JOINT ARRANGEMENT, ASSOCIATES AND JOINT VENTURE (CHAPTER 14)

1 Introduction Holding NCI DOA CT RE @ DOA

Consolidation: H Direct in S 90% 10% 1/1/20X4 1,100.00 300.00 Sub
Equity Method H Direct in A 30% 1/1/20X4 400.00 150.00 Asso
H Direct in X 40% 1/4/20X4 330.00 240.00 Asso

2 Goodwill SUBSIDIARY ASSOCIATES

S A X
CT - Direct 90% 1,100 CT 400 330
- Indirect FV of NA:
NCI 10% 140 Share capital 1,000 600
1,240 RE 150 240
FV of NA acquired: 1,150 840
Share capital 1,100 Interest 30% 40%
Retained earning 300 (1,400) 345 336
Goodwill / (bargain purchase) (160) GW/(BP) 55 (6)

Goodwill on acquistion of subsidiary - CSOFP Goodwill on acquistion of associates - Do nothing

Bargain purchase on acquisition of subsidiary - SOPL Bargain purchase on acquisition of associates - share of profit from assciates

3 Carrying value of investment in Associates at Year Ended

A X

Cost of investment 30% 400 Cost of investment 40% 330.00

Share of profit: Share of profit:
PAT 200 PAT (9 months) 120
URP [(500 - 400)X1/4] (25) Interest in X 40%
PS dividend paid (10) 48
PS dividend payable (10) BP 6 54
155
Interest in A 30%
46.50
(-) impairment of investment (11) 35.5
Share of post ARR (60X30%) 18
CV of investment in A @ YE 453.50 CV of investment in X @ YE 174.8

4 Analysis of FS GRE GARR NCI 5. CSOPL New item (share of profit from associates) which includes items as per no. 3 above.
Acquistion of S 140.00
Post acquisition RE of S 200.00 180.00 20.00
6. CSOCE Include items as per no. 4 (GRE, GARR & NCI)
FS of H RE c/d 2,150.00
Share of profit A 35.50
Share of profit X 54.00 7. CSOFP Share capital (Parent Only)
BP (Invest in S) 160.00 2,399.50 RE, Other Reserve (Group) and NCI (as per CSOCE.
Assets and liabilities (Parent and Sub)
ARR (Post acquire) H (100%) 40.00 40.00
S (90:10) 50.00 45.00 5.00 New item (NCA) - Investment in Associates =
A (30%) 60.00 18.00 Cost of investment + share of profit (Post)+ + Share of other reserve (Post)
2,579.50 103.00 165.00
### + BP (acquire asso) - impairment of investment in Asso - dividend from asso
Eg 3 (Page 518) : CSOFP with Associates
H Group For the year ended 31 December 20x7

Holding NCI DOA CT RE @ DOA ARR @ DOA

H Direct in A 25% 1/1/20X7 200.00 120.00 100.00

W4 Analysis of financial statements @ b/d

Statement of financial position as at 31 December 20x7 a H Group

H A Consolidated Statements of Profit or Loss and Other Comprehensive Income
RM'000 RM'000 For the year ended 31 December 20x7
Ordinary shares 1,000 400
Retained profit b/d 200 120
PAT for the year 310 100
Liabilities 120 100

1,630 720

Non-current assets 1,130 520

Investment in A 200 -
Current Assets 300 200
1,630 720
- -

W1 Goodwill @ 1/1/20X7 A
CT - Direct 25% 200.00 W3 Attributable of PAT to NCI
- Indirect

FV of NA acquired: W5 ANALYSIS OF FS @ c/d

Share capital 400.00 GRE NCI
Retained earning 120.00
ARR 100.00 H
620.00 RE b/d 200.00
Interest in Associates 25% (155.00) Current year PAT 310.00
GW / (BP) 45.00 Share of profit A (W2) 22.00 532.00
GW no needd to consol. But if BP, need to transfer to share of profit from Associates. b Consolidated statement of changes in equity
For the year ended 31 December 20x7 532.00 -
- -
W2 INVESTMENT IN ASSOCIATES @ YE 25% A

Cost of investment ### 200

Share of profit:
RE b/d 120
PAT for the year 100 c Consolidated statement of financial position
RE DOA (120) As at 31 December 20x7
Post acquisition RE 100
Interest in A 25% 25 Ordinary shares 1,000.00 NCA 1,130.00
Less: impairment of investment in A (3.0) Retained earning 532.00 Goodwill (W1) -
Share of profit from Associates (SOPL) 22.0 Non-controlling interest - Investment in A (W2) 222.00
Share of post acquisition ARR - Liabilities 120.00 CA 300.00
Carrying value of investment in A @ YE 222 1,652.00 1,652.00
-
Eg 3 (Page 518) : CSOFP & CSOPL & CSOCE with Associates (Modified)
H Group For the year ended 31 December 20x7

