ASSIGNMENT FAR 560

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

MISS NUR HAYATI ABD SAMAD
NAME MATRIC NUMBER
FARHANI ARINI BT PENDI 2016263022
ANNASTASIA LUYAH AK HENRY 2016263132
ADIBAH BT ISMAIL 2016263008
November 2017 ( Question 4 )
a) Prepare the Consolidated Statement of Financial Position of Salam Bhd and its
subsidiary, Palam Bhd as at 31 December 2016.

1. % control = 160 000/200 000= 80%

% debentures- 20 000/40 000= 50%
2. Pre retained pro – RM30 000
Pre general reserves –RM 12000
3. Pre revaluation reserves- RM30 000 (RM 330000-RM300000)
5. Palam Bhd
URP- RM30 000
Depreciation-RM30000/10=RM 3000(over depreciation)
6. Salam Bhd
URP-RM18000 x ¾=RM13500
7. Bill Intra – RM7000
8. CIT- RM2000
Add bank RM 2000
11.
Ordinary Share Palam Bhd
Balance b/d RM 200 000
Bonus issue RM 10 000
 NCI General
Goodwill Group RE
Details RM ( 20% ) Reserves
(RM) ( 80%)(RM)
(RM) (RM)
Consideration transferred 210 000
NCI 54 400 54 400
264400
FV of net asset :
Ordinary share 210 000
Pre retain profit 30 000
Pre general reserve 2 000
Pre revaluation reserve
30 000
land
272 000 (272 000)
Bargain purchase ( 7 600)

Retain profit H ( Salam

150 000
Bhd )
Unrealized retain profit of
(13 500)
inventory

Retain profit S ( Palam

100 000
Bhd )
(-) Pre retain profit ( 30 000 )
Post-acquisition 70 000
Unrealized retain profit-
3 000 600 2 400
over depreciation
URP machine ( 30 000 ) 6 000 24 000
43 000

General reserves Salam

57 000
Bhd

General reserves Palam

45 000
Bhd
(-) Pre general reserves (2 000)
Post acquisition 43 000
Total (7 600) 55 000 57 000 138 900
Consolidated Statement Of Financial Position of Salam Bhd and its subsidiary, Palam Bhd as at
31 December 2016

Non Current Asset RM RM

Freehold land at cost 64 000
Other PPE 310 000
Brand 20 000 970 000
Bill receivable(10 000+2 000)-(10 000+25 000)-7000 2 000
Inventories(88 500+37500-30 000) 96 000
Loan to Palam Bhd15 000-13 000) 2 000
Trade receivables(82 000+60 000) 142 000
Bank(84 850+33 600+2 000) 120450 362 450
1 332 450
Equity
Ordinary share 600 000
10% preference share 70 000
Group retained earning 162 900
General reserves 57 000 889 900

Non Current Liability

10% debenture(40 000-20 000) 20 000
5% debenture 80 000 100 000

Current Liability
Trade payables( 69350+61100) 130 450
Interest on debenture payables 4 000
Ordinary dividend payable(20 000-16 000) 4 000
Preference dividend payable(7 000+17500) 8750 147 200
1 137 100
b) Identify three classifications of business combination/acquisition.
Classification of the business combination on business point of view are:
 Horizontal Integration- this type of combination is one that involves companies within
the same industry that have been previously competitors
 Vertical Integration- is one involving companies that takes place between two companies
that involve in the same industries but at different levels. It normally involves in
combination of the company and its suppliers or customers.
 Conglomerate Combination- is one involving companies in unrelated industries having
little, if any, production or market similarities for the purpose of entering into new
markets or industries.

c) With reference to additional information 1 above, state the journal entries to record the
investment in Palam Bhd.

Debit Palam Bhd- Investment RM 160 000

Debenture RM 20 00
Credit Ordinary Shares RM 50 000
Debenture RM 80 000
Cash RM 50 000
RM 180 000 RM 180 000
d) Define pre-acquisition and post-acquisition reserve of the subsidiary company.
Pre-acquisition reserves are retained profits and other reserves that exists in a subsidiary’s
statement of financial position at the date of acquisition and will be capitalized at the date of
acquisition by including the goodwill calculations.
Post-acquisition reserve are reserves and profits of subsidiary company in the period after
it has been acquired made, which profit will be treated as revenue and transferred to the
consolidated reserves of the holding company.

e) State a reason why businesses may need to combine.

A company that merges or combine is to diversify may acquire another company in a
seemingly unrelated industry in order to reduce the impact of a particular industry’s performance
on its profitability. Companies seeking to sharpen focus merge with companies that have deeper
market penetrations in a key area of operations.