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SET A
QUESTION 1
Acquisition of Hobbit in Summer on 1 July 2009
Consideration transferred
FVNCI at date of acquisition
FVNA at date of acquisition:
Equity
Retained earnings
FV adjustment
OCE
Parent
RM million
100
125
9/
8/
6/
-------148
Goodwill
Goodwill impaired
NCI
RM million
80
Total
RM million
100/
80/
(88.8)
11.2
(1.8)/
9.4
(59.2)
20.8
(1.2)/
19.6
(148)
32
( 3)
29
Parent
RM million
NCI
RM million
Total
RM million
40/
84
40
(28.22)
11.78
(0.68)/
11.1
(83)
41
(2)
39
Consideration transferred
- Direct
- Indirect 40 x 60%
FVNCI at date of acquisition
FVNA at date of acquisition:
Equity
Retained earnings
Goodwill
Goodwill impaired
60/
24/
80
3/
----83
(54.78)
29.22
(1.32)/
27.9
48//
(45.2)
2.8
(0.28)/
2.52
RM million
48
Consideration transferred
Share of post acquisition profits:
26 x 6/12 x 40%
Goodwill impaired
URP 1/125 x 25 x 40%
Carrying value of investment in associate
5.2/
(0.28)/
(0.08)/
52.84
Balance b/d
Pre acquisition profits
Post acquisition profits
URP
Depreciation : 1.6 x 3 years
Dividends proposed
Dividends receivable :
From Summer 3.75 x 60%
Sunny
2.4 x 30%
2.4 x 60%
Goodwill impaired:
Summer
Sunny
Autumn
Post acquisition profits
Share of post acquisition profits:
Summer 13.39 x 60%/
Sunny
24.6 x 66%/
Autumn 13 x 40%/
To CSFP
Hobbit
RM million
41
(0.08)/
(12)/
Summer
RM million
31
(9)
22
(1.5)/
(4.8)//
(3.75)/
Sunny
RM million
49
(3)
46
Autumn
RM million
46
(33)
13
(2.4)/
2.25/
0.72/
1.44/
(1.8)/
(1.32)/
(0.28)/
13.39
8.03
28.78
5.2
70.5
43.6
13
5.36/
1.6/
(1.2)/
(16)/
69.76
34%
RM million
40
14.82/
(0.68/)
54.14
Analysis of OCE
Balance b/d
Pre acquisition
Share of post acquisition
4 x 60%
To CSFP
Hobbit
RM million
7
Summer
RM million
10
(6)
4
2.4
9.4
PPE
Goodwill
Investment in associate
ITA
CA
Total assets
58 + 56 + 34 1.5 /
Equity
Share premium
OCE
Retained earnings
NCI
NCL
CL
Dividends proposed Hobbit
7 + 2.4/
69.76 + 54.14
20 + 10 + 15
45 + 35 + 9
RM million
362.2//
68/
52.84/
5
146.5
634.54
256
32/
9.4
70.5
123.9
45
84
12/
Dividends to NCI
Total equity and liabilities
1.74//
634.54
Consolidated statement of comprehensive income for the year ended 30 June 2012
Revenue
COS
Gross profit
Other income
Operating expenses
Share of net profit of associate
Profit before tax
Taxation
Profit for the year
OCI
Total comprehensive income for the year
2+3
68 + 47 + 29 + goodwill impaired 3 + 2
26/2 x 40% - goodwill impaired 0.288
- URP 0.08
(25 + 16 + 10)
5+4
: Summer
Sunny
Parent /
RM
million
545/
(173.1)/////
371.9
5/
(149)/
4.84//
232.74
(51)/
181.74
9/
190.74
RM
million
21.56//
14.96/
145.22
181.74
RM
million
23.16//
14.96/
Parent/
152.62
190.74
RM
(38)
(24.72)
145.22
(12)
70.5
75/3 = 25 marks
QUESTION 2
Petroco Bhd
Statement of Comprehensive Income for the year ended 30 June 2012
RM
Revenue
22,425,000
Cost of sales (W1)
(12,987,000)
Gross profit
9,438,000
Income from investments
260,000
Administrative expenses (W1)
(2,128,100)
Distribution expenses
(1,860,000)
Other operating expense (W1)
(2,281,300)
Profit from operations
3,428,600
Finance expense (W1)
(125,650)
Profit before tax
3,302,950
Taxation (435,000 + 60,000)
(495,000)
Profit for the year
2,807,950
Other Comprehensive Income
Revaluation surplus - land
500,000
Total comprehensive Income
3,307,950
20 x = 10 marks
Petroco Bhd
