CONFIDENTIAL

2012/FAR450/FAC450

AC/JAN

1
FAR 450
JANUARY 2012
SUGGESTED SOLUTION

SOLUTION 1
A. a. The cost of acquiring the debentures will be offset against their nominal value acquired by the
parent. In this case, there is no goodwill since it is acquired at par.
The debentures not held by the parent (ie. 20%) are actual liabilities of the group and is shown in the
consolidated statement of financial position. It is not treated as part of NCI.
(3 x 1 = 3 marks)

b.

Lam Bhd Group

Consolidated Statement of Financial Position as at 30 June 2011
RM000

Non-current assets
Property, plant and equipment
(74,360 + 34,315 + 26,120) + 4,000 1,000 150 + 30)
Intangible assets
Goodwill on consolidation (5,480 + 9,230)
Current assets
Inventories
Receivables (4,560 + 13,290 + 2,830) 4,300 )
Cash

137,675
3,450
14,710

18,430
16,380
660

191,305
Equity
Ordinary shares of RM1 each
Revaluation reserves
Share premium
Retained profits
NCI

50,000
15,684
12,340
53,524
131,548
22,237
153,785

Non-current Liabilities
10% Debentures (20,000 + 5,000 4,000 )

21,000

Current Liabilities
Payables (10,290 + 6,850 + 2,280 4,300 )
Debenture interest payable ( 1,000 + 250 200)
Bank overdraft

15,120
1,050
350

191,305
[21 x 1/3 = 7 marks + Presentation: 1 mark = 8 marks]

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CONFIDENTIAL
2012/FAR450/FAC450

AC/JAN

Calculation of goodwill
Group reserves & NCI
Consideration transferred
(5,000 x 6)
(50,650 30,000 4,000)
NCI at fair value on d.o.a ( 5,760 + 12,320)
Indirect consideration
Indirect consideration {20% x 8,125)
(80% x 8,125)
Revaluation reserves
NCI at fair value
c/f
(20% x 16,000 x 1.8)
Pre-acquisition
(44% x 14,000 x 2)
Post-acquisition
CSOFP
FV of net assets acquired
Ord. share capital
Retained profit
Retained
Retained profits
profit b/f
10,370 + [ (3,970 + 630 ) x 3/12)]
Profit for the year
630
Retained profit c/f
Share premium
Pre-acquisition
Revaluation reserves
Underdepreciation - factory
(200 x 5 yrs)
Goodwill to CSOFP
Unrealised profit - equipment
Depreciation - equipment
Finance (income)/charge
Impairment of IA
Debenture interest payable
Debenture interest receivable
Post adjusted profit - Aliff
- Hamzah
CSOFP

Aliff Bhd
RM000
RM000

Hamzah Bhd
RM000
RM000

Aliff Bhd
Hamzah Bhd
30,000
RM000
RM000

1,500
5,760
(1,350)
150
35,760

Group
NCI
RM000
RM000
16,650
18,080
(1,625)
6,500
15,600
12,320
84
66
35,470
15,684

16,000
14,000
7,980
23,200
10,370
30,100
7,740
3,970
8,100
10,890
30,940
14,340
38,200
2,300
(7,980)
(10,890)
4,000
1,350
(1,000)
(30,280)
(26,240)
5,480
9,230
(150)
30
(600)
600
(3,200)
(250)
(1,000)
200
16,792
4,198
20,990
1,932
1,518
3,450
53,524
22,237
(51 x 1/3 = 17 marks)

Bi. Mim can be excluded from consolidation provided the sale is to take place within 12 months and
management is actively seeking a buyer.
(2 marks)
ii. Mim cannot be excluded from consolidation on the grounds of dissimilar activities. If a group
diverse business activities, segment disclosure is then required.

contains
(2 marks)

SOLUTION 2
a.
The functional currency of Bimbo is the same as that of the parent, ie RM. /
Reason: The operations of Bimbo are carried out as an extension of the parent. // Materials are provided by the
parent and the product is sold by the parent. / Therefore RM is the currency that mainly influences material
and other costs of providing the goods as well as the sale prices . /
The functional currency of Dooby is its own local currency , ie DY. /
Reason: Doobys operations are independent of those of Mutiara Bhd. //
Materials are supplied by local
companies and the product is also sold to local customers. / Therefore DY is the currency that mainly
influences material and other costs of providing the goods as well as the sale prices. /
10/ x - 5 marks
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CONFIDENTIAL
2012/FAR450/FAC450

