SECOND SEMESTER SESSION 2019/2020 (A192)

BKAR 3043

FINANCIAL ACCOUNTING AND REPORTING IV

(GROUP H)

TUTORIAL 3:
CHANGES IN GROUP STRUCTURE PART

PREPARED FOR:
PROF. MADYA DR. KAMARUL BAHRAIN BIN ABDUL MANAF

PREPARED BY:
NO. NAME MATRIC NO.
1 XU NUO 256860
2 KONG KAR CHIEN 258970
3 ONG MINN JING 264194
4 YEAK QIAN HAN 264472

DATE OF SUBMISSION:
21 MAY 2020
Question 1
RM'000
Goodwill (FPK Bhd & BEC Bhd)
Consideration transferred (COI) 4,500
Add: Non-controlling interest (NCI) 580
Fair value of Suria as whole 5,080
Less: Fair value of Identifiable net assets * (4,000)
Goodwill on combination 1,080
Allocated to parent [4,500-(4,000 × 90%)] 900
Allocated to NCI [580-(4,000 × 10%0] 180
1,080
*(3m+1m)

RM'000
Disposal of shares
Non-controlling interest 620
Share on post-acquisition profit * 90
Carrying amount of NCI 710
Carrying amount- transfer to parent (10/20) 355
Less: Consideration transferred (980)
Negative movement to equity (625)

*[800-600+(1,000 × 3/12)]

RM'000
Goodwill (SOA Bhd & FPK Bhd)
Consideration transferred (COI) 2,600
Add: Non-controlling interest (NCI) * 620
Fair value of Suria as whole 3,220
Less: Fair value of Identifiable net assets (3,100)
Goodwill on combination 120

*(2,500+600) × 20%

RM'000 RM'000
(a) DR Ordinary Share (3,000 × 90%) 2,700
Retained profit b/f (1,000 × 90%) 900
Goodwill on consolidation 900
CR Investment in FPK Bhd 4,500

DR Ordinary Share (3,000 × 10%) 300

Retained profit b/f (2,100 × 10%) 210
Goodwill on consolidation (1,080 × 10%) 180
CR NCI (CSFP) 690
 RM'000 RM'000

DR NCI (CSCI) (1,120 × 10%) 112

CR NCI (CSFP) 112

DR Sales 400
CR Cost of sales 400

DR Cost of sales (150 × 20%) 30

CR Inventory (CSFP) 30

DR Retained profit b/f (150-50) 100

Accumulated depreciation 50
CR Machinery 150

DR Accumulated depreciation 50
CR Depreciation expenses 50

DR Ordinary Share (2,500 × 72%) 1,800

Retained profit b/f (600 × 72%) 432
Goodwill on consolidation (120 × 90%) 108
NCI (CSFP) (2,600x10%) 260
CR Investment in BEC Bhd 2,600

DR Ordinary share (2,500 × 28%) 700

Retained profit b/f (800 × 28%) 224
CR NCI (CSFP) 924

DR Retained profit b/f 625

NCI (CSFP) 355
CR Investment in BEC Bhd 980

DR NCI (CSCI) 205

CR NCI (CSFP) 205
[(1,000 × 28% × 3/12)+(1,000 × 18% × 9/12)]
 (b)
SOA Group Bhd
Consolidated Statement of Profit or Loss and Other
Comprehensive Income for the year ended 31 December 2018
RM'000
Sales (5,200+3,550+3,800-400) 12,150
Less: Cost of sales (2,500+1,000+1,900-400+30) (5,030)
Gross profit 7,120
Less: Operating expenses (450+450+500-50) (1,350)
Profit before taxation 5,770
Less: Taxation (1,060+980+400) (2,440)
Profit after taxation 3,330

Attributable to:
Equity holders of parent (3,330-317) 3,013
NCI (112+205) 317
3,330

(c)

SOA Group Bhd

Consolidated Statement of Changes in Equity for the year ended 31 December 2018
Attributable to equity holder of the parent
Share capital Retained profit Total NCI Total equity
RM'000 RM'000 RM'000 RM'000 RM'000
Balance 1 Jan 2018 4,000 2,709 6,709 999 7,708
Profit for the period 3,013 3,013 317 3,330
Balance 31 Dec 2018 4,000 5,722 9,722 1,316 11,038

* RP b/f = 2,300+2,100+800-900-210-100-432-224-625
NCI b/f = 690-260+924-355
(d)