Holding NCI DOA CT RE @ DOA ARR @ DOA

H Direct in A 0.25 1/1/20X7 200.00 120.00 100.00

W2 INVESTMENT IN ASSOCIATES @ YE 0.25 A

Statement of financial position as at 31 December 20x7
H A a H Group Cost of investment 200.00
RM'000 RM'000 Consolidated Statements of Profit or Loss and Other Comprehensive Income
Ordinary shares 1,000.00 400.00 For the year ended 31 December 20x7 Share of profit from Associates (SOPL)
Retained profit b/d 200.00 120.00 Revenue 9,000.00 RE b/d 120.00
PAT for the year 410.00 100.00 Cost of sales (4,490.00) PAT for the year 500.00
ARR 200.00 150.00 Dividend income (100-100) - RE DOA (120.00)
Liabilities 120.00 100.00 Share of profit from associates 15.00 Less: URP (200.00)
1,930.00 870.00 Expenses (2,000.00) Post acquisition RE 300.00 0.25 75.00
Profit before tax 2,525.00 Less: Impairment of investment in Associates (60.00) 15.00
Non-current assets 1,430.00 670.00 Tax (1,200.00)
Investment in A 200.00 - Profit after tax 1,325.00 Share of post acquisition ARR 50.00 0.25 - 12.50
Current Assets 300.00 200.00 Other comprhensive income
1,930.00 870.00 Share of ARR from associates 12.50 Less: Dividend paid by Associates - (100.00)
- - Total comprehensive income 1,337.50
Statement of profit or loss FYE 31 December 20x7 Carrying value of investment in A @ YE 127.50
Revenue 9,000.00 5,000.00 W3 Attributable of PAT to NCI (Amount at CSOFP @ YE)
Cost of sales (4,490.00) (2,700.00) Parent 1,325.00
Dividend income from associates 100.00 - NCI -
Expenses (2,000.00) (1,000.00) 1,325.00
Profit before tax 2,610.00 1,300.00
Tax (1,200.00) (800.00) Attributable of TCI to NCI
Profit after tax 1,410.00 500.00 Parent 1,337.50
ARR - 50.00 NCI -
Total comprehensive income 1,410.00 550.00 1,337.50

Dividend paid 1,000.00 400.00

Unrealised profit 200.00 b Consolidated statement of changes in equity
Impairment of investment 60.00 For the year ended 31 December 20x7
GRE GARR NCI
Balance b/d 200.00 200.00 - W4 ANALYSIS OF FS @ c/d
Acquisition during the year - - - GRE
W1 Goodwill @ 1/1/20X7 A Assume Share of ARR from associates - 12.50 -
CT - Direct 0.25 200.00 200.00 PAT 1,325.00 - - H
- Indirect Dividend (1,000.00) - - RE b/d 200.00
Balance c/d 525.00 212.50 - Current year PAT 410.00
FV of NA acquired: Share of profit A (W2) 15.00
Share capital 400.00 Less: Dividend from Associates (100.00)
Retained earning 120.00 525.00
ARR 100.00 c Consolidated statement of financial position -
620.00 As at 31 December 20x7 Same of amount to CSOCE and CSOFP
Interest in Associates 0.25 (155.00) (250.00)
GW / (BP) 45.00 (50.00) Ordinary shares 1,000.00 Non-current assets 1,430.00
GW no needd to consol. Retained earning 525.00 Goodwill (W1) -
But if BP, need to transfer to share of profit from Associates. ARR 212.50 Investment in A (W2) 127.50
Non-controlling interest - Current Assets 300.00
Dr Investment in Associates 50.00 Liabilities 120.00
Cr Share of profit from associates 50.00 1,857.50 1,857.50
(However, this transaction not incorporated in this example) -
Eg 4 (Page 520) : CSOFP & CSOPL (SUB & ASSOCIATES)
H Group For the year ended 31 December 20x4