Statement of changes in equity for the year ended 30 June 2012
As at 1 July 2011
PYA
Profit for the year
Interim dividend
Revaluation surplus
As at 30 June 2012
Share
capital
RM
7,650,000
Share
premium
RM
827,000
Revaluation
reserve
RM
100,000
Retained
earnings
RM
1,182,000
(100,000)
2,807,950
(90,000)
7,650,000
827,000
500,000
600,000
3,799,950
Petroco Bhd
Statement of financial position as at 30 June 2012
RM
Non - Current Assets:
Property, plant and equipment (W2)
Investments
Intangibles: license
Patents and trademarks
Current Assets:
Inventories
Trade receivables
(1,883,000 200,000)
Bank and cash
(1,750,000 77,500)
RM
7,228,400
3,250,000
8,745,200
555,000
19,753,600
11
1,240,000
1,683,000
1,672,500
4,595,500
1,092,500
25,446,600
7,650,000
5,226,950
12,876,950
500,000
560,000
77,500
1,137,500
246,000
1,038,650
167,500
10,000,000
11,452,150
25,466,600
33 x 1/3 = 11
(Total 25 marks)
Note: The ticks () are counted based on the face of financial statements. The ticks () in the
workings are only for reference.
Workings:
admin
others
12,735,000 1,682,000
finance
100,000
(90,000)
22,500
83,100
192,000
163,000
60,000
2,186,300
95,000
200,000
12,987,000 2,128,100
2,281,300
93,150
125,650
Cash
(-) payment
Balance c/f
(+) Interest (10% x 222,500)
30 June 2013
(-) payment
Balance c/f
RM
300,000
(77,500)
222,500
22,500
245,000
(77,500)
167,500
Cost/Valuation
As at 1 July 2011
Reclassification to NCAHFS
Revaluation surplus
Addition
As at 30 June 2012
Accumulated depreciation
As at 1 July 2011
Eliminations to NCAHFS
Charge for the yearsee
below
As at 30 June 2012
Carrying amount as at 30
June 2012
Land
Building
1,500,000
4,780,000
(1,250,000)
500,000
2,000,000
Plant &
Machinery
Motor
Vehicles
1,920,000
815,000
1,920,000
815,000
191,000
(62,500)
384,000
326,000
83,100
211,600
192,000
576,000
3,530,000
2,000,000 3,318,400
1,344,000
163,000
489,000
326,000
Leased
Machinery
300,000
300,000
60,000
60,000
240,000
11
12,500
70,600
83,100
= RM10,931,500
Amortisation
= RM10,931,500
5
Carrying amount at 30 June 2012
= RM 2,186,300
= RM93,150
= RM8,745,200
QUESTION 3
1.
The change in the useful lives of the asset and a change in accounting method of
depreciation is a change in accounting estimates. The effect of the change in the
accounting estimate should be included in the determination of the net profit or loss in:
-
The period of the change, if the change affects only that period; or
The period of the change and future periods, if the change affects both.
The change in the useful life of the equipment will affect both the current period and the
future depreciation charge. Therefore the depreciation charged for the current year
should be calculated as below:
300/10 x 2 years
= 60 p.a
NBV at 1 July 2011 = 240/5 years = 48 p.a for current year and future period/
The change in depreciation method from straight line method to reducing balance
method is allowed and be treated as a change in accounting policy only if the change will
result in a more appropriate presentation of events or transactions in the financial
statements of the company. The accounting treatment is to apply the change
retrospectively. However, if the company is unable to determine the cumulative effect,
then it can apply the new method prospectively and adjust the comparative information
from the earliest date practicable//.
2.