SOA Group Bhd

Consolidated Statement of Financial Position for the year ended 31 December 2018
RM'000
Goodwill (900+180+108) 1,188
Investment, at cost:
Shares in FPK Bhd -
Shares in BEC Bhd -
Other assets (4,880+4,480+5,000-150+50+50-30) 14,280
15,468
Finance by:
Ordinary share (RM1 each) 4,000
Retained profit 5,722
Other liabilities (2,870+860+700) 4,430
Non-controlling interest 1,316
15,468
Question 2

RM'000 RM'000 RM'000

Goodwill (Alam Bhd & Suria Bhd) Total Parent (75%) NCI (25%)
Consideration transferred (COI) * 92,500 70,000 22,500
Less: Fair value of Identifiable net assets ** (71,400) (53,550) (17,850)
Goodwill on combination 21,100 16,450 4,650

*(60,000x25%x1.50)
**(60m+11.4m)

RM'000
Goodwill (Suria Bhd & Permai Bhd)
Consideration transferred (COI) 32,000
Add: Non-controlling interest (NCI) 45% (36,000x1.50) 54,000
Fair value of previously held stake 30% (24,000x1.50) 36,000
Fair value of Permai as whole 122,000
Less: Fair value of identifiable net assets * (95,567)
Goodwill on combination 26,433

*[80m+11.2m+(6.55mx8/12)]

Note 1: RM'000
Cost of investment in Permai Berhad 31,000
Add: Share of post-acquisition profits [(11.2m+(6,550x8/12)-8m)x30%] 2,270
Carrying amount at date of control 33,270
Less: Fair value of previously held stake (36,000)
[(80,000 shares x RM1.50)x30%]
Gain on remeasurement (2,730)

Note 2:
Disposal of shares RM'000
%dispose = 20%x75% 15%

Cash consideration received 15,300

Less: Cost of investment (70m/75%x15%) (14,000)
Gain to parent 1,300
Less: Post acquisition reserves:
Retained profit b/f [(16,800-11,400)x15%] (810)

Positive movement in equity 490

 RM'000 RM'000
(a) DR Ordinary Share (60,000x75%) 45,000
Retained profit b/f (11,400x75%) 8,550
Goodwill on consolidation (21,100x75%) 16,450
CR Investment in Suria Berhad 70,000

DR Ordinary Share (60,000x25%) 15,000

Retained profit b/f (16,800x25%) 4,200
Goodwill on consolidation (21,100x25%) 4,650
CR NCI (CSFP) 23,850

DR Dividend income (CSCI) # 2,520

NCI (CSFP)* 1,680
CR Dividend paid (CSFP) 4,200
#(4,200x60%x) *(4,200x40%)

DR Proposed dividend 4,200

CR Dividend receivable 2,520
Other creditor 1,680

DR Sales 9,000
CR Cost of sales 9,000

DR Cost of sales (3,200 x 25%) 800

CR Inventory (CSFP) 800

DR Retained profit b/f (800 x 25%) 200

CR Cost of sales 200

DR NCI (CSCI) 2,213

CR NCI (CSFP) 2,213
(5,533x40%)

DR Investment in Suria 14,000

Gain on disposal 1,300
CR Non-controlling interest (CSFP) 15,300
Note 2

DR Non-controlling interest (CSFP) 490

CR Retained profit 490
Note 2
% for Alam Berhad and Permai Berhad = 45%
[(60% × 25%) + 30%]

RM'000 RM'000
DR Ordinary Share (80,000 × 45%) 36,000
Goodwill on consolidation (26,433 × 45%) 11,895
Retained profit b/f ([11,200+(6,550 × 8/12)] × 45%) 7,005
NCI (32,000 × 40%) 12,800
CR Investment in Permai Berhad 67,700

DR Ordinary Share (80,000 × 55%) 44,000

Goodwill on consolidation (26,433 × 55%) 14,538
Retained profit b/f ([11,200+(6,550 × 8/12)] × 55%) 8,562
CR NCI (CSFP) 67,100

DR NCI (CSCI) 1,201

CR NCI (CSFP) 1,201
(6,550 × 55%x4/12)

DR Revenue (27,000 × 8/12) 18,000

Other income (2,500 × 8/12) 1,667
CR Cost of sales (15,600 × 8/12) 10,400
Operating expenses (5,100 × 8/12) 3,400
Taxation (2,250 × 8/12) 1,500
Retained profit 4,367