Holding NCI DOA CT RE @ DOA Impairment

H Direct in S 60% 40% 1/1/20X3 498.00 130.00 20.00 W4 Analysis of financial statements @ b/d
H Direct in A 25% 1/1/20X4 100.00 140.00 2.50
a H Group
Statement of financial position as at 31 December 20x4 Consolidated Statements of Profit or Loss and Other Comprehensive Income DOA: S 252.00
H S A For the year ended 31 December 20x4
RM'000 RM'000 RM'000 RM
Ordinary shares 800.0 500.0 200.0 Revenue 2,000.00 S 60%
Retained profit b/d 250.0 330.0
### 140.0 Costof sales (700.00) RE @ b/d 330.00
PAT (current year) 445.0 290.0
### 60.0 1,300.00 RE DOA (130.00)
1,495.0 1,120.0 400.0 Expenses (260.00) 200.00 120.00 80.00
Dividend from A (5-5 to CSOFP) -
Investment in S 498.0 Share of profit from Asso [(80 X 25%) - 2.5] - W2 17.50
Investment in A 100.0 Goodwill impairment (subsidiary) (20.00) H
Sundry Assets 897.0 1,120.0 600.0 RE @ b/d 250.00
1,495.0 1,120.0
### 600.0 Profit before tax 1,037.50 - 250.00
- - 200.0 Taxation (250.00)
Profit after tax 787.50 GRE and NCI@ b/d 370.00 332.00
Statement of profit or loss FYE 31 December 20x4
Revenue 1,200.0 800.0 400.0 PROFIT AFTER TAX ATTRIBUTABLE TO:
Expenses (400.0) (300.0) (200.0) Parent 671.50
Gross profit 800.0 500.0 200.0 NCI (W3) 116.00
Expenses (150.0) (110.0) (80.0) 787.50
Dividend from A 5.0
Tax (150.0) (100.0) (40.0) W3 Attributable of PAT to NCI
Profit after tax 505.0 290.0 80.0 NCI: S W5 ANALYSIS OF FS @ c/d
PAT 290.00 GRE NCI
Retained earning b/d 250.0 330.0 140.0 NCI interest 40% 116.00
Dividend paid 60.0 - 20.0 DOA: S 252.00

