona Bhd had discounted 20% of these bills.
40,000
- 35,000 72,000
13,300,000 800,000 14,100,000
147,000 14,247,000
Dr Bills payable -Covied (20,000 x 80%) 16,000 Cr Bills receivable Corona
16,000
2. During the year, Corona Bhd sold inventories to Covied Bhd at invoiced price of RM800,000 after charging a margin of 25%. As at the reporting date, 40% of these inventories are still unsold by Covied Bhd.
URP = Unsold inventory x Markup % / Invoice % = (40% x 800,000) x 25% / 125%
= 320,000 x 25%/125% = 64,000
Dr P/L (Corona) 64,000 Cr Inventory
64,000
3. The difference in amount due from Corona and amount due to Covied is due to cash in transit.
Dr Amount due from Corona Cash/ Bank
Cr Amount due to Covied
40,000 20,000
60,000
4. At the end of the year, the test on goodwill found it to be impaired by 25%.
5. The group has adopted the policy to value its non-controlling interest at its fair value.
Required:
Prepare the Consolidated Statement of Financial Position of Corona Bhd and its subsidiary, Covied Bhd as at 30 June 2020. Show all relevant workings
Question
Corona Bhd is a manufacturer of office equipment since year 2000. As part of business expansion, the company is decided to Covied Bhd, a supplier of office materials. Therefore, on 1 July 2019, Corona Bhd of Covied Bhd. As at the acquisition date, the following balances were available in the books of Covied Bhd:
Retained profits Share premium General reserve
RM
180,000 400,000 240,000
acquire
bought 3,200,000 ordinary shares
No new shares were issued since that date by Covied Bhd.
On the acquisition date, the freehold land of Covied Bhd had a fair value of RM400,000 more than its
carrying value. No adjustment was made in the account of Covied Bhd as to reflect its fair value.
The statements of financial position of Corona Bhd and Covied Bhd as at 30 June 2020 are as follows:
Non- current assets
Properties 1,869,000 Freehold land 7,000,000 Fixtures and fittings 450,000 Investments in Covied Bhd 6,000,000
10,900,000 1,561,000 600,000 - 13,061,000
1,186,000 14,247,000
4,000,000 600,000 400,000 300,000
8,000,000
15,319,000
Trade receivable
Amount due to Covied Bhd
Bills receivable
Bank 736,000 2,136,000
17,455,000
Equity and reserves
Ordinary shares of RM2 each 6,000,000 Ordinary shares of RM1 each
10% Preference shares of RM1 each 550,000 Share premium 200,000 General reserve 100,000 Retained profits 10,200,000
Current assets:
Inventories 540,000
155,000 890,000 - 55,000 86,000
Corona Bhd Covied Bhd RM RM RM RM
755,000 60,000 45,000
17,050,000 Non-current liabilities 200,000 17,250,000
Current liabilities
Amount due from Corona Bhd
Preference dividend payable 55,000
Bills payable 30,000
Trade payable 120,000 205,000
17,455,000
Additional information:
1. RM20,000 of the bills payable of Covied Bhd are in favour of Corona Bhd. Corona Bhd had discounted 20% of these bills.
40,000
- 35,000 72,000
13,300,000 800,000 14,100,000
147,000 14,247,000
Dr Bills payable -Covied (20,000 x 80%) 16,000 Cr Bills receivable Corona
16,000
2. During the year, Corona Bhd sold inventories to Covied Bhd at invoiced price of RM800,000 after charging a margin of 25%. As at the reporting date, 40% of these inventories are still unsold by Covied Bhd.
URP = Unsold inventory x Markup % / Invoice % = (40% x 800,000) x 25% / 125%
= 320,000 x 25%/125% = 64,000
Dr P/L (Corona) 64,000 Cr Inventory
64,000
3. The difference in amount due from Corona and amount due to Covied is due to cash in transit.
Dr Amount due from Corona Cash/ Bank
Cr Amount due to Covied
40,000 20,000
60,000
4. At the end of the year, the test on goodwill found it to be impaired by 25%.
5. The group has adopted the policy to value its non-controlling interest at its fair value.
Required:
Prepare the Consolidated Statement of Financial Position of Corona Bhd and its subsidiary, Covied Bhd as at 30 June 2020. Show all relevant workings
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Auditing Text And Cases
Authors: W. Robert Knechel, Knechel
1st Edition
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