Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Star Berhad and its group of companies are involved in the food and beverages industry. The Group is well-known for its aromatic coffee beans and

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Star Berhad and its group of companies are involved in the food and beverages industry. The Group is well-known for its aromatic coffee beans and scrumptious pastries. The draft summarized financial statements of Star Berhad and its group of companies as at 30 June 2021 are shown below: Star Bhd Comet Bhd Crescent Bhd RM RM RM Statements of Financial Position as at 30 June 2021 ASSETS Non-current assets Freehold land and buildings Machinery and equipment Investments in Comet and Crescent at 415,500 250,500 370.900 385,900 320,500 176,300 800.000 cost 1,466,000 756,800 496.800 Current liabilities 70.000 Trade payables Inter-company current accounts Other liabilities 116,400 35,600 61.650 37.800 269.900 389.100 115.100 Total equity and liabilities 2.122.800 964.700 669.350 Statements of Comprehensive Income for the year ended 30 June 2021 Star Bhd Comet Bhd Crescent Bhd RM RM RM 197.100 Revenue Cost of sales Gross profit Operating expenses Profit before tax 780,300 (232.500) 547.800 (47,550) 500,250 (94.560) 405,690 (72,500) 124,600 (33,550) 91.050 (17.960) 73,090 159.000 (46,500) 112,500 (42.550) 69.950 (12.960) 56.990 Tax expense Net income Star Bhd Statements of Changes in Retained Earnings for the year ended 30 June Comet Bhd Crescent Bhd Star Bhd Statements of Changes in Retained Earnings for the year ended 30 June 2021 Comet Bhd Crescent Bhd RM RM RM Balance as at 1 July 2020 91.210 24,510 19.010 Net income 405 690 73,090 56,990 Balance as at 30 June 2021 496.900 97 600 76,000 The following additional information is also available: Star Bhd acquired 540,000 ordinary shares in Comet Bhd for RM1.20 per unit on 1 July 2017 when the balance of retained earnings in Comet Bhd was RM14,680. There have been no changes in Comet Bhd's share capital since then. Star Bhd acquired 108,000 ordinary shares in Crescent Bhd two years ago when the balance of retained earnings was RM9,100 and the balance of revaluation reserve was RM44,000. There have been no changes in Crescent Bhd's share capital since then. - On 10 November 2020, Comet Bhd sold RM100,000 of inventory to Star Bhd. Comet Bhd prices its goods at cost plus a mark-up of 25%. At the year end, Star Bhd's closing inventory included goods purchased from Comet Bhd for RM60,000. On 15 May 2021. Star Bhd sold RM80,000 of inventory to Crescent Bhd. Star Bhd also prices its goods at a mark-up of 25%. At the year end, Crescent Berhad's closing inventory included 2/5 of goods purchased from Star Bhd. On 28 June 2021. Crescent Bhd sent a cheque for RM3,400 to Star Bhd. The cheque was received by Star Bhd on 1 July 2021. At 30 June 2021, the goodwill arising on consolidation was impaired by RM3,200 for Comet Bhd and RM5,000 for Crescent Bhd, respectively. The impairment of goodwill for Comet Bhd for the year ended 30 June 2020 was RM1,800. received by Star Bna on 1 July 2021. At 30 June 2021. the goodwill arising on consolidation was impaired by RM3,200 for Comet Bhd and RM5,000 for Crescent Bhd, respectively. The impairment of goodwill for Comet Bhd for the year ended 30 June 2020 was RM1.800. On 20 June 2021, the directors of Star Bhd proposed dividend for the year of 30 sen per share. The proposed dividend has not yet been reflected in the draft financial statements above. Required: a) Prepare the consolidated statement of comprehensive income for Star Berhad and its subsidiaries for the year ended 30 June 2021, in accordance with Malaysian Financial Reporting Standards. (9 marks) b) Prepare a summary to show the movements in the group retained earnings for the year ended 30 June 2021. (4 marks) c) Prepare the consolidated statement of financial position for Star Berhad and its subsidiaries as at 30 June 2021, in accordance with Malaysian Financial Reporting Standards. (12 marks) d) Compute Star Berhad's (parent company only) P/E ratio for the year ended 30 June 2021 with the assumption that the company's share price for the same financial period is RM0.45 per share. Star Berhad's P/E ratio for the year ended 30 June 2020 was 1.05:1. Based on the P/E ratios, how would you assess shareholders' confidence in the company's shares between 2020 and 2021? Why? (5 marks) Star Berhad