QUESTION Given below are the draft financial statements of Jewel, Stone and Ruby. Statement of Profit or Loss for the year ended 30 June 20x4 Jewel Stone Ruby RM'000 RM'000 RM'000 Revenue 90,000 35,000 49,800 Cost of sales (45,000) (21,000) (18,000) Gross profit 45,000 14,000 31,800 Dividend income from subsidiaries 700 Income from other investments 1,300 10,400 900 Gain on disposal of PPE 300 Operating expenses (13,700) (6.000) (4,500) Finance cost (2.000) (2.200) (2.100) Profit before tax 31,300 16.200 26.400 Taxation (7.800) (4.100) (6.600) Profit for the year 23.500 12.100 19.800 TA Statement of Changes in Equity for the year ended 30 June 20x4 (extract) Jewel Stone 1 Ruby RM000 RM'000 RM'000 Retained profit brought forward 20,000 22,800 6,800 Profit for the year 23,500 12.100 19,800 Ordinary dividend (2,500) (1,000) Preference dividend (4.800) Retained profit carried forward 41.000 29.100 26.600 2. (9 Ruby RM'000 180,000 10,000 Statement of Financial Position as at 30 June 20x4 Jewel Stone RM'000 RM'000 Assets Property, plant and equipment 186,300 210,000 Intangibles Investments: Ordinary shares in Stone 168,000 6% Preference shares in Stone 36,000 Ordinary shares in Ruby 91,200 8% Redeemable preference shares of Ruby 45.000 Other quoted investments 39,500 90,000 Inventories 37.000 13,000 Current account - Stone 10.000 Current account - Ruby Bills receivable 6,000 Accounts receivable 10.000 Bank 20.000 19.000 14.000 12.000 647,000 360,000 20.000 10.600 12.000 6.000 238,600 350,000 120,000 HE 200,000 80,000 10,000 29,100 Equity and Liabilities Ordinary shares 6% Preference shares of RM1 each General reserve Retained profits 8% Redeemable preference shares Bills payable Accounts payable 6% Preference dividend payable Current account - Jewel Current account - Stone 50.000 41,000 140,000 5.000 61,000 26,600 75,000 11.000 28.100 4.800 8.000 647,000 360,000 6.000 238,600 1) On 1 July 20x1, Jewel acquired 140 million ordinary shares and 36 million 6% | preference shares of Stone. At that date, the equity of the Stone was: 200,000,000 ordinary shares 80,000,000 6% Preference shares General reserve Retained profits RM000 200.000 80,000 10,000 8.000 At this date, the market value of Stone's share was RM1.20 per share. Also, on that date, the fair value of a freehold property of Stone was found to be RM2,000,000 in excess of the carrying value. 2) On 1 October 20x3, Jewel acquired 96 million of the 120 million ordinary shares of Ruby for a cash consideration of RM91.2 million. At that date the market price of the ordinary shares of Ruby Bhd was RM0.95 per share. 3) On 1 April 20x4, Jewel acquired 60% of the 8% Redeemable preference shares in Ruby. Both Jewel and Ruby have not accounted for the redeemable preference dividend for the year ended 30 June 20x4. 4) Ruby capitalized development costs which had a carrying value at 30 June 20x4 of RM10 million. A review at 30 June 20x4 of the intangible showed an indication that the asset might be impaired. The value in use based on the forecasted cash flow was estimated at RM9 million and the fair value less cost to sell was RM9.2 million. The books of Ruby was not yet adjusted to reflect this transaction. 5) The RM300,000 gain on disposal of equipment shown in the statement of profit or loss of Ruby arose from a disposal of equipment on 1 August 20x3. The equipment was sold to Stone for RM3 million. The remaining useful life of the equipment on the date of disposal was 5 years, and a full year's depreciation was to be provided. The equipment was still in the books of Stone at 30 June 20x4. 6) On 15 July 20x1, Jewel sold one of its plant of carrying value RM3 million to Stone. Proceeds from the sale was RM3.5 million. The remaining useful life of the plant at the date of transfer was 4 years. 7) Stone supplied goods to Jewel at cost plus 25%. During the year ended 30 June 20x4, goods costing RM5,000,000 were supplied to Jewel. Half of these goods were still in the inventory of Jewel as at 30 June 20x4. 8) In February 20x4, Jewel sold goods to Ruby costing RM2,800,000, at a profit of 40% on invoice price. As at 30 June 20x4, one-quarter of these goods remained unsold. 9) Jewel and Stone had paid their dividends on ordinary shares in June 20x4. Jewel had recognized its share of the ordinary dividend from Stone. However, Jewel had not taken credit of its share of the preference dividend from Stone. 10) At the beginning of the current year, a building of Stone was found to be RM4,000,000 in excess of it carrying value of RM80,000,000. The remaining useful life of the building was 40 years. 11) Included in the bills receivable of Stone was RM5.000.000 due from Jewel. Jewel had discounted RM3.000.000 of these bills. 