Question: Parent Bhd. acquired a 75% interest in the equity capital of Nephew Bhd. on 1 January 2019 when the retained p

Post by **answerhappygod** » Fri Jul 01, 2022 8:21 am

: Question Parent Bhd Acquired A 75 Interest In The Equity Capital Of Nephew Bhd On 1 January 2019 When The Retained P 1 (69.08 KiB) Viewed 53 times

: Question Parent Bhd Acquired A 75 Interest In The Equity Capital Of Nephew Bhd On 1 January 2019 When The Retained P 2 (69.88 KiB) Viewed 53 times

: Question Parent Bhd Acquired A 75 Interest In The Equity Capital Of Nephew Bhd On 1 January 2019 When The Retained P 3 (34.56 KiB) Viewed 53 times

Question: Parent Bhd. acquired a 75% interest in the equity capital of Nephew Bhd. on 1 January 2019 when the retained profits of Nephew Bhd. were RM8 600 000. Also, on 1 January 2021, Parent Bhd. acquired another subsidiary, Cousin Bhd. with a paid-up capital of RM20 000 000. Parent Bhd. also hold a 75% equity interest in Cousin Bhd. The draft financial statements of the three companies for the year ended 31 December 2021 are as follows: (a) Statements of profit or loss and other comprehensive income for the year ended 31 December 2021 Sales Cost of sales Gross profit Operating expenses Profit from operations Finance costs Dividends received Interest income Profit before taxation Taxation Profit after taxation Retained profits b/f Dividends paid Retained profits c/f Parent Bhd. Nephew Bhd. Cousin Bhd. (RM'000) (RM'000) (RM'000) 68 500 42 100 34 200 (43 200) (28 900) (20 400) 25 300 13 200 13 800 (8 800) 16 500 (4 800) 3114 2.000 16 814 (3 836) 12 978 18 644 (4 128) 27 494 (4 600) 8 600 (1 200) 7400 (2 072) 5328 1368 (1 776) 14 920 (5 200) 8 600 (2 000) 6 600 (1 848) 4 752 (2376) 2376

(b) (1) Statements of financial position as at 31 December 2021 (ii) Freehold land, at cost Plant and equipment Investment in Nephew Bhd. Investment in. Cousin Bhd. Loan to Cousin Bhd. Current assets: Inventories Trade and other receivables Amount due from Parent Bhd. Bank balances Share capital of RM1 each Revaluation reserves Retained profits Long-term liabilities Loan from Parent Bhd., 10% interest Current liabilities: Bank overdraft Trade and other payables Amount due to Cousin Bhd. Taxation payable Bills payable Parent Bhd. Nephew Bhd, Cousin Bhd. (RM'000) (RM'000) 70 000 9 000 80 848 26 502 27 020 20 000 20 000 * 25 600 31 200 274 668 100 000 20 000 27 494 80 000 12 606 25 400 1 200 3 840 4 128 274 668 (RM'000) 10 000 26 771 10 100 11 200 500 58 571 10 000 14 920 20 000 9800 2075 1776 58 571 8.900 7600 1 200 1 000 54 202 20-000 4- 2.376 20 000 7600 Additional information: At 1 January 2019, the freehold land of Nephew Bhd. was assessed to have a fair open market value of RM15 000 000. On 1 January 2021, this land was assessed to have a fair open market value of RM25 000 000. No adjustment has been made in the accounts to reflect this fair value. During the year ended 31 December 2021, Parent Bhd. sold inventories to Cousin Bhd. for invoices totalling RM8 000 000. Of these sales, RM2 000 000 remained in the 1 850 2376 54 202

(iii) closing inventories of Cousin Bhd. The profit margin to Parent Bhd. was 25% on sales price. Parent Bhd. provided a RM20 000 000 unsecured loan to Cousin Bhd., charging an interest rate of 10% per annum. Required: Prepare the consolidated statement of profit or loss and other comprehensive income of Parent Bhd. for the year ended 31 December 2021 and the consolidated statement of financial position as at that date.