SECTION A (40 MARKS) This question is Compulsory in this section. QUESTION 1 (40 Marks) The following are summarised accounts of the Prague Bhd and its group companies for the year ended 31 December 2021. Statement of Financial Position at 31 December 2021 Prague Bhd Sofia Bhd Ankara Bhd Assets RM RM RM Non-current assets Tangible Fixed Assets 1,000,000 800,000 600,000 Investment Properties 500,000 200,000 100,000 Other investments 20,000 10,000 Investments in Sofia Bhd 610,000 Investments in Ankara 85,000 2,215,000 1,010,000 700,000 Current assets Inventories 540,000 250,000 110,000 Other Current Assets 400,000 40,000 150,000 Inter-company current account 20,000 Cash at bank 548.000 340,000 130,000 Total assets 3.723.000 1.640.000 1,090,000 Equity & Liabilities Equity Ordinary shares at RMI 1,300,000 500,000 220,000 5% Non-Redeemable Preference Shares 20,000 Retained earnings 643,000 370,000 218,000 1,943,000 890,000 438,000 10% Debentures 450,000 Current liabilities Trade payables 500,000 550,000 460,000 Dividend proposed 130,000 Other liabilities 700.000 200,000 192.000 Total Equity and Liabilities 3,723,000 1.640.000 1,090,000 Statements of Comprehensive Income for year to 31 December 2021 Prague Bhd Sofia Bhd RM RM Revenue 1,600,000 700,000 Cost of sales (1,000,000) (400,000) Gross profit 600,000 300,000 Selling & Distribution expenses (60,000) (20,000) Admistrative expenses including depreciation 42,500 (60,000) Finance Expenses (45,000) Profit before tax 537,500 220,000 Dividend Income 5,500 Tax expense (70,000) (20,000) Profit for the year 473,000 200,000 Ankara Bhd RM 300,000 (80,000) 220,000 (20,000) (35,000) 165,000 (15.000) 150,000 Statements of Changes in Retained Earnings for the year ended 31 December 2021 Prague Bhd Sofia Bhd Ankara Bhd RM RM RM Balance at 1 January 2021 300,000 170,000 90,000 Profit for the year 473,000 200,000 150,000 Less: Dividends (130,000) (22,000) Balance at 31 December 2021 643,000 370,000 218,000 The following information is relevant in the preparation of the group financial statements of the Prague Group: i) On 1 January 2021 Prague Bhd acquired 70% of the ordinary share in Sofia Bhd. The consideration paid by Prague Bhd for these shares was RM600,000 cash. The accumulated profits of Sofia Bhd on 1 January 2021 were RM170,000. There have been no changes in Sofia Bhd's issued share capital since then. ii) On 30 December 2021 Prague Bhd acquired 25% of the non-redeemable preference shares in Sofia Bhd. The consideration paid to Sofia was RM10,000 cash. iii) On 2 January 2021 Prague Bhd made a further acquisition by purchasing 25% of the ordinary shares in Ankara for RM85,000. The retained profits of Ankara at the date of acquisition was RM90,000. iv) At the date of acquisition, Sofia's plant had a fair value of RM50,000 higher than their book value at the date of acquisition. This revaluation has not been reflected in the books of Sofia. At the date of acquisition, the plant had an estimated life of 10 years. v) On 20 December 2021 Prague Bhd bought inventories from Sofia Bhd for RM30,000. The goods were sold at a markup of 20%. Of these sales 80% of these goods were still in the inventory of Prague Bhd at year end. vi) On 30 December 2021 Sofia Bhd made a payment of RM20,000 to Prague Bhd. The payment was only received and recorded by Prague Bhd on 4 January 2022. W vii) The goodwill arising on consolidation on Sofia Bhd had been impaired by RM10,000 in the current year ended 31 December 2021. viii) On 31 December 2021, Prague Bhd proposed a dividend of 10 cents per shares. Ankara Bhd had paid a dividend of 10 cents per share on 30 December 2021. ix) It is group policy to value the non-controlling interest using the fair value method. The fair value of the non-controlling interest of Sofia Bhd at date of acquisition was RM220,000 x) All revenues and expenses are expected to accrue evenly throughout the year. Required: a) Prepare a consolidated statement of comprehensive income for Prague Bhd and its group of companies for the year to 31 December 2021. (20 marks) b) Prepare a consolidated statement of financial position for Prague Bhd and its group of companies as at 31 December 2021. (20 