The draft summarised statements of comprehensive income of three companies for the year ended 31 December 2020 are shown below: Milk Berhad Pastries Berhad Vanilla Berhad RM'000 RM'000 RM'000 Revenue 6,800 4,200 5,580 Cost of sales (2,720) (1,565) (3,220) Gross profit 4,080 2,635 2,360 (720) (520) (160) Selling expenses General administrative expenses (1.470) (1.115) (1,310) Profit from operations 1,890 1,000 890 Dividend income from Vanilla Bhd 20 Dividend income from Earth Bhd 40 Interest expense (425) (125) (40) Profit before tax 1,525 875 840 Tax expense (280) (175) (170) Profit for the year 1,245 700 670 The following information is also available: 1 On 1 January 2015, Pastries Berhad acquired 300,000 ordinary shares of Vanilla Berhad for RM650,000. The issued share capital of Vanilla Berhad at that date amounted to 500,000 ordinary RM1 shares. Vanilla Berhad's retained earnings on 1 January 2015 amounted to RM237,500. 2. Pastries Berhad acquired 80% of the ordinary RM1 shares in Milk Berhad on 1 January 2018 for RM276,000. On that date, Milk Berhad's share capital amounted to RM240,000 and its accumulated retained earnings was reported at RM148,000. 3. Since Pastries Berhad's acquisition of shares in Vanilla Berhad and Milk Berhad, there have been no changes in the share capital of these two companies. The issued share capital of Pastries Berhad at 31 December 2020 consisted of 600,000 ordinary RM1 shares. On 24 December 2020, the respective boards of directors proposed a dividend for the year of 8 sen per share to be payable by each of the three companies. The proposed dividend has not yet been reflected in the respective companies' draft financial statements. 4. On 15 May 2020, Pastries Berhad sold inventory to Milk Berhad for RM180,000, at a mark-up of 20% on cost. Half of this inventory was unsold by Milk Berhad at 31 December 2020. 5. During the year ended 31 December 2020, Pastries Berhad purchased goods from Vanilla Berhad for RM1,600,000. At the year end, Pastries Berhad's closing inventory included goods purchased from Vanilla Berhad for RM300,000. Vanilla Berhad prices its goods at a mark-up of 25% on cost. 6. Pastries Berhad also received and recognised a dividend of RM40,000 from its 25% shareholdings in the ordinary share capital of Earth Berhad. 7. Following the annual impairment review of goodwill arising on consolidation, it was decided that the goodwill arising in respect of Vanilla Berhad should be written-off by RM15,600 in the year ended 31 December 2020. At 31 December 2019, the cumulative amount written-off due to impairment of goodwill arising on the acquisition of Vanilla Berhad amounted to RM10,000. 8. At 1 January 2020, the retained earnings of Pastries Berhad, Vanilla Berhad and Milk Berhad were RM980,000, RM545,000 and RM320,000, respectively. 9. Pastries Group values the non-controlling interest using the proportion of net assets method. Required: (a) Calculate the goodwill arising from Pastries Berhad's acquisition of Vanilla Berhad and Milk Berhad. (11.5 marks) (b) Prepare the consolidated income statement for Pastries Berhad and its subsidiaries for the year ended 31 December 2020. (14.5 marks) (c) Prepare an extract of the Statement of Changes in Equity showing the movements in the group's retained earnings during the year ended 31 December 2020. (4 marks) Total: 30 marks