The following financial statements were extracted from the company's records. Statements of Financial Position as at...
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The following financial statements were extracted from the company's records. Statements of Financial Position as at 31 December 2020: Gilmore Lorelai Rory Luke RM'000 RM'000 RM'000 RM'000 Investment Ordinary shares of Lorelai 20,500 Preference shares of Lorelai 200 Non-current assets: Land 29,916 14,200 6,463 4,587 Building 13,400 6,110 3,224 2,284 Plant 2,990 1,520 1,863 916 Machinery 3,320 2,005 988 872 Equipment 1,740 1,269 841 654 Current assets: 10% Loan to Lorelai 250 Inventory 3,270 2,356 1,335 853 Current account 780 Trade receivables 3,650 2,778 1,154 911 Bank 4,210 2,410 711 603 Total assets 84,226 32,648 16,579 11,680 Ordinary shares 60,000 20,000 10,000 8,000 5% Cum Preference shares 2,000 6% Preference shares 500 7% Redeemable Preference shares 300 Revaluation reserve 5,220 3,100 1,800 1,200 Retained earnings 10,305 4,123 2,285 897 8% Debentures 800 200 10% Loan from Gilmore 250 Current account 575 195 Trade payables 4,775 3,190 1,896 1,457 Other payables 1,126 710 103 126 Total equities and liabilities 84,226 32,648 16,579 11,680 Statements of Comprehensive Income for year ended 31 December 2020 Gilmore Lorelai Rory Luke RM'000 RM'000 RM'000 RM'000 Turnover 15,900 9,873 7,885 4,180 -) Cost of sales Gross margin -) Administration expenses (4,621) 5,252 (3,815) 4,070 (7,880) (2,120) 8,020 2,060 (1,781) (964) (3,564) (1,150) (780) (750) -) Selling expenses (1,996) (240) Profit before taxation 2,460 2,557 2,140 -) Taxation (620) (590) (340) (260) Profit after tax 1,840 1,967 1,800 810 RE b/f Dividends declared in December 8,425 2,156 685 87 2020: Ordinary shares 2% 2% 3% 5% Preference shares Full year 6% Preference shares Half year 7% Preference shares Full year 8% Debentures Full year Full year Additional Information 1. Gilmore Berhad acquired 75% of the ordinary shares of Lorelai S/B on 1 January 2019 with consideration transferred of RM20.5 million. On the same date, Gilmore also acquired 25% of the preference shares issued by Lorelai with cash consideration of RM200,000. 2. Upon checking the previous year's statements, the retained earnings of Lorelai as at 1 January 2019 was found to be RM1,660,000. There was no issuance of new shares since acquisition date. 3. Lorelai's partial goodwill has been impaired by RM40,000 for the year ended 2020. 4. On 1 July 2020, Gilmore acquired 6 million units (60%) of the ordinary shares of Rory Sdn Bhd with immediate cash payment of RM1 million, share exchange of 1 share of Gilmore for every 3 shares acquired in Rory. Gilmore's share price was estimated at RM3/share on this date. Rory paid an interim dividend of RM200,000 in February 2020 which has been recorded in its accounts. 5. On 1 January 2020, Gilmore acquired 25% of Luke Sdn Bhd ordinary shares with immediate cash payment of RM1 million and an additional RM550,000 should Luke's net profit increases by 10% for year ended 2020. Cost of capital is 10%. 6. There was no issuance of new shares for all the companies since 1 January 2019. 7. From the available records of the companies, you extracted the following fair value adjustments which have not been adjusted in the books. The group uses revaluation model to prepare its accounts: As at 1 January 2019 Gilmore (RM) Lorelai (RM) Rory (RM) Luke (RM) Plant 160,000 Useful life 8 years Machinery 75,000 5 years Useful life Land 500,000 As at 31 Dec 2020 Land 300,000 50,000 200,000 8. For year ended 2019, Lorelai sold equipment to Gilmore with the profit of RM30,000. Useful life of this asset is estimated to be 6 years. Full year depreciation is charged in the year of acquisition and none in the year of disposal. 9. During the year, Lorelai sold inventories with the invoice value of RM350,000 to Gilmore at cost plus 25%. 10% of the ending inventory in Gilmore were inventories purchased from Lorelai 10. Gilmore also sold inventories to Rory in the post-acquisition date with the invoice price of RM1,100,000 at cost plus 25%. 50% of these inventories have been sold off to third parties. Rory has paid for 60% of the invoice balance but the payment was only received 2 January 2021. 11. For year ended 2020, Gilmore sold inventories to Luke at cost plus 25%, the invoice value was RM100,000 and 40% of these inventories have been sold off. 12. Lorelai has not accrued its loan interest expense for the full year and Gilmore has not recognised the interest income in its books. 13. All dividends and debenture interests declared in December 2020 have not been recorded in the books. 14. The group uses straight line depreciation and partial goodwill to prepare its accounts. 15. Difference in current account is due to inventory in transit. 