DR Investment in Permai Berhad 2,730

CR Gain on remeasurement (Note 1) 2,730
Note 1

DR Investment in Permai Berhad 2,270

CR Retained profit b/f 2,270
Note 1

DR Gain on sale of land 1,000

CR Land (5m-4m) 1,000
(Suria Berhad transaction)

DR NCI 300
CR Investment in Permai 300
(1,000 × 30%)
 (b)
Alam Group Bhd
Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year
ended 30 June 2018
RM'000
Revenue (37,000+28,120+27,000-9,000-18,000) 65,120
Less: Cost of sales (19,000+16,000+15,600-9,000+800-10,400-200) (31,800)
Gross profit 33,320
Add: Other income (4,500+2,500-2,520-1,300-1,000-1,667+2,730) 3,243
Less: Operating expenses (7,000+4,840+5,100-3,400) (13,540)
Profit before taxation 23,023
Less: Taxation (3,720+1,747+2,250-1,500) (6,217)
Profit after taxation 16,806

Attributable to:
Equity holders of parent 13,392
NCI (2,213+1,201) 3,414
16,806

(c) Alam Group Bhd

Consolidated Statement of Financial Position for the year ended 30 June 2018
RM'000
Goodwill (16,450+4,650+11,895+14,538) 47,533
Investment securities (87,000+32,000-70,000+14,000-300-67,700+2,730+2,270) -
Other non-current assets (102,500+44,100+86,450-1,000) 232,050
Current assets (30,430+22,433+28,900-800-2,520) 78,443
358,026

Finance by:
Share capital, RM1 each 140,000
Retained earnings * 30,002
Non-current liabilities (35,200+12,800+115,00) 59,500
Current liabilities (22,950+7,600+6,100-4,200+1,680) 34,130
Non-controlling interest # 94,394
358,026

*RE= 17,600+16,800+11,200-8,550-4,200-200+490-7,005-8,562+4,367+2,270+13,392-7,600

# NCI= 23,850-1,680+2,213+15,300-490-12,800+67,100+1,201-300
Question 3
Waja Saga Satria
Parent Interest:
Direct 80% 60% 10%
Indirect 48%
80% 60% 58%
Non Controling Interest
Direct 20% 40% 10%
Indirect 32%
20% 40% 42%

Disposal of shares in subsidiary = 10,000,000/(20,000,000 X 80%)

= 62.5%
Disposal of subsidiary shares = 10,000,000/20,000,000
= 50%
80% - 50% = 30%

Remeasurement of remaining shares (30%) RM'000

Cost of Investment 7,500
Post Acquisition Reserve:
Brought Forward (3,500,000 - 2,000,000) X 30% 450
Current Profit (2,000,000 X 9/12 X 30%) 450
Carrying Amount of Disposal Date 8,400
Fair Value of Remaining Shares ( 6,000,000 X 1.55) (9,300)
Remeasurement Gain 900

Disposal of Shares in subsidiary RM'000

Sale Proceed 14,200
(-) Cost of Investment Disposal (20,000,000 X 50%/80%) (12,500)
Gain to Parent 1,700
(-) Post Acquisition Reserve
Brought Forward (3,500,000 - 2,000,000) X 50% (750)
Current Profit (2,000,000 X 9/12 X 50%) (750)
Remeasurement Gain 900
Gain to Group 1,100

Goodwill Perdana and Saga

Implied FV Parent 60% FV of NCI
RM'000 RM'000 RM'000
Cost of Investment 50,000 30,000 16,800
(-) Fair Value of INA 36,000 21,600 14,400
Goodwill Perdana and Saga 14,000 8,400 2,400

NCI = 30,000,000 X 1.40 X 40%

=16,800,000
Goodwill Saga and Satria
Implied FV Parent 80% FV of NCI
RM'000 RM'000 RM'000
Cost of Investment 50,000 40,000 10,000
(-) Fair Value of INA 44,000 35,200 8,800
Goodwill Perdana and Saga 6,000 4,800 1,200

