The draft summarised financial statements of three companies at 31 December 2019 are shown below: Statement of Financial Position as at 31 Originals Elijah Berhad Klaus Berhad December 2019 Berhad RM RM RM ASSETS Non-current Assets 1,500,000 1800,600 1150,000 Property, plant, and equipment Investments in Elijah Berhad and Klaus Berhad at cost 3,880,000 5,380,000 1,800,600 1150,000 145,270 101.450 55,900 99,600 Current Assets Inventories Trade receivables Inter-company current accounts Cash at bank 127,800 145,400 88,000 124,200 62,860 52,800 5,865,400 2,108,330 1.360,150 Total Assets EQUITY AND LIABILITIES Share Capital and Reserves Ordinary shares @ RM1 3,400,000 1,600,000 1,000,000 Retained earnings 2,150,400 256,520 180,400 5,550,400 1,856,520 1,180,400 Current Liabilities 144.400 90,210 Trade payables Inter-company current accounts Other liabilities 52,000 48,550 30,000 101,200 170,600 109,600 5,865,400 2,108,330 1,360,150 Total Equity and Liabilities Statement of Comprehensive Income for Year Ended 31 December 2019 Elijah Berhad Klaus Berhad RM RM 780,700 (345,600) 435,100 300,500 (143,280) 157,220 (88,800) Originals Berhad RM 3,200,800 (540,800) 2,660,000 (560,400) 2,099,600 30,000 2,129,600 (199,200) 1,930,400 220,000 2,150,400 (210,500) 224,600 Revenue Cost of sales Gross profit Operating expenses Operating profit Dividend income from Damon Berhad Profit before tax Tax expense Net profit for the year Retained earnings at 1 January 2019 Retained earnings at 31 December 2019 68,420 224,600 (53,900) 170,700 68,420 (16 400) 52,020 128,380 180,400 85,820 256,520 The following additional information is also available: Originals Berhad acquired 1,440,000 ordinary shares in Elijah Berhad for RM2.00 per share on 1 January 2017 when the balance of retained earnings was RM45,640. There have been no changes in Elijah Berhad's share capital since then On 1 January 2019, Originals Berhad acquired 700,000 ordinary shares in Klaus Berhad when the balance of retained earnings was RM128,380. There have been no changes in Klaus Berhad's share capital since then. On 15 May 2019, Originals Berhad also acquired 20% ordinary shares in Damon Berhad for investment purpose. Damon Berhad is not part of Original Berhad's group of companies. Originals Berhad plans to hold the shares for long-term to finance its expansion plans in 2021. Klaus Berhad sold goods worth RM44,000 to Originals Berhad on 5 December 2019. Klaus Berhad prices its goods at cost plus a mark-up of 25%. Originals Berhad's closing inventory included % of the goods purchased from Klaus Berhad as at 31 December 2019. On 30 December 2019, Klaus Berhad sent a cheque for RM6,000 to Originals Berhad. The cheque was received by Originals Berhad on 2 January 2020. Originals Berhad's Board of Directors proposed a dividend for the year of 20 sen per share. The proposed dividend is yet to be reflected in the draft financial statements above. At 31 December 2019, the goodwill arising on consolidation of Elijah Berhad was impaired by RM8,300. At 31 December 2018, RM3,600 was written-off as cumulative amount of impairment in respect of goodwill arising on the acquisition of Elijah Berhad. In addition, the goodwill arising on consolidation of Klaus Berhad was impaired by RM2,400 at 31 December 2019. Required: (a) Prepare the consolidated statement of comprehensive income for Originals Berhad and its subsidiaries for the year ended 31 December 2019, in accordance with Malaysian Financial Reporting Standards. (7 marks) (b) Prepare a summary to show the movement in the group retained earnings for the year ended 31 December 2019 (3 marks) (c) Prepare the consolidated statement of financial position of Originals Berhad and its subsidiaries as at 31 December 2019, in accordance with Malaysian Financial Reporting Standards. (15 marks) (d) In your opinion, do the advantages of preparing consolidated financial statements outweigh the disadvantages? You are required to support your opinion with four (4) reasons. (5 