CONFIDENTIAL

2011/FAR450/FAC450

AC/APRIL

1
FAR 450
APRIL 2011
SUGGESTED SOLUTION

SOLUTION 1
a)
Dr Ord share capital
RM2,000,000 /
Dr General reserve
25,000 /
Dr Retained profit
237,500 /
Dr Goodwill
178,125 /
Cr Investment in Sutera Bhd
Cr NCI

RM1,875,000 /
565,625 /
/ 6 X = 3 marks

b)
Petra Bhd

OS 30%

OS 75%
PS 40%
Sutera Bhd

Surimas (asso.)
OS 25%

OS 40%
Lestari Bhd
W1 - Goodwill
Sutera Bhd
RM
1,875,000 //

Consideration transferred
[400,000x2] + 1,075,000

1,500,000 +
[75% x 1,687,500]

NCI
2,262,500 x 25%
Shareholders fund on d.o.a:
OSC
GR
P/L
FV adjustment:
Building
Intangible

Lestari Bhd
RM
2,765,625 ///

__565,625 //
2,440,625
2,000,000 /
25,000 /
237,500 /

Goodwill

HAK CIPTA UNIVERSITI TEKNOLOGI MARA

(2,262,500)

3,562,500 x 40%

1,425,000 //
4,190,625

1,250,000 /
62,500 /
150,000 /
100,000 /
2,000,000 /

_______
178,125

CONFIDENTIAL

(3,562,500)
_______
628,125

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2011/FAR450/FAC450

AC/APRIL

W2 - Retained profit
c/f
Pre
underdepr - building
Post adjusted
- NCI
- parent

Sutera Bhd
Lestari Bhd
RM
RM
525,000 /
275,000 /
[237,500] /
[150,000] /
________
(4,000) /
287,500
121,000
@25%
71,875 @40%
48,400
215,625
72,600

Petra Bhd
RM
750,000 /

Urp - land
Urp - inventory
Post: Sutera
: Lestari
: Surimas
CSoFP

[37,500] /
[1,000] /
215,625 /
72,600 /
____24,375 /
1,024,100

W3 - NCI
NCI at acq date
Investment in Lestari
25% x 1,687,500
Preference shares
Post acquisition
- retained profit
- GR [170,000 25,000] x 25%

Sutera Bhd [25%]

RM
565,625 /

Lestari Bhd [40%]

RM
1,425,000 /

[421,875] //
300,000 /

CSoFP

71,875 /
36,250 //
________
551,875

[125,000 62,500] x 40%

W4 - Investment in Surimas
COI
Share of post acq pft
Urp - inventory
CSoFP

[130,000 32,500] x 25%

HAK CIPTA UNIVERSITI TEKNOLOGI MARA

RM
75,000 /
24,375 //
[1,000] //
98,375

CONFIDENTIAL

48,400 /
25,000 //
________
1,498,400

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2011/FAR450/FAC450

AC/APRIL

Petra Bhd Group

Consolidated statement of financial position as at 31 December 2010
Non-current assets
Property, plant and equipment
Goodwill /
Intangibles
Investment in Associate /
Other Investment
Current Assets
Inventory
Trade receivable
Bill receivable
Bank
Cash in transit
Dividend receivable
Equity and liabilities
Ordinary shares capital
10% Preference shares
General reserve
Share premium
Retained profit

5,450,000 + 100,000 37,500 4,000

107,500 + 2,000,000

(673,750 10,000 5,000)

287,500 100,000
(12,500+5,000)

(450,000+108,750+37,500)

Non-controlling interest /
Non-current liability
Long Term Loan
Current liabilities
Trade payable
Bill Payables
Ordinary dividends payable:
Sutera
Lestari

RM
5,508,500 ///
806,250 W1
2,107,500 //
98,375 W4
225,000 /
1,730,000 /
658,750 //
187,500 //
309,250 /
5,000 /
17,500 //
11,653,625
5,650,000 /
750,000 /
596,250 ///
600,000 /
1,024,100 W2
2,050,275 W3

(250,000 100,000)

150,000 //

(473,750 10,000)

463,750 //
325,500 /

(100,000 75,000)
(62,500 25,000 18,750)

25,000 //
18,750 ///
11,653,625

78 x 1/3 = 26 + P1 = 27 marks

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2011/FAR450/FAC450

AC/APRIL

SOLUTION 2
a.
Victory Bhd Group
Consolidated Statement of Comprehensive Income for the year ended
31 December 2010 /
Sales (180,000 + 160,000) / +(100,000 x 25% x 9/12) // - (20,000 x 25%) //
Cost of sales (106,200 + 90,000) / + (70,000 x 25% x 9/12) // (20,000 x 25%) // + (6,000 x 20% x 25%) //
Gross Profit
Expenses (25,000 + 48,000) / + (12,000 x 25% x 9/12) // + 125 //
Operating profit before taxation
Investment income (20,000 ) /+ (400 x 25% x 9/12) //
Profit before tax
Taxation (27,000 + 6,500) / + (5,800 x 25% x 9/12) //
Total comprehensive income
Profit after tax attributable to:
Shareholders of parent /
Non-controlling interest (15,500 / 125 / ) x 40% /

RM000
353,750
(204,625)
149,125
(75,375)
73,750
20,075
93,825
(34,587.5)
59,237.5
53,087.5
6,150

/ 28 X = 14 marks
b.
Victory Bhd
Statement of Changes in Equity for the year ended 31 December 2010 /
Group
Nonretained
controlling
profit
interest
RM000
RM000
Balance at 1.1.2010
W1 10,270
W2 330,380
Profit for the year /
53,087.5
6,150
Ordinary dividends
(3,000) /
Transfer to reserves (11,000/ + (500 x 25% x 9/12) //
(11 ,093.75)
Balance at 31.12.2010
49,263.75
336,530
Retained profit b/f [W1]
Victory