A non-current asset held for sale is measured at the lower of carrying amount and fair
value less cost to sell and classify under current assets. No depreciation is charged on
these assets and the company is not allowed to make use of the asset as it must be
available for immediate sale. (MFRS 5)/
Since the economy has improved and the company is using the plant to help cope with
the demand, there is a change of plan and therefore the plant must be re classify as a
non current asset (PPE) subject to depreciation as required by MFRS 116./
On re classification, the asset should be measured at the lower of:
Carrying amount before classification as held for sale less depreciation, as if the
asset were never classified as held for sale, and /
3.
The sale of goods and the sale of the car are related party transactions. MFRS 124
requires disclosure of transactions with key personnel and sales of assets to directors
where control exists. An important aspect of MFRS124 is the assessment of both the
materiality and significance of the transactions to the reporting company. Transactions
need only be disclosed if they are material. Transactions are material where the users of
financial statements might reasonably be influenced by such transactions///
In this case, Johan has purchased RM360,000 of goods from the company and a car for
RM50,000 with a market value of RM60,000. Johan effectively controls Wellness.
Although neither of these transactions is material or significant to the company or the
directors, in the spirit of good corporate governance, transactions with directors are
extremely sensitive and therefore disclosure would be recommended.//
4.
The cost of an item comprises of the initial purchase price, including taxes, duties after
deducting trade discounts, and any other directly attributable costs incurred in bringing
the asset into working condition and intended location and use and decommissioning
costs./
Finance expenses of RM30,000 should be expensed to statement of comprehensive
income. It cannot be capitalized as it is not related to a qualifying asset. The deferred
payment has to be discounted to present value.
Gross cost:
Less discount
RM000
2,000
(200)
1,800
RM000
60
15
1,080
Deferred payment
720 x 0.909 =
654/
1,809
30/
361.8/
65.4/
1,809
(361.8)
1,447.2
Current liability
Deferred payment:
654 + 65.4 =
720/
(9/3 = 3 marks)
5. This a sale and leaseback arrangement and cannot be treated as a sale as in substance
Wellness still enjoy the economic benefits of using the asset .The proceeds from the
sale should be treated as a secured loan as it is a financing arrangement . As the lease
back is an operating lease and the selling price is greater than the fair value, the gain is
not recognised immediately but is defer and amortize //
Dr Bank
Accumulated depreciation
Cr Machine
Deferred gain
Statement of comprehensive income
800,000/
150,000/
800/
50/
100
200,000/
200,000/
Dr Deferred gain
Cr Statement of comprehensive income
10,000/
10,000/
(Total: 9/3 = 3 marks)
QUESTION 4
(a)
(i)
Accruals The effects of transactions and other events are recognized when
they occur (and not as cash or its equivalent is received or paid) and they are
recorded in the accounting records and reported in the financial statements in the
period to which they relate.
(ii)
(b)
(i)
RM
880,000
176,000
704,000
525,000
179,000
2013
2014
2015
2016
2017
Estimated
Cash flow
RM
123,660
122,300
115,350
112,330
107,000
Discount
rate (10%)
0.909
0.826
0.751
0.683
0.621
VIU
Discounted
Amount
RM
112,407
101,020
86,628
76,722
66,447
443,224
RM
880,000
(176,000)
179,000)
525,000
(10 x = 5 marks)
(c)
(ii)
(i)
Initial recognition of the HFT investment is at cost and the transaction costs
are charged to the Income Statement:
Dr.
HFT Investment
Cr. Bank
RM5,600,000
RM5,600,000
Income Statement
Cr. Bank
RM28,000
RM28,000
(Being transaction costs (RM5,600,000 x 0.5%) taken through profit and loss
because the investment is classified as HFT)
Subsequent measurement is at fair value with gain or loss taken to profit and
loss:
Dr.
HFT Investment
RM400,000
Cr.
Income Statement
RM400,000
(Being the gain on HFT investment recognized in profit for the year)
8 x = 4 marks
(ii)
RM8,400,000
Cr. Bank
RM8,400,000
30 June 2011
30 June 2012
Opening
balance
RM000
8,400
8,474
Effective
interest 8.5%
RM000
714
720
Interest received
(8% x RM8m)
RM000
(640)
(640)
Closing
balance
RM000
8,474
8,554