ADVANCED FINANCIAL ACCOUNTING AND REPORTING 1 (FAR610)
PRE-TEST SOLUTION
QUESTION 3
PART A
Computation of Goodwill or bargain purchase
Danish Bhd (RM’000) Irwin Bhd (RM’000)
Consideration 17,000√ 80% x 10,000 8,000√√
NCI 20% x 10m x 5,000√√ 13, 866 x 40% 5,546.40√
RM2.50
22,000 13,546.4
FVoNA
Ordinary Shares 10,000√ 8,000√
Retained Profit 4,352√ (4,716 – 850)
3,866√√
Revaluation Reserves 2,000√ (16,352) 2,000√ (13,866)
5,648 Bargain purchase 319.6
Impairment 700√
Goodwill 4,978
√14 x ½ = 7 marks
Computation of group retained profit and non-controlling interest as at 31 March
2018.
GRP (RM’000) NCI (RM’000)
FV on DOA : Danish 5,000√
FV on DOA : Irwin 5,546.4√
Indirect Consideration (20% x 10m) (2,000) √√
Post Revaluation Surplus (3,000 – 200√√
2,000)20%
Danish Bhd
Balance as per SOPF 11,138√
Pre-acquisition (4,352) √
6,786
Ordinary dividend payable (600) √
6,186 (80%) 4,948.80 (20%) 1,237.20
Irwin Bhd
Balance as per SOPF 4,716√
Pre-acquisition (3,866) √
850 (60%) 510 (40%) 340
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Meow Bhd
Balance as per SOPF 15,350√
Ordinary dividend payable (1,280) √
Ordinary dividend receivable 480√
URP inventories (200) √ 14,350
Post profit of Rexy (2,000 – 1,500)30% 150√√
Bargain purchase 319.6√
Goodwill impairment (560) √ (140) √
19,718.4 10,183.6
√20 x ½ = 10 marks
Consolidated Statement of Financial Position for the group as at 31 March 2018
RM’000 RM’000
Non-current Assets
Property, plant and equipment (10,018 + 12,346 + 9,820) + 2,000 34,184√√
Goodwill on consolidation √ 4,948
Investments in Rexy (W1) √ 6,450
Current Assets
Inventories (6,912 + 4, 918 + 2,728) - 200 14,358 √√
Trade and other receivables (1,380 +1,444 +1,326) - 800 3,350 √√
Cash and cash equivalents (2,760 + 2,166 + 2,650) 7,576 √ 25,284
70,866
Equity
Ordinary share capital at RM1 each (12,000 + 2,000) 14,000√√
Revaluation reserves {5,000 + (3,000 – 2,000)80% + 300} 6,100√√√
Retained profit√ 19,718.4
Share Premium (2,000 x RM2) 4,000√
Non-controlling Interest√ 10,183.6
Non-current Liability
Deferred taxation (1,400 + 1,000 + 700) 3,100√
Current Liability
Trade and other payables (3,320 + 5,136 + 2,688) - 800 10,344 √√
Tax payable (1,000 + 600 + 420) 2,020 √
Ordinary dividend payable by Meow 1,280 √
Ordinary dividend payable by Danish 120 √ 13,764
70,866
Investment in Rexy Bhd RM’000
COI 2,000 x RM3 6,000
Post RP (2,000 – 1,500)30% 150
Post Rev Surplus (3,000 – 2,000)30% 300
6,450
This study source was downloaded by 100000815031455 from CourseHero.com on 07-25-2022 09:17:19 GMT -05:00 √ 26 X ½ = 13 marks
(TOTAL = 30 marks)
https://www.coursehero.com/file/89132302/SOLUTION-PRETEST1-Q3docx/
PART B
a) Two types of joint arrangements.
(i) Joint operation
(ii) Joint venture
(2 marks)
b) How would you distinguish a joint operation from a joint venture? Explain
briefly.
(2 marks)
Refer to page 511 and 512 of the text book.
c) X, Y and Z are parties to an arrangement where X holds 40 percent voting
power, Y 35 percent and Z 25 percent. The contractual agreement between the
three is that at least 75 percent of voting rights are required to make decisions
about the relevant activities of the arrangement. Explain briefly whether or not all
parties have joint control?
(3 marks)
In this case, X and Y have joint control / as X needs the consent of Y to make
decisions about the relevant activities /. Meanwhile Z is a party to the joint
arrangement /.
d) A Bhd holds 60% shares of B Bhd. C Bhd holds 20% shares of B Bhd and the
balance are held by D Bhd. D Bhd holds 80% shares of A Bhd. Explain briefly the
investor (s) that control or jointly control the investee company.
(3 marks)
Ultimate holding company of B Bhd is D Bhd / which holds 20% direct interest and
48% indirect interest through A Bhd /. Immediate holding company of B Bhd is A
Bhd through its direct interest of 60% /.
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