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Question The draft statements of financial position of two companies as at 31 December 2020 were as follows: Yin Bhd Yang Bhd RM000 RM000 RM000

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The draft statements of financial position of two companies as at 31 December 2020 were as follows:

Yin Bhd

Yang Bhd

RM000

RM000

RM000

RM000

Non-current assets

Property, plant and equipment

52,000

20,000

Investment in Yang Bhd, at cost

26,000

-

78,000

20,000

Current Assets

Inventory

20,410

5,500

Trade receivables

11,000

3,700

Interest receivable

40

-

Bank and cash

1,000

-

32,450

9,200

Total assets

110,450

29,200

Equity

Ordinary shares of 50 sen each

35,000

5,000

Share premium

11,000

4,500

Retained earnings

15,650

12,000

61,650

21,500

Non-current liabilities

4% Debentures 2030

30,000

4,000

Current Liabilities

Trade and other payables

18,300

3,540

Interest payable

-

160

Dividend payable

500

18,800

-

3,700

110,450

29,200

Their draft statements of comprehensive income for the year ended 31 December 2020 were:

Yin Bhd

Yang Bhd

RM000

RM000

Revenue

122,500

27,200

Less: Cost of sales

80,900

15,700

Gross profit

41,600

11,500

Less: Administration and distribution costs

24,500

6,500

17,100

5,000

Income from investments

40

-

Interest expense

1,200

160

Profit on ordinary activities before tax

15,940

4,840

Less: Taxation

5,000

1,500

Profit on ordinary activities

10,940

3,340

Yin Bhd acquired its investment in Yang Bhd on 1 January 2020. The investment comprises:

8,000,000 ordinary shares for RM25 million

1,000,000 debentures for RM1 million

The balance on Yang Bhds retained earnings at the date of acquisition was RM9,450,000.

Yin Bhd sold goods to Yang Bhd for RM3,500,000 during the year ended 31 December 2020. All of these remained in inventory at the year end. Yin Bhd had sold these at its normal margin of 20%.

Yin Bhd is of the opinion that the goodwill is impaired and is now worth RM7 million.

Required:

Prepare the consolidated statement of financial position and statement of comprehensive income for Yin Group as at 31st December 2020.

(25 marks)

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