and its group of companies are involved in the food and beverages industry. The Group is well-known for its aromatic coffee beans and scrumptious pastries. The draft summarized financial statements of Star Berhad and its group of companies as at 30 June 2021 are shown below: Star Bhd Comet Bhd Crescent Bhd RM RM RM Statements of Financial Position as at 30 June 2021 ASSETS Non-current assets Freehold land and buildings Machinery and equipment Investments in Comet and Crescent at 415,500 250,500 370.900 385,900 320,500 176,300 800.000 cost 1,466,000 756,800 496.800 Current liabilities 70.000 Trade payables Inter-company current accounts Other liabilities 116,400 35,600 61.650 37.800 269.900 389.100 115.100 Total equity and liabilities 2.122.800 964.700 669.350 Statements of Comprehensive Income for the year ended 30 June 2021 Star Bhd Comet Bhd Crescent Bhd RM RM RM 197.100 Revenue Cost of sales Gross profit Operating expenses Profit before tax 780,300 (232.500) 547.800 (47,550) 500,250 (94.560) 405,690 (72,500) 124,600 (33,550) 91.050 (17.960) 73,090 159.000 (46,500) 112,500 (42.550) 69.950 (12.960) 56.990 Tax expense Net income Star Bhd Statements of Changes in Retained Earnings for the year ended 30 June Comet Bhd Crescent Bhd Star Bhd Statements of Changes in Retained Earnings for the year ended 30 June 2021 Comet Bhd Crescent Bhd RM RM RM Balance as at 1 July 2020 91.210 24,510 19.010 Net income 405 690 73,090 56,990 Balance as at 30 June 2021 496.900 97 600 76,000 The following additional information is also available: Star Bhd acquired 540,000 ordinary shares in Comet Bhd for RM1.20 per unit on 1 July 2017 when the balance of retained earnings in Comet Bhd was RM14,680. There have been no changes in Comet Bhd's share capital since then. Star Bhd acquired 108,000 ordinary shares in Crescent Bhd two years ago when the balance of retained earnings was RM9,100 and the balance of revaluation reserve was RM44,000. There have been no changes in Crescent Bhd's share capital since then. - On 10 November 2020, Comet Bhd sold RM100,000 of inventory to Star Bhd. Comet Bhd prices its goods at cost plus a mark-up of 25%. At the year end, Star Bhd's closing inventory included goods purchased from Comet Bhd for RM60,000. On 15 May 2021. Star Bhd sold RM80,000 of inventory to Crescent Bhd. Star Bhd also prices its goods at a mark-up of 25%. At the year end, Crescent Berhad's closing inventory included 2/5 of goods purchased from Star Bhd. On 28 June 2021. Crescent Bhd sent a cheque for RM3,400 to Star Bhd. The cheque was received by Star Bhd on 1 July 2021. At 30 June 2021, the goodwill arising on consolidation was impaired by RM3,200 for Comet Bhd and RM5,000 for Crescent Bhd, respectively. The impairment of goodwill for Comet Bhd for the year ended 30 June 2020 was RM1,800. received by Star Bna on 1 July 2021. At 30 June 2021. the goodwill arising on consolidation was impaired by RM3,200 for Comet Bhd and RM5,000 for Crescent Bhd, respectively. The impairment of goodwill for Comet Bhd for the year ended 30 June 2020 was RM1.800. On 20 June 2021, the directors of Star Bhd proposed dividend for the year of 30 sen per share. The proposed dividend has not yet been reflected in the draft financial statements above. Required: a) Prepare the consolidated statement of comprehensive income for Star Berhad and its subsidiaries for the year ended 30 June 2021, in accordance with Malaysian Financial Reporting Standards. (9 marks) b) Prepare a summary to show the movements in the group retained earnings for the year ended 30 June 2021. (4 marks) c) Prepare the consolidated statement of financial position for Star Berhad and its subsidiaries as at 30 June 2021, in accordance with Malaysian Financial Reporting Standards. (12 marks) d) Compute Star Berhad's (parent company only) P/E ratio for the year ended 30 June 2021 with the assumption that the company's share price for the same financial period is RM0.45 per share. Star Berhad's P/E ratio for the year ended 30 June 2020 was 1.05:1. Based on the P/E ratios, how would you assess shareholders' confidence in the company's shares between 2020 and 2021? Why

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Horngrens Financial and Managerial Accounting

Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura

4th Edition

978-0133251241, 9780133427516, 133251241, 013342751X, 978-0133255584

Students also viewed these Accounting questions