Question 1 The draft statements of financial position of two companies as at 31 December 2017...

 

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Question 1 The draft statements of financial position of two companies as at 31 December 2017 were as follows: Non-current assets Property, plant and equipment Investment in Smiley Sdn Bhd, at cost Current assets Inventory Trade and other receivables Dividend receivable Bank and cash Total assets Equity Ordinary shares of RM1 each Share premium Retained earnings Non-current liabilities 6% Debentures 2028 Current liabilities Trade and other payables Dividend payable Total liabilities Total equity and liabilities Huggy Bhd RM'000 Income from investments Interest expense Profit on ordinary activities before tax Less: Taxation Profit on ordinary activities Revenue Less: Cost of sales Gross profit Less: Administration and distribution costs. 89,000 50,000 3.200 4,500 135,000 80,000 20,000 RM'000 226,000 73,000 299,000 146,700 445.700 120,000 45,000 45,700 210,700 235,000 445,700 Smiley Sdn Bhd RM'000 459,100 331,000 128,100 ROTTAN 86,000 42,100 3,500 8,100 16,500 12,200 37,500 10,000 27,500 - 1,500 20,000 15,700 4,000 RM'000 62,000 Their draft statements of profit or loss for the year ended 31 December 2017 were: Huggy Bhd Smiley S.Bhd RM'000 RM'000 62,000 30,200 92,200 30,000 9,500 13,000 52,500 39,700 92,200 90,000 56,000 34,000 21,000 13,000 1,200 11,800 3.500 8,300 Huggy Bhd acquired its investment in Smiley Sdn Bhd of 24,000,000 ordinary shares for RM 68 million on 1 January 2017. The balance on Smiley Sdn Bhd's retained earnings at the date of acquisition was RM 8,700,000. Huggy also bought RM5 million of debentures in Smiley Sdn Bhd. The fair value of the property, plant & equipment of Smiley Sdn Bhd at 1 January 2017 was RM 65,000,000. The book value of the property, plant & equipment of Smiley Sdn Bhd at 1 January 2017 was RM 60,000,000. The revaluation has not been recorded in the books of Smiley Sdn Bhd. The revaluation had no effect on depreciation. Smiley Sdn Bhd purchased goods from Huggy Bhd for RM 12,000,000 during the year ended 31 December 2017. 60% of these remained in inventory at the year end. Huggy Bhd had sold these at its normal mark up of 20%. Huggy Bhd is of the opinion that the goodwill is impaired and has fallen by RM 10,000,000 since the acquisition date. The current account of Huggy in Smiley's books shows an amount due to Huggy of RM 4,000,000. The current account of Smiley in Huggy's books shows an amount due by Smiley of RM 6,000,000. The difference is due to cash in transit. Current accounts are included in trade and other receivables, and trade and other payables as appropriate. All debenture interest was paid during the year. Smiley has declared a dividend for the year of RM 4,000,000 which is unpaid at the accounting date. Required: Prepare, for the Huggy Group, the consolidated statement of profit or loss for the year ended 31 December 2017 and a consolidated statement of financial position as at that date. (30 marks) Question 1 The draft statements of financial position of two companies as at 31 December 2017 were as follows: Non-current assets Property, plant and equipment Investment in Smiley Sdn Bhd, at cost Current assets Inventory Trade and other receivables Dividend receivable Bank and cash Total assets Equity Ordinary shares of RM1 each Share premium Retained earnings Non-current liabilities 6% Debentures 2028 Current liabilities Trade and other payables Dividend payable Total liabilities Total equity and liabilities Huggy Bhd RM'000 Income from investments Interest expense Profit on ordinary activities before tax Less: Taxation Profit on ordinary activities Revenue Less: Cost of sales Gross profit Less: Administration and distribution costs. 89,000 50,000 3.200 4,500 135,000 80,000 20,000 RM'000 226,000 73,000 299,000 146,700 445.700 120,000 45,000 45,700 210,700 235,000 445,700 Smiley Sdn Bhd RM'000 459,100 331,000 128,100 ROTTAN 86,000 42,100 3,500 8,100 16,500 12,200 37,500 10,000 27,500 - 1,500 20,000 15,700 4,000 RM'000 62,000 Their draft statements of profit or loss for the year ended 31 December 2017 were: Huggy Bhd Smiley S.Bhd RM'000 RM'000 62,000 30,200 92,200 30,000 9,500 13,000 52,500 39,700 92,200 90,000 56,000 34,000 21,000 13,000 1,200 11,800 3.500 8,300 Huggy Bhd acquired its investment in Smiley Sdn Bhd of 24,000,000 ordinary shares for RM 68 million on 1 January 2017. The balance on Smiley Sdn Bhd's retained earnings at the date of acquisition was RM 8,700,000. Huggy also bought RM5 million of debentures in Smiley Sdn Bhd. The fair value of the property, plant & equipment of Smiley Sdn Bhd at 1 January 2017 was RM 65,000,000. The book value of the property, plant & equipment of Smiley Sdn Bhd at 1 January 2017 was RM 60,000,000. The revaluation has not been recorded in the books of Smiley Sdn Bhd. The revaluation had no effect on depreciation. Smiley Sdn Bhd purchased goods from Huggy Bhd for RM 12,000,000 during the year ended 31 December 2017. 60% of these remained in inventory at the year end. Huggy Bhd had sold these at its normal mark up of 20%. Huggy Bhd is of the opinion that the goodwill is impaired and has fallen by RM 10,000,000 since the acquisition date. The current account of Huggy in Smiley's books shows an amount due to Huggy of RM 4,000,000. The current account of Smiley in Huggy's books shows an amount due by Smiley of RM 6,000,000. The difference is due to cash in transit. Current accounts are included in trade and other receivables, and trade and other payables as appropriate. All debenture interest was paid during the year. Smiley has declared a dividend for the year of RM 4,000,000 which is unpaid at the accounting date. Required: Prepare, for the Huggy Group, the consolidated statement of profit or loss for the year ended 31 December 2017 and a consolidated statement of financial position as at that date. (30 marks)

Answer rating: 100% (QA)

Profit and Loss Particulars Cost Of Sales Gross Profit Balance Sheet Amount Particulars 387000 Sales ... View the full answer