marks) SECTION A (40 MARKS) This question is Compulsory in this section. QUESTION 1 (40 Marks) The following are summarised accounts of the Prague Bhd and its group companies for the year ended 31 December 2021. Statement of Financial Position at 31 December 2021 Prague Bhd Sofia Bhd Ankara Bhd Assets RM RM RM Non-current assets Tangible Fixed Assets 1,000,000 800,000 600,000 Investment Properties 500,000 200,000 100,000 Other investments 20,000 10,000 Investments in Sofia Bhd 610,000 Investments in Ankara 85,000 2,215,000 1,010,000 700,000 Current assets Inventories 540,000 250,000 110,000 Other Current Assets 400,000 40,000 150,000 Inter-company current account 20,000 Cash at bank 548.000 340,000 130,000 Total assets 3.723.000 1.640.000 1,090,000 Equity & Liabilities Equity Ordinary shares at RMI 1,300,000 500,000 220,000 5% Non-Redeemable Preference Shares 20,000 Retained earnings 643,000 370,000 218,000 1,943,000 890,000 438,000 10% Debentures 450,000 Current liabilities Trade payables 500,000 550,000 460,000 Dividend proposed 130,000 Other liabilities 700.000 200,000 192.000 Total Equity and Liabilities 3,723,000 1.640.000 1,090,000 Statements of Comprehensive Income for year to 31 December 2021 Prague Bhd Sofia Bhd RM RM Revenue 1,600,000 700,000 Cost of sales (1,000,000) (400,000) Gross profit 600,000 300,000 Selling & Distribution expenses (60,000) (20,000) Admistrative expenses including depreciation 42,500 (60,000) Finance Expenses (45,000) Profit before tax 537,500 220,000 Dividend Income 5,500 Tax expense (70,000) (20,000) Profit for the year 473,000 200,000 Ankara Bhd RM 300,000 (80,000) 220,000 (20,000) (35,000) 165,000 (15.000) 150,000 Statements of Changes in Retained Earnings for the year ended 31 December 2021 Prague Bhd Sofia Bhd Ankara Bhd RM RM RM Balance at 1 January 2021 300,000 170,000 90,000 Profit for the year 473,000 200,000 150,000 Less: Dividends (130,000) (22,000) Balance at 31 December 2021 643,000 370,000 218,000 The following information is relevant in the preparation of the group financial statements of the Prague Group: i) On 1 January 2021 Prague Bhd acquired 70% of the ordinary share in Sofia Bhd. The consideration paid by Prague Bhd for these shares was RM600,000 cash. The accumulated profits of Sofia Bhd on 1 January 2021 were RM170,000. There have been no changes in Sofia Bhd's issued share capital since then. ii) On 30 December 2021 Prague Bhd acquired 25% of the non-redeemable preference shares in Sofia Bhd. The consideration paid to Sofia was RM10,000 cash. iii) On 2 January 2021 Prague Bhd made a further acquisition by purchasing 25% of the ordinary shares in Ankara for RM85,000. The retained profits of Ankara at the date of acquisition was RM90,000. iv) At the date of acquisition, Sofia's plant had a fair value of RM50,000 higher than their book value at the date of acquisition. This revaluation has not been reflected in the books of Sofia. At the date of acquisition, the plant had an estimated life of 10 years. v) On 20 December 2021 Prague Bhd bought inventories from Sofia Bhd for RM30,000. The goods were sold at a markup of 20%. Of these sales 80% of these goods were still in the inventory of Prague Bhd at year end. vi) On 30 December 2021 Sofia Bhd made a payment of RM20,000 to Prague Bhd. The payment was only received and recorded by Prague Bhd on 4 January 2022. W vii) The goodwill arising on consolidation on Sofia Bhd had been impaired by RM10,000 in the current year ended 31 December 2021. viii) On 31 December 2021, Prague Bhd proposed a dividend of 10 cents per shares. Ankara Bhd had paid a dividend of 10 cents per share on 30 December 2021. ix) It is group policy to value the non-controlling interest using the fair value method. The fair value of the non-controlling interest of Sofia Bhd at date of acquisition was RM220,000 x) All revenues and expenses are expected to accrue evenly throughout the year. Required: a) Prepare a consolidated statement of comprehensive income for Prague Bhd and its group of companies for the year to 31 December 2021. (20 marks) b) Prepare a consolidated statement of financial position for Prague Bhd and its group of companies as at 31 December 2021. (20 marks)