Section A Q1. (Continued) The following notes should be taken into consideration: 1. On 1 December 2019, Johan bought an 80% stake in another entity, Mariam Bhd. The cost of this stake was RM200 million, satisfied by Johan issuing 120 million equity shares and RM80 million in cash. The fair value of the net assets acquired on the acquisition date was RM180 million, consisting of the following: Property, plant and equipment Intangible assets Inventory Cash Trade payables RM 'Mil 130 20 25 20 (15) 180 2. The fair value of the non-controlling interest at the acquisition date was RM47 million. Johan uses the full (fair value) goodwill method in all acquisitions. Goodwill was tested for impairment at 31 July 2020, and any impairment loss was correctly accounted for through operating expenses. 3. Depreciation of property, plant and equipment amounted to RM207 million, charged to operating expenses. Amortization charges of RM45 million relating to intangible assets were also charged to operating expenses, 4. Disposals of property, plant and equipment were made for proceeds of RM140 million, on which gains of RM14 million were recognized. These gains were netted against operating expenses. No disposals of intangible assets were recorded. 5. There were no non-cash adjustments to the 6% bonds. Interest has been paid up to date. 6. Included in the figure for "trade payables and provisions' at 31 July 2020 is a provision for warranty claims amounting to RM27 million (2019: RM14 million). 7. Equity dividends were paid during the period by Johan and Mariam. 8. Financial assets which had cost RM60 million, and had a carrying value on 1 August 2019 of RM75 million, were sold during the year for RM78 million. The gain was netted against finance costs. 9. A bonus issue was made during the year capitalizing RM50m of retained earnings. Other shares were issued for cash, in addition to those to fund the acquisition referred to in note (1) above. Section A Q1. (Continued) Required: (a) Computation of the goodwill value that arises from the acquisition of Mariam Bhd's business by Johan Bhd (11 marks) (b) A consolidated Statement of Changes in Equity. (10 marks) (c) A consolidated Statement of Cash Flows showing all the relevant supporting workings. (19 marks) [Total: 40 marks] Section A Q1. (Continued) Johan Bhd: Consolidated Statements of Financial Position as at 31 July: 2020 RM Mil 2019 RM' Mil Non-current assets: Property, plant and equipment Intangible assets Goodwill Financial assets 2,400 350 3,680 330 60 210 180 4,280 2,930 Current assets: Inventory Trade receivables Bank 400 460 275 340 230 860 845 Total assets 5,140 3,775 Equity: Equity shares Retained earnings 1,900 1,796 1,550 1,305 2,855 3,696 50 Non-controlling interest 3,746 2.855 Non-current liabilities: 6% bonds 680 550 680 550 280 Current liabilities: Trade payables and provisions Bank overdraft Current tax payable 466 168 80 90 714 370 Total equity and liabilities 5,140 3,775 Section A Q1. (Continued) The following notes should be taken into consideration: 1. On 1 December 2019, Johan bought an 80% stake in another entity, Mariam Bhd. The cost of this stake was RM200 million, satisfied by Johan issuing 120 million equity shares and RM80 million in cash. The fair value of the net assets acquired on the acquisition date was RM180 million, consisting of the following: Property, plant and equipment Intangible assets Inventory Cash Trade payables RM 'Mil 130 20 25 20 (15) 180 2. The fair value of the non-controlling interest at the acquisition date was RM47 million. Johan uses the full (fair value) goodwill method in all acquisitions. Goodwill was tested for impairment at 31 July 2020, and any impairment loss was correctly accounted for through operating expenses. 3. Depreciation of property, plant and equipment amounted to RM207 million, charged to operating expenses. Amortization charges of RM45 million relating to intangible assets were also charged to operating expenses, 4. Disposals of property, plant and equipment were made for proceeds of RM140 million, on which gains of RM14 million were recognized. These gains were netted against operating expenses. No disposals of intangible assets were recorded. 5. There were no non-cash adjustments to the 6% bonds. Interest has been paid up to date. 6. Included in the figure for "trade payables and provisions' at 31 July 2020 is a provision for warranty claims amounting to RM27 million (2019: RM14 million). 7. Equity dividends were paid during the period by Johan and Mariam. 8. Financial assets which had cost RM60 million, and had a carrying value on 1 August 2019 of RM75 million, were sold during the year for RM78 million. The gain was netted against finance costs. 9. A bonus issue was made during the year capitalizing RM50m of retained earnings. Other shares were issued for cash, in addition to those to fund the acquisition referred to in note (1) above. Section A Q1. (Continued) Required: (a) Computation of the goodwill value that arises from the acquisition of Mariam Bhd's business by Johan Bhd (11 marks) (b) A consolidated Statement of Changes in Equity. (10 marks) (c) A consolidated Statement of Cash Flows showing all the relevant supporting workings. (19 marks) [Total: 40 marks] Section A Q1. (Continued) Johan Bhd: Consolidated Statements of Financial Position as at 31 July: 2020 RM Mil 2019 RM' Mil Non-current assets: Property, plant and equipment Intangible assets Goodwill Financial assets 2,400 350 3,680 330 60 210 180 4,280 2,930 Current assets: Inventory Trade receivables Bank 400 460 275 340 230 860 845 Total assets 5,140 3,775 Equity: Equity shares Retained earnings 1,900 1,796 1,550 1,305 2,855 3,696 50 Non-controlling interest 3,746 2.855 Non-current liabilities: 6% bonds 680 550 680 550 280 Current liabilities: Trade payables and provisions Bank overdraft Current tax payable 466 168 80 90 714 370 Total equity and liabilities 5,140 3,775