Hendrick Bhd is the parent company of a group undergoing rapid expansion through acquisition. Hendrick Bhd...

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Hendrick Bhd is the parent company of a group undergoing rapid expansion through acquisition. Hendrick Bhd operates within the manufacturing sector. On 1 January 2018, Hendrick Bhd acquired 80% of the equity share capital of Kendall Bhd by way of share exchange. Hendrick Bhd issued three shares for every two shares in Kendall Bhd. The market value of Hendrick Bhd's shares on 1 July 2018 was RM1.50 each. The acquisition enables Hendrick to access new markets and acquire raw materials at a lower cost. The following information is available at the date of acquisition: . . Due to the relatively poor performance of Kendall Bhd in 2020, it was decided that goodwill on consolidation is impaired. The amount of impairment is RM800,000 during the financial year ending 31 December 2020. The acquisition was not as successful as anticipated, and on 30 June 2021, Hendrick disposed of 85% of its equity shareholding in Kendall Bhd for RM26 million. Further details relating to the disposal are as follows: a. The fair value of Kendall's assets was equal to their book values except for its land. which had a fair value of RM1.5 million in excess of its carrying value at the date of acquisition. b. The share capital of Hendrick and Kendall was 82 million units and 15 million units, respectively. Kendall's profit and general reserve were RM7 million and RM2.5 million, respectively. Non-controlling interest is measured at the fair value of the net asset at the date of acquisition Required: C. The fair value of Kendall's Bhd net assets at 1 January 2021 is RM35 million. Kendall Bhd's loss for the year ended 31 December 2021 was RM8 million. Losses are deemed to accrue evenly throughout the year. On the date of disposal, the fair value of the remaining shares was RM10 million. The current year-end is on 31 December 2021. Discuss the accounting treatment of Kendall's acquisition on 1 January 2018. (6 marks) Calculate the gain or loss on the disposal of the share for the Hendrick Bhd. (4 marks) Discuss the effects of implementing the plan on the group's financial statements as at 31 December 2021. Hendrick Bhd is the parent company of a group undergoing rapid expansion through acquisition. Hendrick Bhd operates within the manufacturing sector. On 1 January 2018, Hendrick Bhd acquired 80% of the equity share capital of Kendall Bhd by way of share exchange. Hendrick Bhd issued three shares for every two shares in Kendall Bhd. The market value of Hendrick Bhd's shares on 1 July 2018 was RM1.50 each. The acquisition enables Hendrick to access new markets and acquire raw materials at a lower cost. The following information is available at the date of acquisition: . . Due to the relatively poor performance of Kendall Bhd in 2020, it was decided that goodwill on consolidation is impaired. The amount of impairment is RM800,000 during the financial year ending 31 December 2020. The acquisition was not as successful as anticipated, and on 30 June 2021, Hendrick disposed of 85% of its equity shareholding in Kendall Bhd for RM26 million. Further details relating to the disposal are as follows: a. The fair value of Kendall's assets was equal to their book values except for its land. which had a fair value of RM1.5 million in excess of its carrying value at the date of acquisition. b. The share capital of Hendrick and Kendall was 82 million units and 15 million units, respectively. Kendall's profit and general reserve were RM7 million and RM2.5 million, respectively. Non-controlling interest is measured at the fair value of the net asset at the date of acquisition Required: C. The fair value of Kendall's Bhd net assets at 1 January 2021 is RM35 million. Kendall Bhd's loss for the year ended 31 December 2021 was RM8 million. Losses are deemed to accrue evenly throughout the year. On the date of disposal, the fair value of the remaining shares was RM10 million. The current year-end is on 31 December 2021. Discuss the accounting treatment of Kendall's acquisition on 1 January 2018. (6 marks) Calculate the gain or loss on the disposal of the share for the Hendrick Bhd. (4 marks) Discuss the effects of implementing the plan on the group's financial statements as at 31 December 2021.