On 31 December 2018, WWW Bhd acquired 80% interest in RRR Bhd at purchase consideration of RM45,000,000.

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Question:

On 31 December 2018, WWW Bhd acquired 80% interest in RRR Bhd at purchase consideration of RM45,000,000. The building worth RM1,000,000 as at 31 December 2018 was not reflected in the RRR Bhd accounts. At the date of acquisition, net asset of RRR Bhd represented by equity is as follows:

	RM’000
Share Capital	30,000
Retained Earning	12,000
Revaluation reserve	10,000

Financial statement for both companies on 31 December 2020 are as follows: RM ‘000 RM’000

Share Capital of RM1.00 each 100,000 30,000

Retained Earnings 41,000 28,000

Revaluation Reserves 25,000 12,000

166,000 70,000

RM ‘000 RM’000

Investment in RRR 45,000 -

Property, Plant & Equipment 80,000 40,000

Accounts Receivable 40,000 30,000

Cash 13,000 25,000

Accounts Payable (12,000) (25,000)

166,000 70,000

The profit for the for year ended 31 December 2020 for WWW Bhd is RM20,000,000. The profit for the for year ended 31 December 2020 for RRR Bhd is RM5,000,000. The RRR Bhd retained earnings as at 31 December 2019 was RM23,000,000. The non-controlling interest in the WWW Bhd is measured at proportionate share of identifiable net assets method.

REQUIRED

(a) Prepare consolidation journal entries of WWW Bhd and RRR Bhd.

(b) Prepare the consolidated financial statements of WWW Bhd and RRR Bhd as at 31 December 2020. [extract version for Consolidated Statement of Profit or Loss and Other Comprehensive Income, full statement for Consolidated Statement of Financial Position].