AC/JAN

b. For Dooby, goodwill is treated as a foreign currency asset which is translated using the closing rate. / Therefore
the amount of goodwill will be different from year to year. Any gain or loss from the translation of goodwill is taken
to other comprehensive income. /
For Bimbo, goodwill is translated at the historical rate. / Hence the amount of goodwill will be the same from year
to year. /
4/ x 1 = 4 marks
c.
Bimbo
Consideration transferred
FV of NA : OSC
: profit
Goodwill on 1/7/2010
Goodwill in CSOFP at 30/6/2011

Dooby

BB
// 2,400,000
/ 1,000,000
/ 650,000

DY
// 4,000,000
/ 2,000,000
/1,400,000

(1,650,000)
750,000

Translated at historical rate

/ 750,000 = RM937,500
/ 0.8

( 3,400,000)
600,000

Translated at closing rate

/ 600,000 = RM187,500
/ 3.2
12/ x - 6 marks

SOLUTION 3
(a) Only one goodwill is to be recognized on a piecemeal acquisition ie on the date the acquirer obtains
control. / There will not be any more additions to goodwill even if the parent acquires more shares in the
subsidiary subsequently. / In this scenario, goodwill will be computed on 1/7/2009 based on 60% control. /
No further goodwill will be computed on 1/10/2010. /
4/ x 1 = 4 marks
(b) SlimJuice Bhd
RM
RM
Consideration transferred (COI)
330,000 /
Less: net assets
Share capital
500,000 /
Share premium
100,000 /
Retained profit -1/7/2010
200,000 //
Current year profit (160 x 3/12)
40,000 //
840,000
x 40% / (336,000)
Bargain purchase /
(6,000)
SlimBelt Bhd
RM
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RM

CONFIDENTIAL
2012/FAR450/FAC450

AC/JAN

Consideration transferred
NCI ( 600,000 / x 40% // )
Fair value of net assets:
Share capital
Retained profit
Goodwill
(c)

800,000 /
240,000
1,040,000
500,000 /
100,000 /

(600,000)
440,000

(15/ x 1/3 = 5 marks)

SlimWorld Bhd Group
Consolidated Statement of Comprehensive Income for the year ended 30 June 2011
RM000
Sales (12,000+10,000+2500) / - 1500 /
23,000
Cost of sales (5000 + 4000+1200) / - 1500 / + 500 /
(9,200)
Gross profit
13,800
Operating expenses (2000+2000+400)
/ (4,400)
Interest on loan stock (1000 400)
// (600)
Interest expense
/ (55)
8,745
Share of profit of associate (160 x 9/12 x 40%) // + 6 /
54
Operating profit
8,799
Taxation (1583 + 1040 + 200)
/ (2,823)
Profit after tax
5,976
Other comprehensive income:
Surplus on fair value of non-depreciable assets (40 +80) //
Decrease in NCI /
Total comprehensive income

120
W1 (165)
5,931

Profit after tax attributable to;

Equity holders of parent /
Non-controlling interest

W2

Total comprehensive income attributable to:

Equity holders of parent [ 5,515 + FVA 80 + 40x80% - 165]
Non-controlling interest [461 + FVA 40 x 20%]

5,515
461
5,976
/ 5,462
// 469
5,931

W1 Gain or loss on second acquisition

RM000
Cost of acquisition
Fair value of net assets:
Share capital
Retained profit (300 + (700 x 3/12)

/ 500
// 475
975
x 20% /

Loss other comprehensive income /

RM000
/ 360

195
(165)

W2 NCI
RM000
SlimBelt
Profit after tax
SlimGel
Profit after tax
unrealized profit

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700 x 3/12 / x 40% /

700 x 9/12 / x 20% /
1,930 /
(500) //
1,430 x 20% /

RM000
70
105

286
461
(34/ x = 17 + P2 = 19 marks)