RM000
28,500

Glory (10,200 4,000 - 250) /// x 60% /

3,570

Less: previous yr gw impairment

710,000 / - (815,000 + 4,000 + 1,000) x 60%) // = 218,000 x 10% /
NCI b/f [W2]
OSC 815,000 x 40%
FV adj 1,000 x 40%
Retained profit on 1.1.2010 (10,200 - 250) x 40%

HAK CIPTA UNIVERSITI TEKNOLOGI MARA

(21,800)
10,270
326,000 //
400 //
__3,980 //
330,380
20 x 1/2 = 10 marks

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2011/FAR450/FAC450

AC/APRIL

SOLUTION 3
Kong Group Berhad
Consolidated Cash Flow Statement for year ended 31 December 2010
RM000
RM000
Cash flows from operating activities
Profit before taxation
392/
Adjustments for non-cash items:
Gw impairment
10 //
Depreciation
260 /
Associates profit
(21) /
Exchange gain
(30) //
Finance costs
337/
556

948
Increase in trade receivables (2,400 1,500)
Increase in inventories (2,650 2,300)
Increase in trade payables (4,230 1,900)
Cash generated from operations
Interest paid (40 + 337 80)
Tax paid (working)
Net cash from operating activities

(900)//
(350)//
2,330//

(297) //
(530) ///
1,201

Cash flows from investing activities

Purchase of associate
Purchase of property, plant and equipment (working)
Dividend received from associate (working)
Cash flows from financing activities
Dividend paid to NCI
Dividends paid
Net decrease in cash and cash equivalents
Cash and cash equivalents at 1 January 2010
Cash and cash equivalents at 31 December 2010

1,080
2,028

(10) /
(1,310) //
21 ///

(12) //
(50) //

(1,299)

(62)
(160) /
300 /
140 /

Workings

Bal b/d
Acq new
plant
Cash pur

PPE
4110 Dep
10 /

1310 Bal c/d

260/

Cash Paid
Bal c/d
Bal c/d

5170

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Tax payable
530 Bal b/d
/ 300 Bal b/d
400
Cis

770 /
300
160 /

CONFIDENTIAL
2011/FAR450/FAC450

Cash
Bal c/d

NCI
Bal b/d
12 Cis
200 /

180
32 /

AC/APRIL

Inv in asso.
- Div. R
60 /
21 / Bal c/d

Bal b/d
New asso.
Share of pf.

(/ 32 x 1/2 = 16 + P1 = 17 marks)
SOLUTION 4
4A.
Goodwill
RMmillion
Consideration transferred
NCI on acquisition date (70 x 20%)
Shareholders fund on d.o.a:
Ordinary shares
Retained profits
Goodwill

RMmillion
/ 60
/ 14
74

/ 30
/ 40

(70)
4

Calculation of gain/loss on disposal

Jelly Bhd:
Sales Proceed
Less: carrying value of investment
Gain on disposal

RMmillion

RMmillion

// 60 x 50%

/ 40
(30)
10

Group
Sales Proceed
FV of remaining shares on d.o.d (12 mill x RM3.8)
NA at disposal date:
Ordinary shares
Retained profits (1/1/2010)
Current year pft (6 x 6/12)

/ 40
// 45.6
85.6
/ 30
/ 50
// 3
83
X 80% /

Less: goodwill
Gain on disposal

(66.4)
/ (4)
15.2

/ 16 x = 8 marks
ii. Jelly becomes an associate after the disposal. /
In CSoFP, the investment in jelly Bhd will be accounted for using the equity method. //

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21
60 /

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2011/FAR450/FAC450

AC/APRIL

Investment in Jelly Bhd

RMmillion
Balance at FV (12million x RM3.8)
Share of post profit
40% x (6 x 6/12)

45.6 //
1.2 ///

RMmillion

CSoFP

46.8

46.8

46.8
/ 8 x 1/2 = 4 marks

B.

(40% x 600 mill) + 170 mill = 51.25% //

600 mill + 200 mill
The share warrant would enable Sweet Candy Bhd to hold more than 50% of the
voting rights of Lolly Pop Bhd. Thus it would most likely to have control over the
financial and operating policies of Lolly Pop Bhd. //
/ 4x 1 = 4 marks

C.

a. Consideration transferred
RM50 mill / + [30 mill x RM3.5] // + [RM15 mill x 0.90] //
= RM168.5 million /
/ 6 x 1/2 = 3 marks
b. Dr Investment in Choccy Bar Bhd /
RM168.5 million /
Cr Cash
Cr Ordinary share capital
Cr Share premium
Cr Contingent consideration payable

RM50 million /
RM30 million /
RM75 million /
RM13.5 million /
/ 6 x 1/2 = 3 marks

D.
a. The functional currency of the Indonesian subsidiary is Rupiah. (1/2 mark)
Reason: Apart from the initial investment, the cash flows, both inflows and
outflows for the Indonesian subsidiary are dependant on the economic
environment of Indonesia rather than Malaysia. The effect of a change
in exchange rate between Malaysia and Indonesia has no immediate
effect on the operations of the Indonesian subsidiary. (2 marks)
The functional currency of the Brunei subsidiary is RM. (1/2 mark)
Reason: RM is the currency of the primary economic environment in which the
Brunei subsidiary operates. The inventories are sourced in Malaysian
RM, and the cash flows that influence the action of the parent in
continuing to operate in Brunei are Malaysian RM. (2 marks)

b. Indonesia Translating from functional to presentation currency (1 mark)

Brunei - Translating from foreign to functional currency (1 mark)

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CONFIDENTIAL
2011/FAR450/FAC450

AC/APRIL

8
END OF SOLUTION

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