12) Unless specified, all profits and losses are deemed to accrue evenly throughout the year. 13) It is the group policy to value non-controlling interests at their fair value on the date of acquisition You are required to: a. Compute goodwill/bargain purchase on acquisition of Stone Bhd, and Ruby Bhd. using appropriate schedule. b. Prepare the Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 20x4. e. Prepare the Consolidated Statement of Changes in Equity for the year ended 30 June 20x4, showing columns for (i) Share capital. (ii) Reserves (General reserve, Revaluation reserve, Retained Profits) and (iii) non-controlling interest. d. Prepare the Consolidated Statement of Financial Position as at 30 June 20x4. (SHOW ALL WORKINGS) QUESTION Given below are the draft financial statements of Jewel, Stone and Ruby. Statement of Profit or Loss for the year ended 30 June 20x4 Jewel Stone Ruby RM'000 RM'000 RM'000 Revenue 90,000 35,000 49,800 Cost of sales (45,000) (21,000) (18,000) Gross profit 45,000 14,000 31,800 Dividend income from subsidiaries 700 Income from other investments 1,300 10,400 900 Gain on disposal of PPE 300 Operating expenses (13,700) (6.000) (4,500) Finance cost (2.000) (2.200) (2.100) Profit before tax 31,300 16.200 26.400 Taxation (7.800) (4.100) (6.600) Profit for the year 23.500 12.100 19.800 TA Statement of Changes in Equity for the year ended 30 June 20x4 (extract) Jewel Stone 1 Ruby RM000 RM'000 RM'000 Retained profit brought forward 20,000 22,800 6,800 Profit for the year 23,500 12.100 19,800 Ordinary dividend (2,500) (1,000) Preference dividend (4.800) Retained profit carried forward 41.000 29.100 26.600 2. (9 Ruby RM'000 180,000 10,000 Statement of Financial Position as at 30 June 20x4 Jewel Stone RM'000 RM'000 Assets Property, plant and equipment 186,300 210,000 Intangibles Investments: Ordinary shares in Stone 168,000 6% Preference shares in Stone 36,000 Ordinary shares in Ruby 91,200 8% Redeemable preference shares of Ruby 45.000 Other quoted investments 39,500 90,000 Inventories 37.000 13,000 Current account - Stone 10.000 Current account - Ruby Bills receivable 6,000 Accounts receivable 10.000 Bank 20.000 19.000 14.000 12.000 647,000 360,000 20.000 10.600 12.000 6.000 238,600 350,000 120,000 HE 200,000 80,000 10,000 29,100 Equity and Liabilities Ordinary shares 6% Preference shares of RM1 each General reserve Retained profits 8% Redeemable preference shares Bills payable Accounts payable 6% Preference dividend payable Current account - Jewel Current account - Stone 50.000 41,000 140,000 5.000 61,000 26,600 75,000 11.000 28.100 4.800 8.000 647,000 360,000 6.000 238,600 1) On 1 July 20x1, Jewel acquired 140 million ordinary shares and 36 million 6% | preference shares of Stone. At that date, the equity of the Stone was: 200,000,000 ordinary shares 80,000,000 6% Preference shares General reserve Retained profits RM000 200.000 80,000 10,000 8.000 At this date, the market value of Stone's share was RM1.20 per share. Also, on that date, the fair value of a freehold property of Stone was found to be RM2,000,000 in excess of the carrying value. 2) On 1 October 20x3, Jewel acquired 96 million of the 120 million ordinary shares of Ruby for a cash consideration of RM91.2 million. At that date the market price of the ordinary shares of Ruby Bhd was RM0.95 per share. 3) On 1 April 20x4, Jewel acquired 60% of the 8% Redeemable preference shares in Ruby. Both Jewel and Ruby have not accounted for the redeemable preference dividend for the year ended 30 June 20x4. 4) Ruby capitalized development costs which had a carrying value at 30 June 20x4 of RM10 million. A review at 30 June 20x4 of the intangible showed an indication that the asset might be impaired. The value in use based on the forecasted cash flow was estimated at RM9 million and the fair value less cost to sell was RM9.2 million. The books of Ruby was not yet adjusted to reflect this transaction. 5) The RM300,000 gain on disposal of equipment shown in the statement of profit or loss of Ruby arose from a disposal of equipment on 1 August 20x3. The equipment was sold to Stone for RM3 million. The remaining useful life of the equipment on the date of disposal was 5 years, and a full year's depreciation was to be provided. The equipment was still in the books of Stone at 30 June 20x4. 6) On 15 July 20x1, Jewel sold one of its plant of carrying value RM3 million to Stone. Proceeds from the sale was RM3.5 million. The remaining useful life of the plant at the date of transfer was 4 years. 7) Stone supplied goods to Jewel at cost plus 25%. During the year ended 30 June 20x4, goods costing RM5,000,000 were supplied to Jewel. Half of these goods were still in the inventory of Jewel as at 30 June 20x4. 8) In February 20x4, Jewel sold goods to Ruby costing RM2,800,000, at a profit of 40% on invoice price. As at 30 June 20x4, one-quarter of these goods remained unsold. 9) Jewel and Stone had paid their dividends on ordinary shares in June 20x4. Jewel had recognized its share of the ordinary dividend from Stone. However, Jewel had not taken credit of its share of the preference dividend from Stone. 10) At the beginning of the current year, a building of Stone was found to be RM4,000,000 in excess of it carrying value of RM80,000,000. The remaining useful life of the building was 40 years. 11) Included in the bills receivable of Stone was RM5.000.000 due from Jewel. Jewel had discounted RM3.000.000 of these bills. 12) Unless specified, all profits and losses are deemed to accrue evenly throughout the year. 13) It is the group policy to value non-controlling interests at their fair value on the date of acquisition You are required to: a. Compute goodwill/bargain purchase on acquisition of Stone Bhd, and Ruby Bhd. using appropriate schedule. b. Prepare the Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 20x4. e. Prepare the Consolidated Statement of Changes in Equity for the year ended 30 June 20x4, showing columns for (i) Share capital. (ii) Reserves (General reserve, Revaluation reserve, Retained Profits) and (iii) non-controlling interest. d. Prepare the Consolidated Statement of Financial Position as at 30 June 20x4. (SHOW ALL WORKINGS)