16. All depreciation expenses and goodwill impairment are to be adjusted in administration expenses. Required: (a) Determine the goodwill for all the investments. (b) Prepare the Group Statement of Financial Position as at 31 December 2020. (c) Prepare the Group Statement of Comprehensive Income for year ended 31 December 2020. (d) Prepare the Group Statement Changes in Equity for year ended 31 December 2020. Note: Show ALL relevant workings 100 marks The following financial statements were extracted from the company's records. Statements of Financial Position as at 31 December 2020: Gilmore Lorelai Rory Luke RM'000 RM'000 RM'000 RM'000 Investment Ordinary shares of Lorelai 20,500 Preference shares of Lorelai 200 Non-current assets: Land 29,916 14,200 6,463 4,587 Building 13,400 6,110 3,224 2,284 Plant 2,990 1,520 1,863 916 Machinery 3,320 2,005 988 872 Equipment 1,740 1,269 841 654 Current assets: 10% Loan to Lorelai 250 Inventory 3,270 2,356 1,335 853 Current account 780 Trade receivables 3,650 2,778 1,154 911 Bank 4,210 2,410 711 603 Total assets 84,226 32,648 16,579 11,680 Ordinary shares 60,000 20,000 10,000 8,000 5% Cum Preference shares 2,000 6% Preference shares 500 7% Redeemable Preference shares 300 Revaluation reserve 5,220 3,100 1,800 1,200 Retained earnings 10,305 4,123 2,285 897 8% Debentures 800 200 10% Loan from Gilmore 250 Current account 575 195 Trade payables 4,775 3,190 1,896 1,457 Other payables 1,126 710 103 126 Total equities and liabilities 84,226 32,648 16,579 11,680 Statements of Comprehensive Income for year ended 31 December 2020 Gilmore Lorelai Rory Luke RM'000 RM'000 RM'000 RM'000 Turnover 15,900 9,873 7,885 4,180 -) Cost of sales Gross margin -) Administration expenses (4,621) 5,252 (3,815) 4,070 (7,880) (2,120) 8,020 2,060 (1,781) (964) (3,564) (1,150) (780) (750) -) Selling expenses (1,996) (240) Profit before taxation 2,460 2,557 2,140 -) Taxation (620) (590) (340) (260) Profit after tax 1,840 1,967 1,800 810 RE b/f Dividends declared in December 8,425 2,156 685 87 2020: Ordinary shares 2% 2% 3% 5% Preference shares Full year 6% Preference shares Half year 7% Preference shares Full year 8% Debentures Full year Full year Additional Information 1. Gilmore Berhad acquired 75% of the ordinary shares of Lorelai S/B on 1 January 2019 with consideration transferred of RM20.5 million. On the same date, Gilmore also acquired 25% of the preference shares issued by Lorelai with cash consideration of RM200,000. 2. Upon checking the previous year's statements, the retained earnings of Lorelai as at 1 January 2019 was found to be RM1,660,000. There was no issuance of new shares since acquisition date. 3. Lorelai's partial goodwill has been impaired by RM40,000 for the year ended 2020. 4. On 1 July 2020, Gilmore acquired 6 million units (60%) of the ordinary shares of Rory Sdn Bhd with immediate cash payment of RM1 million, share exchange of 1 share of Gilmore for every 3 shares acquired in Rory. Gilmore's share price was estimated at RM3/share on this date. Rory paid an interim dividend of RM200,000 in February 2020 which has been recorded in its accounts. 5. On 1 January 2020, Gilmore acquired 25% of Luke Sdn Bhd ordinary shares with immediate cash payment of RM1 million and an additional RM550,000 should Luke's net profit increases by 10% for year ended 2020. Cost of capital is 10%. 6. There was no issuance of new shares for all the companies since 1 January 2019. 7. From the available records of the companies, you extracted the following fair value adjustments which have not been adjusted in the books. The group uses revaluation model to prepare its accounts: As at 1 January 2019 Gilmore (RM) Lorelai (RM) Rory (RM) Luke (RM) Plant 160,000 Useful life 8 years Machinery 75,000 5 years Useful life Land 500,000 As at 31 Dec 2020 Land 300,000 50,000 200,000 8. For year ended 2019, Lorelai sold equipment to Gilmore with the profit of RM30,000. Useful life of this asset is estimated to be 6 years. Full year depreciation is charged in the year of acquisition and none in the year of disposal. 9. During the year, Lorelai sold inventories with the invoice value of RM350,000 to Gilmore at cost plus 25%. 10% of the ending inventory in Gilmore were inventories purchased from Lorelai 10. Gilmore also sold inventories to Rory in the post-acquisition date with the invoice price of RM1,100,000 at cost plus 25%. 50% of these inventories have been sold off to third parties. Rory has paid for 60% of the invoice balance but the payment was only received 2 January 2021. 11. For year ended 2020, Gilmore sold inventories to Luke at cost plus 25%, the invoice value was RM100,000 and 40% of these inventories have been sold off. 12. Lorelai has not accrued its loan interest expense for the full year and Gilmore has not recognised the interest income in its books. 13. All dividends and debenture interests declared in December 2020 have not been recorded in the books. 14. The group uses straight line depreciation and partial goodwill to prepare its accounts. 15. Difference in current account is due to inventory in transit. 16. All depreciation expenses and goodwill impairment are to be adjusted in administration expenses. Required: (a) Determine the goodwill for all the investments. (b) Prepare the Group Statement of Financial Position as at 31 December 2020. (c) Prepare the Group Statement of Comprehensive Income for year ended 31 December 2020. (d) Prepare the Group Statement Changes in Equity for year ended 31 December 2020. Note: Show ALL relevant workings 100 marks
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2000o Soo 4123 3100 WNI Statement of Net Assets of Lorelai DOA change DOC 101 19 319... View the full answer
Related Book For
Accounting Principles
ISBN: 978-1119048473
7th Canadian Edition Volume 2
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak
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