CONFIDENTIAL
2012/FAR450/FAC450

AC/JAN

SOLUTION 4
MDAB Bhd Group
Consolidated Cash Flow Statement For the year ended 30 June 2011
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from customers
Cash paid to supplier and employees (37,450 w2 ////+12,490 w3 /////////)
Cash generated from operations
Taxation Paid
Net Cash Flow From Operating Activities
CASH FLOW FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment
Disposal of property, plant and equipment
Dividend received from
associate
Development cost paid
Acquisition of Subsidiary
Net Cash Flow from investing activities

(1,000-700)

CASH FLOW FROM FINANCING ACTIVITIES

Issue of ordinary shares at a premium
(800+200)

RM'000
75,750
(49,940)
25,810
(1,700)

RM'000
W1 //

W4 //
24,110

(13,700)

W5 /////

5,000

500

W6 //

(500)
(300)

//

/
(9,000)

1,000

W7 ////

Dividend paid to NCI

(4,360)

W8 ///

Dividend paid by holding

Net Cash Flow from Financing activities
Net increase in cash and cash equivalent /
Cash and cash equivalent at beginning of the year
Cash and cash equivalent at the end of the year

(2,500)

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(5,860)
9,250
1,000 /
10,250
38/ x = 19 + P1 = 20 marks

CONFIDENTIAL
2012/FAR450/FAC450

AC/JAN

Statement of reconciliation
Profit Before Tax
Adjustments:
Depreciation
Interest payable
Impairment of associate
Impairment of Goodwill on consolidation
Impairment of development cost
Gain on disposal of property, plant and equipment
Share of profit of associate
Operating profit before working capital changes
Changes in working capital:
Decrease in Inventories
Decrease in accounts receivable
Decrease in accounts payable
Cash Generated From Operations

RM'000
15,960
1,750
40
250
5,760
2,000
(1,000)
(1,000)
23,760
(6,000+600-4,500)
(3,750+500-3,500)
(1,500+300-1,000)

2,100
750
(800)
25,810

/
/
/
/
/
/
//
/

//
//
//

15/ x 1/3 = 5 marks

Workings:
Bal b/d
Acqn of Sub
Sales

W1 Accounts Receivable
3,750
Cash
500 /
Bal c/d
75,000 /
W2 Inventories
6,000
Cost of Sales

Bal b/d
Acqn of Sub
Purchases

600 /
36,650

Bal c/d

75,750
3,500

38,750 /
4,500

W2 Accounts payable
Cash

37,450

Bal c/d

1,000

Bal b/d

1,500

Acqn of Sub

300 /

Purchases

36,650 /

W3 Goodwill on Consolidation
Bal b/d
Acqn of Sub

2,000
// 4,760

Bal b/d
Cash

Impairment

5,760

Bal c/d

1,000

W3 Development cost
2,500
Impairment
500 /
Bal c/d

2,000
1,000

W3 Expenses
Depreciation
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1,750 /

CSOCI

21,250 /

CONFIDENTIAL
2012/FAR450/FAC450

AC/JAN

Impairment-assoc

250 /

Goodwill impaired-sub

5,760 /

Devt cost impaired

2,000 /

Cash

12,490

Gain on disposal

1,000 /

W4 Taxation Payable
Cash

1,700

Bal b/d

4,500

Bal c/d

5,500

CSOCI

2,500 /

Acqn of Sub

Bal b/d
Acqn of Sub
OSC
Share premium
Cash

Bal b/d
Share of profit

W5 Property, Plant and Equipment

21,250
Depreciation
4,000 /
Disp of PE (NBV)
200 /
Bal c/d
300 /
13,700
W6 Investment in Associate
4,500
Cash-Div Received
1,000 /
Impairment
Bal c/d

200 /

1,750 /
4,000 /
33,700

500
250 /
4,750

W7 OSC
Bal c/d

22,500

W7 Share premium
6,000
Bal b/d
Acqn of Sub (6,000 x 0.25)
PPE
Cash

Bal c/d

Cash
Bal c/d

Bal b/d
Acqn of Sub (6,000 x
RM1)
PPE
Cash

W8 Non Controlling Interest (NCI)

4,360
Bal b/d
4,000
Acqn of Sub
CSOCI

END OF SOLUTION

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15,500
6,000 /
200 /
800

4,000
1,500 /
300 /
200

6,000
1,060 //
1,300 /