QUESTION The issued share capital of Serene Bhd, on 1 July 2020, is made up of: Number of shares RM Ordinary shares 150 million shares 170 million 10% preference shares 20 million shares 20 million On 1 July 2020, Peace Bhd acquired 80% of the issued ordinary shares of Serene Bhd at RM1.625 per share. On the same date, Peace Bhd acquired two-third of the 6% debentures at par for RM50 million. The purchase consideration for both securities was in cash. At that date, the land of Serene Bhd was found to be undervalued by RM3 million and a brand was fair valued to RM1.5 million. The intangible asset has an indefinite useful life. Both revaluations were not yet recognized The non-controlling interest in Serene Bhd was valued at its proportionate share in the net assets of Serene Bhd. Given below are the financial statements of Peace Bhd and Serene Bhd. Statement of Financial Position as at 30 June 2021 Peace Serene RM000 RM'000 Assets Property, plant and equipment 304,500 249,000 Intangibles 3,500 1,000 Investments: In Serene 245,000 Other investments 15,000 3,000 Inventories 36,000 40,000 Trade receivables 15,000 32,500 Bills receivable 10,000 29,000 Cash and bank 20,500 22,000 649,500 376,500 360,000 169,500 190,000 79,000 75,000 Equity and Liabilities Share capital Reserves 6% debentures Bank loan Trade payables Bills payable Accruals 39,000 55,000 23,000 3,000 649,500 20,000 10,500 2,000 376,500 Statement of Profit or Loss for the year ended 30 June 2021 Peace Serene RM000 RM000 Revenue 236,500 136,500 Cost of sales (140,000) (75,000) Gross profit 96,500 61,500 Loss on disposal of property, plant and equipment (500) Investment income: From Serene Other investments 1,000 200 Interest income 2,000 Administration expenses (21,000) (19,700) Other operational expenses (20,500) (11.500) Finance cost (3,500) (3,000) Profit before tax 60,000 27,500 Taxation (10,000) (5,000) Profit/(Loss) for the year 50,000 22,500 6,000 Peace Bhd Statement of Changes in Equity for the year ended 30 June 2021 Ordinary Preference Retained shares shares profit RM'000 RM'000 RM000 Balance as at 1 July 2020 300,000 60,000 130,000 Profit for the year 50,000 Ordinary dividend paid (7,500) Preference dividend paid (3,000) Balance as at 30 June 2021 300,000 60,000 169,500 Serene Bhd Statement of Changes in Equity for the year ended 30 June 2021 Ordinary Preference Retained shares shares profit RM'000 RM'000 RM000 Balance as at 1 July 2020 150,000 40,000 66,000 Profit for the year 22,500 Ordinary dividend paid (7,500) Preference dividend paid (2,000) Balance as at 30 June 2021 150,000 40,000 79,000 Additional information: 1) Goodwill of Serene Bhd was impaired by RM1.5 million at 30 June 2021. 2) Property, plant and equipment Peace Bhd Land RM'000 Building RM'000 Plant RM'000 Equipment RM'000 Total RM'000 51,000 200,000 110,000 15,000 60,000 421,000 15,000 (10,000) 426,000 (10,000) 50,000 51.000 200.000 125,000 Cost/Valuation As at 1 July 2020 Acquisition/ Revaluation Disposal As at 30 June 2021 Accum. depreciation As at 1 July 2020 Current year charge Disposal As at 30 June 2021 Carrying value as at 30 June 2021 20,000 4,000 55,000 12,500 30,000 5,000 (5,000) 30,000 105,000 21,500 (5,000) 121,500 24,000 67,500 51,000 176,000 57,500 20,000 304,500 Serene Bhd Land RM'000 Building RM'000 Plant RM'000 Equipment RM'000 Total RM'000 44,500 150,000 80,000 50,500 4,500 325,000 4,500 44,500 150,000 80.000 55,000 329,500 Cost/Valuation As at 1 July 2020 Acquisition/ Revaluation Disposal As at 30 June 2021 Accum. depreciation As at 1 July 2020 Current year charge Disposal As at 30 June 2021 Carrying value as at 30 June 2021 12,000 3,000 32,000 8,000 20,000 5,500 64,000 16,500 15,000 40,000 25,500 80,500 44,500 135,000 40,000 29,500 249,000 The policy of the group is to provide full depreciation in the year of acquisition and none in the year of disposal for all assets, at the following rates: on building at 2% per annum on plant and equipment at 10% per annum. 3) During the year ended 30 June 2021, the following transactions took place: Peace Bhd disposed an equipment to Serene at a loss of RM0.5 million. Serene Bhd sold goods on credit to Peace Bhd for RM5 million, with a profit margin of 20%. On 30 June 2021, 50% of these goods remained in the closing inventories of Peace Bhd. 4) Details on dividends and interest on debt instruments are: Peace Bhd and Serene Bhd have paid and recorded the dividend on preference shares and the interim ordinary dividend. Peace Bhd has taken credit of its share of Serene Bhd's dividends. Peace Bhd and Serene Bhd declared final ordinary dividend of RM10 million and RM5 million respectively on 30 June 2021. Both companies have not recorded these proposed dividends. Serene Bhd paid interest on the 6% debentures for the first 8 months of the year, and Peace Bhd received its share. However, no adjustment was made for the remaining 4 months' interest. 5) Details of the inter-company balances: The whole bills payable of Serene Bhd is amount due to Peace Bhd. In June 2021, Peace Bhd discounted RM3 million of the bills receivable from Serene Bhd. Required: a. Compute goodwill/bargain purchase on acquisition of Serene Bhd, using appropriate schedule. b. Compute the non-controlling interest (NCI) and group retained profits as at 30 June 2021. c. Prepare the Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2021. d. Prepare the Consolidated Statement of Changes in Equity for the year ended 30 June 2021. e. Prepare the Consolidated Statement of Financial Position as at 30 June 2021. (SHOW ALL WORKINGS)