On 31 December 2020, MULTI BHD. acquired 70 percent interest in the equity capital of CABLE...

   

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On 31 December 2020, MULTI BHD. acquired 70 percent interest in the equity capital of CABLE BHD. The following are the Statements of Profit or Loss for the year ended 31 December 2021 for both companies. MULTI BHD. CABLE BHD. (RM) (RM) Revenue Cost of sales Gross profit 1,300,000 600,000 (350,000) 250,000 (700,000) 600,000 Other income: Gain on fair value of investment property 20,000 Gain on sale of equipment 10,000 Loss on sale of property (30,000) Dividend 7,000 Selling and distribution expenses (210,000) (70,000) Administrative and other operating (285,000) (114,000) expenses Profit from operations 122,000 56,000 Finance costs (10,000) (6,000) Profit before tax Income tax Profit after tax 112,000 50,000 (22,000) (10,000) 90,000 40,000 The followings are the Statements of Financial Position as at 31 December 2021 for both companies. MULTI BHD. САBLE BHD. (RM) (RM) Non-current asset Property, plant and equipment Investment property 415,000 492,500 120,000 Investment in CABLE Current assets 500,000 Inventory 60,000 50,000 Trade and other receivables 100,000 70,000 Cash and cash equivalents 115,000 47,500 TOTAL ASSETS 1,190,000 780,000 Equity Ordinary shares: 450,000 units 900,000 200,000 units 400,000 Retained earnings 175,000 170,000 Revaluation reserve 15,000 Non- current liabilities Loan from bank 58,000 106,000 Current liabilities Trade payables 30,000 80,000 Loan from bank 12,000 24,000 TOTAL EQUITIES AND LIABILITIES 1,190,000 780.000 Additional information: i. CABLE retained profits was RM140,000 and the net aggregate fair value of assets and liabilities was RM600,000 at the time of acquisition. ji. On acquisition date, the property of CABLE in which was purchased on 1 January 2020 at RM600,000 has a fair value of RM640,000 as compared to its carrying amount of RM580,000. All other assets and liabilities owned by CABLE have the same fair value and book value at the acquisition date. jji. In calculating the goodwill, the non-controlling interest is measured at fair value at acquisition date. iv. During the financial year, CABLE sold RM30,000 inventories to MULTI at a selling price of RM60,000. It was determined that 10 percent of these inventories remained unsold at the end of the period. On 1 July 2021, MULTI sold one of its equipment to CABLE at a gain of V. RM10,000. The equipment was acquired by MULTI on 1 July 2019 at RM50,000. vi. Dividend income of MULTI is an interim dividend from CABLE paid on 10 July 2021. vii, Trade receivables of MULTI include RM30,000 due from CABLE. vii. Property is depreciated using straight line method for 30 years without residual value. ix. Equipment is depreciated at 10% per annum on cost without residual value. Required: (a) Calculate the amount of goodwill on the acquisition date. (b) Prepare the Group Statement of Profit or Loss for the year ended 31 December 2021. Show the detail calculation of each item. (c) Prepare the Group Statement of Financial Position as at 31 December 2021. Show the detail calculation of each item. On 31 December 2020, MULTI BHD. acquired 70 percent interest in the equity capital of CABLE BHD. The following are the Statements of Profit or Loss for the year ended 31 December 2021 for both companies. MULTI BHD. CABLE BHD. (RM) (RM) Revenue Cost of sales Gross profit 1,300,000 600,000 (350,000) 250,000 (700,000) 600,000 Other income: Gain on fair value of investment property 20,000 Gain on sale of equipment 10,000 Loss on sale of property (30,000) Dividend 7,000 Selling and distribution expenses (210,000) (70,000) Administrative and other operating (285,000) (114,000) expenses Profit from operations 122,000 56,000 Finance costs (10,000) (6,000) Profit before tax Income tax Profit after tax 112,000 50,000 (22,000) (10,000) 90,000 40,000 The followings are the Statements of Financial Position as at 31 December 2021 for both companies. MULTI BHD. САBLE BHD. (RM) (RM) Non-current asset Property, plant and equipment Investment property 415,000 492,500 120,000 Investment in CABLE Current assets 500,000 Inventory 60,000 50,000 Trade and other receivables 100,000 70,000 Cash and cash equivalents 115,000 47,500 TOTAL ASSETS 1,190,000 780,000 Equity Ordinary shares: 450,000 units 900,000 200,000 units 400,000 Retained earnings 175,000 170,000 Revaluation reserve 15,000 Non- current liabilities Loan from bank 58,000 106,000 Current liabilities Trade payables 30,000 80,000 Loan from bank 12,000 24,000 TOTAL EQUITIES AND LIABILITIES 1,190,000 780.000 Additional information: i. CABLE retained profits was RM140,000 and the net aggregate fair value of assets and liabilities was RM600,000 at the time of acquisition. ji. On acquisition date, the property of CABLE in which was purchased on 1 January 2020 at RM600,000 has a fair value of RM640,000 as compared to its carrying amount of RM580,000. All other assets and liabilities owned by CABLE have the same fair value and book value at the acquisition date. jji. In calculating the goodwill, the non-controlling interest is measured at fair value at acquisition date. iv. During the financial year, CABLE sold RM30,000 inventories to MULTI at a selling price of RM60,000. It was determined that 10 percent of these inventories remained unsold at the end of the period. On 1 July 2021, MULTI sold one of its equipment to CABLE at a gain of V. RM10,000. The equipment was acquired by MULTI on 1 July 2019 at RM50,000. vi. Dividend income of MULTI is an interim dividend from CABLE paid on 10 July 2021. vii, Trade receivables of MULTI include RM30,000 due from CABLE. vii. Property is depreciated using straight line method for 30 years without residual value. ix. Equipment is depreciated at 10% per annum on cost without residual value. Required: (a) Calculate the amount of goodwill on the acquisition date. (b) Prepare the Group Statement of Profit or Loss for the year ended 31 December 2021. Show the detail calculation of each item. (c) Prepare the Group Statement of Financial Position as at 31 December 2021. Show the detail calculation of each item.

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