W1 Goodwill @ ASSOCIATES
S A
CT - Direct 60% 498.00 CT 100.00 S 60%
- Indirect RE b/d 330.00
NCI 630.00 40% 252.00 b Consolidated statement of changes in equity PAT for the year 290.0
750.00 For the year ended 31 December 20x4 DOA (130.00)
FV of NA acquired: FV OF NA GRE NCI 490.00 294.00 196.00
Share capital 500.00 Share capital 200.00 Balance b/d (W4) 370.00 332.00
Retained earning 130.00 (630.00) RE 140.00 Acquisition of subsidiary during the year -
Goodwill / (bargain purchase) 120.00 340.00 NCI indirect investment in sub -
Less: Goodwill impairment (20.00) Interest (25%) (85.00) PAT (the year) 671.50 116.00
Remaining Goodwill 100.00 GW / (BP) 15.00 Dividend (60.00) H
GW No need to consol Balance c/d (W5) 981.50 448.00 RE b/d 250.00
Current year PAT 505.00
W2 INVESTMENT IN ASSOCIATES @ YE 25% A Goodwill impairment (20.00)
Reclass dividend Asso (5.00)
Cost of investment ### 100.0 Dividend paid (60.00)
Share of profit: c Consolidated statement of financial position Share of profit Ass (W2) 17.5 687.50
RE b/d 140 As at 31 December 20x4
PAT for the year 80 981.50 448.00
RE DOA (140) Ordinary shares 800.00 Sundry assets 2,017.00 - -
Post acquisition RE 80 Retained earning 981.50 Goodwill (W1) 100.00
Interest in A 25% 20.00 Non-controlling interest 448.00 Investment in S -
Less: impairment of investment in A (2.5) Investment in A - W2 112.50
Share of profit from Associates (SOPL) 17.5
Bargain purchase, if any - 2,229.50 2,229.50
Less: Dividend received from Ass (transfer from SOPL) (5.0) -
Share of post acquisition ARR, if any -
Carrying value of investment in A @ YE 112.5
Eg 6 (Page 526) : CSOFP & CSOPL (ASSOCIATES)
H Group For the year ended 31 December 20x4 a H Group
Consolidated Statements of Profit or Loss and Other Comprehensive Income
Holding NCI DOA CT RE @ DOA For the year ended 31 December 20x4
H Direct in S 90% 10% 1/1/20X4 1,100.00 300.00 RM W4 Analysis of financial statements @ b/d
H Direct in A 30% 1/1/20X4 400.00 150.00 Revenue 3000+5000 8,000.00
H Direct in X 40% 1/4/20X4 330.00 240.00 Cost of sales 2000+3600 (5,600.00) GRE GARR NCI
2,400.00
Statement of financial position as at 31 December 20x4 Expenses (1,300.00) DOA: S 140.00
H S A X Share of profit of associates (A) - W2 35.50
RM'000 RM'000 RM'000 RM'000 Share of profit of associates (X) - W2 54.00 S 90%
Ordinary shares 1,300 1,100 1,000 600 Bargain purchase (subsidiary) 160.00 RE @ b/d 300.00
Preference shares - - 200 Profit before tax 1,349.50 RE DOA (300.00)
Retained profit b/d 1,800 300 150 200 Taxation (550.00) - - -
PAT (current year) 350 200
### 190 160 PAT 799.50
Revaluation reserve 40 50 60 - H
Liabilities 150 100 60 40 Revaluation reserve RE @ b/d 1,800.00
3,640 1,750 1,660 1,000 H 40.00 1,800.00
S 50.00
Non-current assets 1,360 1,600 1,410 950 A 60X30% 18.00 108.00 GRE and NCI@ b/d 1,800.00 - 140.00
Investment in S 1,100
Investment in A 400 TCI 907.50
Investment in X 330 -
Sundry Assets 450 150 250 50 PAT TAX ATTRIBUTABLE TO: W5 ANALYSIS OF FS @ c/d
3,640 1,750
### 1,660 1,000 Parent 779.50 GRE NCI
- - - - NCI (W3) 20.00
Statement of profit or loss FYE 31 December 20x4 799.50 DOA: S 140.00
Revenue 3,000 5,000 2,000 1,600
Cost of sales (2,000) (3,600) (1,500) (1,160) TCI TAX ATTRIBUTABLE TO:
Expenses (500) (800) (200) (200) Parent 882.50 S 90%
Profit before tax 500 600
### 300 240 NCI (W3) PAT 20.00 RE b/d 500.00
Tax (150) (400) (100) (80) TCI 5.00 25.00 DOA (300.00)
Profit after tax 350 200 200 160 907.50
Revaluation reserve 40 50 60 - W3 Attributable of PAT to NCI 200.00 180.00 20.00
Total comprehensive income 390 250
### 260 160 NCI: S
PS dividend (half year) - - 10,000 PAT ARR TCI
PAT 200.00 200.00 H
W1 Goodwill @ 1/1/20X4 Subsidiary Associates ARR 50.00 50.00 RE b/d 1,800.00
S A X 200.00 50.00 250.00 Current year PAT 350.00
CT - Direct 90% 1,100 CT 400 330 NCI interest 10% 10% 10% Share of profit A 35.50
- Indirect FV of NA: 20.00 5.00 25.00 Share of profit X 54.00
NCI 1,400.00 10% 140 Share capital 1,000 600 BP (Invest in S) 160.00
1,240 RE 150 240 b Consolidated statement of changes in equity Dividend paid - 2,399.50
FV of NA acquired: 1,150 840 For the year ended 31 December 20x4
Share capital 1,100 Interest 30% 40% GRE GARR NCI ARR (Post acquisition)
Retained earning 300 (1,400) 345 336 Balance b/d (W4) 1,800.00 - 140.00 H (100%) 40.00 40.00
Goodwill / (bargain purchase) (160) Acquisition of subsidiary during the year - S (90:10) 50.00 45.00 5.00
GW/(BP) 55 (6) PAT for the year 779.50 20.00 A (30%) 60.00 18.00
Revaluation reserve 103.00 5.00
W2 Investment in Associates A X Dividend paid - 2,579.50 103.00 165.00
Cost of investment 400 Cost of investment 330 Balance c/d (W5) 2,579.50 103.00 165.00 - - -

Share of profit: Share of profit: c Consolidated statement of financial position

PAT 200 PAT (9 months) 120 As at 31 December 20x4
URP [(500 - 400)X1/4] (25) Interest in X 40%
PS dividend paid (10) 48 Ordinary shares 1,300.00 Non current assets 2,960.00
PS dividend payable (10) BP 6 54 Retained earning 2,579.50 Goodwill (W1) -
155 Revaluation reserve 103.00 Investment in Sub -
Interest in A 30% Non-controlling interest 165.00 Investment in A - W2 453.50
46.50 Liabilities 250.00 Investment in X - W2 384.00
(-) impairment of investment (11) 35.5 Current assets 600.00
Share of post ARR (60X30%) 18 4,397.50 4,397.50
CV of investment in A @ YE 453.50 CV of investment in X @ YE 384.0 -