Rose Bhd, a manufacturing company engaged in textiles products since the year 2000. Over the years, the
Question:
Rose Bhd, a manufacturing company engaged in textiles products since the year 2000. Over the years, the company is rapidly growing by successfully acquiring a few companies in several areas. The statement of profit or loss of these companies for the year ended 30 June 2020 is as below:
Additional information:
1. On 1 July 2016, Rose Bhd acquired 80% of ordinary shares in Tulip Bhd by paying cash of RM40 million. Ordinary shares of Tulip Bhd amount to 25 million. As of the acquisition date, retained earnings of Tulip Bhd were reported at RM20 million. A piece of land of Tulip Bhd also had increased by RM1 million from its carrying value. Tulip Bhd has not adjusted its book to account for the increase.
2. Later, on 1 July 2018, the directors of Rose Bhd decided to make another investment. Therefore, 50% of Lily Bhd's ordinary shares amounted to 20 million units was acquired. The cost of investment was settled with a cash consideration that amounted to RM15 million. On the same date, Lily Bhd’s retained profit was RM5.2 million. Rose Bhd is having joint control in Lily Bhd.
3. During the year 2020, the following transactions took place:
i. Tulip Bhd sold equipment to Rose Bhd on 1 March 2020 at a profit of RM1 million. The equipment's useful life is five years.
ii. Sales of inventories from Rose Bhd to its investees (profit margin is 20%) at a selling price of:
a. RM5 million on 15 March 2020 to Lily Bhd. Lily Bhd has sold all the inventories.
b. RM6 million on 20 May 2020 to Tulip Bhd. Tulip Bhd kept 30% of the inventory purchased (unsold)
4. Goodwill is limited to parents only and 20% is allocated for the impairment.
5. Depreciation is to be provided in full in the year of purchase and none in the year of disposal.
6. Dividend income reported by Rose Bhd was received from Tulip Bhd and Lily Bhd.
Required: Construct the Consolidated Statement of Profit or Loss and Other Comprehensive for the year ended 30 June 2020. Show all relevant workings.
Foundations of Finance The Logic and Practice of Financial Management
ISBN: 978-0132994873
8th edition
Authors: Arthur J. Keown, John D. Martin, J. William Petty