marks) The draft summarised financial statements of three companies at 31 December 2019 are shown below: Statement of Financial Position as at 31 Originals Elijah Berhad Klaus Berhad December 2019 Berhad RM RM RM ASSETS Non-current Assets 1,500,000 1800,600 1150,000 Property, plant, and equipment Investments in Elijah Berhad and Klaus Berhad at cost 3,880,000 5,380,000 1,800,600 1150,000 145,270 101.450 55,900 99,600 Current Assets Inventories Trade receivables Inter-company current accounts Cash at bank 127,800 145,400 88,000 124,200 62,860 52,800 5,865,400 2,108,330 1.360,150 Total Assets EQUITY AND LIABILITIES Share Capital and Reserves Ordinary shares @ RM1 3,400,000 1,600,000 1,000,000 Retained earnings 2,150,400 256,520 180,400 5,550,400 1,856,520 1,180,400 Current Liabilities 144.400 90,210 Trade payables Inter-company current accounts Other liabilities 52,000 48,550 30,000 101,200 170,600 109,600 5,865,400 2,108,330 1,360,150 Total Equity and Liabilities Statement of Comprehensive Income for Year Ended 31 December 2019 Elijah Berhad Klaus Berhad RM RM 780,700 (345,600) 435,100 300,500 (143,280) 157,220 (88,800) Originals Berhad RM 3,200,800 (540,800) 2,660,000 (560,400) 2,099,600 30,000 2,129,600 (199,200) 1,930,400 220,000 2,150,400 (210,500) 224,600 Revenue Cost of sales Gross profit Operating expenses Operating profit Dividend income from Damon Berhad Profit before tax Tax expense Net profit for the year Retained earnings at 1 January 2019 Retained earnings at 31 December 2019 68,420 224,600 (53,900) 170,700 68,420 (16 400) 52,020 128,380 180,400 85,820 256,520 The following additional information is also available: Originals Berhad acquired 1,440,000 ordinary shares in Elijah Berhad for RM2.00 per share on 1 January 2017 when the balance of retained earnings was RM45,640. There have been no changes in Elijah Berhad's share capital since then On 1 January 2019, Originals Berhad acquired 700,000 ordinary shares in Klaus Berhad when the balance of retained earnings was RM128,380. There have been no changes in Klaus Berhad's share capital since then. On 15 May 2019, Originals Berhad also acquired 20% ordinary shares in Damon Berhad for investment purpose. Damon Berhad is not part of Original Berhad's group of companies. Originals Berhad plans to hold the shares for long-term to finance its expansion plans in 2021. Klaus Berhad sold goods worth RM44,000 to Originals Berhad on 5 December 2019. Klaus Berhad prices its goods at cost plus a mark-up of 25%. Originals Berhad's closing inventory included % of the goods purchased from Klaus Berhad as at 31 December 2019. On 30 December 2019, Klaus Berhad sent a cheque for RM6,000 to Originals Berhad. The cheque was received by Originals Berhad on 2 January 2020. Originals Berhad's Board of Directors proposed a dividend for the year of 20 sen per share. The proposed dividend is yet to be reflected in the draft financial statements above. At 31 December 2019, the goodwill arising on consolidation of Elijah Berhad was impaired by RM8,300. At 31 December 2018, RM3,600 was written-off as cumulative amount of impairment in respect of goodwill arising on the acquisition of Elijah Berhad. In addition, the goodwill arising on consolidation of Klaus Berhad was impaired by RM2,400 at 31 December 2019. Required: (a) Prepare the consolidated statement of comprehensive income for Originals Berhad and its subsidiaries for the year ended 31 December 2019, in accordance with Malaysian Financial Reporting Standards. (7 marks) (b) Prepare a summary to show the movement in the group retained earnings for the year ended 31 December 2019 (3 marks) (c) Prepare the consolidated statement of financial position of Originals Berhad and its subsidiaries as at 31 December 2019, in accordance with Malaysian Financial Reporting Standards. (15 marks) (d) In your opinion, do the advantages of preparing consolidated financial statements outweigh the disadvantages? You are required to support your opinion with four (4) reasons