NCI = (40,000,000/80%) X 20%

=10,000,000

Change in State
RM'000
NCI 28/5/15 10,000
Share of Post Acquisition Profit (5,600,000 - 4,000,000) 20% 320
Carrying Amount of NCI 10,320
Transfer to Parent (10,000,000/20,000,000) 5,160
COI(Perdana to Satria) 8,000
Movement to Equity -2,840

a. Consolidation journal entries

Perdana ---Waja
RM'000 RM'000
DR Expense(1,100,000 X 9/12) 825
Taxation(800,000 X 9/12) 600
Cost of Sales(7,000,000 X 9/12) 5,250
Gain on Disposal Share 750
Investment in Associate 450
Non Controling Interest(2,000,000 X 9/12 X 20%) 300
CR Revenue 8,175

DR Investment in Associate 150

CR Share of Profit in Associate(2,000,000 X 3/12 X 30%) 150

DR Investment in Associate 900

CR Gain on Disposal 900

DR Sales in Profit in Association (1,600,000 X 25% X 30%) 120,000

CR Inventory 120,000

DR Gain on Disposal of shares 750

Investment in Association 450
CR Retained Profit b/f 1,200
 RM'000 RM'000
Saga

DR Share Capital(30,000,000 X 40%) 12,000

Retained Profit b/f (6,000,000 X 40%) 3,360
Goodwill 2,400
CR Non Controling Interest 17,760

DR Non Controling Interest(CSPL) (14,000,000 x 40%) 560

CR Non Controling Interest(CSFP) 560

DR Share Capital Saga (30,000,000 X 60%) 18,000

Retained Profit b/f (6,000,000 X 60%) 3,600
Goodwill 8,400
CR Investment in Saga 30,000

Satria

DR Share Capital (40,000,000 X 48%) 19,200

Retained Profit b/f (4,000,000 X 48%) 1,920
Goodwill(6,000,000 X 48%) 2,880
Non Controling Interest(40,000,000 x 48%) 16,000
CR Investment in Satria 40,000

DR Share Capital (40,000,000 X 52%) 20,800

Retained Profit b/f (4,000,000 X 52%) 2,912
Goodwill(6,000,000 X 52%) 3,120
CR Non Controling Interest 26,832

DR Non Controling Interest 5,160

Retained Profit b/f 2,840
CR Investment in Satria 8,000

DR Non Controling Interest(CSPL) (24,000,000 x 42%) 1,008

CR Non Controling Interest(CSFP) 1,008

DR Profit on Sales of Land 2,560

CR Land 2,560

DR Dividend Income 240

NCI(240,000/4,800)32% 160
CR Dividend Paid 400

DR Dividend Income 1,920

NCI(1,920,000/80%)20% 480
CR Dividend Paid 2,400
 Perdana Berhad
Consolidated Statement of Profit or Loss
For the year ended 31 December 2018
RM'000
Revenue(16,500,000+13,900,000+12,000,000+8,175,000) 50,575
(-) Cost of Sales(9,500,000+8,400,000+8,000,000+5,250,000) (31,150)
Gross Profit 19,425

Remeasurement Gain 900

Gain on Shares Disposal (1,700,000-750,000-750,000) 200
Gain on Sales of Land(2,560,000-2,560,000) 0
Dividend Income(240,000+1,920,000-240,000-1,920,000 0
(-)Operating Expense(3,500,000+1,800,000+3,420,000+825,000) (9,545)
Profit Before Tax 10,980
(-) Tax(3,400,000+1,300,000+400,000+600,000) 6,400
Share of Associate Profit(150,000-120,000) 30
Profit After Tax 4,610

Attributable to :
Parent 2,742.00
Non Controling Interest(300,000+560,000+1,008,000) 1,868
4,610

Perdana Berhad
Consolidated Statement of Financial Position
As of 31 December 2018
RM'000
Investment at Cost(45,500,000+40,000,000-30,000,000-40,000,000-8,000,000) 7,500
Investment in Associate(450,000+450,000+150,000+900,000) 1,950
Other Assets(14,500,000+55,000,000+10,000,000-120,000-2,560,000) 76,820
Goodwill(8,400,000+2,400,000+2,880,000+3,120,000) 16,800
103,070

Share Capital 40,000

Retained Profit(8,800k+5,600k+8,400k-3,600k-3,360k-1,920k-2,912k-2,840k9,310
+1,200k+2,742k-2,800k)
NCI(-160k-480k+17,760k-16,000k+26,832k-5,160k+1,568k) 24,360
Other Liabilities(10,400k+8,800k+10,200k) 29,400
103,070