The following are the extracts of Statements of Profit and Loss for year ended 31 December 2020: Haval (RM000) Serena (RM000) Sales 25,000 1,480 Cost of sales (14,500) (520) Gross profit 10,500 960 Administration expenses (3,800) (110) Selling expenses (1,700) (56) Miscellaneous expense (200) (14) Dividend income from Serena 55 Nil Profit before tax 4,855 780 Taxation (1,005) (180) Profit after tax 3,850 600 Retained earnings @1.1.2020 Dividends declared in December 2020 Ordinary shares Preference shares 12,990 700 nil 1,630 50 60 Additional Information: 1. Haval acquired 80% issued ordinary shares and 25% of the preference shares belonging to Serena on 1 January 2020 at the price of RM2.7 million and RM250,000 respectively. The total units of ordinary shares issued by Serena was 2 million units valued at RM2.8 million. Serena also has in total issuance RM 1 million units of preference shares valued at RM1 million There were no other reserves for Serena as of this date. 2. On the date of acquisition, machinery belonging to Serena has a fair value of RM40,000 more than the carrying value. The useful life of the plant was estimated to be 8 years on this date. Both companies uses straight line depreciation method. Depreciation adjustment is included as part of administration expenses. 3. During the year, Serena sold goods to Haval at the invoice price of RM120,000 at cost plus 25%. 60% of the goods have been sold. 4. The group uses partial goodwill to prepare its consolidated accounts. Required: (a) Calculate the goodwill or bargain purchase for this acquisition. (2 marks) (b) Prepare the consolidated statement of profit and loss for year ended 31 December 2020. (10 marks) (c) Prepare the extract of statement of changes in equity for year ended 31 December 2020. (5 marks) Note: Show the relevant workings. [17 marks]

Question 1 The following are the extracts of Statements of Profit and Loss for year ended 31 December 2020: Haval (RM'000) Serena (RM'000) Sales 25,000 1,480 Cost of sales (14,500) (520) Gross profit 10,500 960 Administration expenses (3,800) (110) Selling expenses (1,700) (56) Miscellaneous expense (200) (14) Dividend income from Serena 55 Nil Profit before tax 4,855 780 Taxation (1,005) (180) Profit after tax 3,850 600 Retained earnings @1.1.2020 12,990 1,630 Dividends declared in December 2020 Ordinary shares 700 50 Preference shares nil 60 Additional Information: 1. Haval acquired 80% issued ordinary shares and 25% of the preference shares belonging to Serena on 1 January 2020 at the price of RM2.7 million and RM250,000 respectively. The total units of ordinary shares issued by Serena was 2 million units valued at RM2.8 million. Serena also has in total issuance RM 1 million units of preference shares valued at RM1 million There were no other reserves for Serena as of this date. 2. On the date of acquisition, machinery belonging to Serena has a fair value of RM40,000 more than the carrying value. The useful life of the plant was estimated to be 8 years on this date. Both companies uses straight line depreciation method. Depreciation adjustment is included as part of administration expenses. EAB20803_Financial Accounting and Reporting 3 Page 2 of 10 JANUARY 2021 CONFIDENTIAL 3. During the year, Serena sold goods to Haval at the invoice price of RM120,000 at cost plus 25%. 60% of the goods have been sold. 4. The group uses partial goodwill to prepare its consolidated accounts. Required: (a) Calculate the goodwill or bargain purchase for this acquisition. (2 marks) (b) Prepare the consolidated statement of profit and loss for year ended 31 December 2020. (10 marks) (c) Prepare the extract of statement of changes in equity for year ended 31 December 2020. (5 marks) Note: Show the relevant workings. [17 marks]