QUESTION On October 1, 2021, Bulan Bhd purchased shares and debentures of Bintang Bhd. At that...

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QUESTION On October 1, 2021, Bulan Bhd purchased shares and debentures of Bintang Bhd. At that time, Bintang Bhd's retained profit, general reserve, and asset revaluation reserve were, respectively, RM1,400,000, RM700,000, and RM240,000. The total issued capital of Bintang Bhd consists of 1,400,000 units of preference shares and 7,000,000 units of ordinary shares. The Statements of Financial Position of Bulan Bhd and Bintang Bhd as at 30 September 2023 are as follows: Bulan Bhd RM Bintang Bhd RM Non-current assets Land at cost 4,060,000 3,780,000 Plant and machinery (carrying value) 3,080,000 3,640,000 Motor vehicles (carrying value) 4,200,000 1,400,000 Investments in Bintang Bhd 4,900,000 units of Ordinary shares 7,000,000 630,000 units of Preference shares 630,000 RM840,000 10% Debentures 840,000 Current assets Inventories 1,974,000 1,701,000 Trade receivable 840,000 1,036,000 Bills receivable 924,000 896,000 Current account - Bintang Bhd 420,000 Ordinary dividend receivable 490,000 Cash at bank 2,926,000 2,345,000 27,384,000 14,798,000 Equity Ordinary shares 14,000,000 7,000,000 Preference shares 2,800,000 1,400,000 Retained profit 3,080,000 1,680,000 General reserve 1,176,000 800,000 Asset revaluation reserve - Machinery 240,000 Non-current liabilities 5% debentures 2,492,000 1,120,000 Current liabilities Trade payable Bills payable Ordinary dividend payable 1,260,000 808,000 1,163,400 616,000 1,120,000 700,000 Preference dividend payable 168,000 84,000 Debenture interest payable 124,600 Current account - Bulan Bhd 350,000 27,384,000 14,798,000 Additional information: 2. 1. 3. 4. 5. 6. 7. 8. 9. At the date of acquisition, revaluation of Bintang Bhd's assets reveals the following: a piece of land was revalued at RM280,000 more than its carrying value. a machinery was revalued at RM140,000 less than its carrying value. Bintang had not adjusted its books to reflect these changes. The group's policy is to depreciate its plant and machinery at a rate of 20% using the straight-line method. Depreciation for the entire year is accounted for in the year of acquisition, but not in the year of disposal. Bulan Bhd was the beneficiary of all of Bintang Bhd's bills payables, of which RM280,000 had not been discounted. Bulan Bhd purchased a motor vehicle from Bintang Bhd for the sum of RM1,260,000 throughout the course of the year. With a carrying value of RM1,120,000, the automobile is now in use. The motor vehicle had five years remaining useful life. This year, Bintang Bhd declared and provided a 6% dividend on preference shares. Dividend income on preference shares from Bintang Bhd has not yet been reported by Bulan Bhd. For the year, Bintang Bhd has not yet accrued and reported interest on debentures. Bintang Bhd remitted RM70,000 as payment of the loan from Bulan Bhd on 30 September 2023, which Bulan Bhd had not yet received at the reporting date. Throughout the year, Bulan Bhd made sales to Bintang Bhd totaling RM1,540,000 and applied a profit margin of 25% based on the selling price. As of 30 September 2023, Bintang Bhd still has RM700,000 worth of unsold stocks. Bintang Bhd still owes RM200,000 that has to be paid. The preference shares of both companies are non-redeemable. The non-controlling interest is measured at a proportionate share of fair value of net assets of Bintang Bhd. Required: a. Find the goodwill or bargain purchase arising from the acquisition of Bintang Bhd by Bulan Bhd. (10 marks) b. Show the journal entries to recorded goodwill on consolidation or bargain purchase (where applicable) for the acquisition of ordinary shares in Bintang Bhd by Bulan Bhd on the date of acquisition. (10 marks) c. Prepare a schedule showing the analysis of the group retained profit, non-controlling interest and other reserves as at 30 September 2023. (24 marks) d. Prepare the Consolidated Statement of Financial Position of Bulan Bhd's group as at 30 September 2023. Your answers should be in RM thousand with two decimal points. Show all workings. (36 marks) QUESTION On October 1, 2021, Bulan Bhd purchased shares and debentures of Bintang Bhd. At that time, Bintang Bhd's retained profit, general reserve, and asset revaluation reserve were, respectively, RM1,400,000, RM700,000, and RM240,000. The total issued capital of Bintang Bhd consists of 1,400,000 units of preference shares and 7,000,000 units of ordinary shares. The Statements of Financial Position of Bulan Bhd and Bintang Bhd as at 30 September 2023 are as follows: Bulan Bhd RM Bintang Bhd RM Non-current assets Land at cost 4,060,000 3,780,000 Plant and machinery (carrying value) 3,080,000 3,640,000 Motor vehicles (carrying value) 4,200,000 1,400,000 Investments in Bintang Bhd 4,900,000 units of Ordinary shares 7,000,000 630,000 units of Preference shares 630,000 RM840,000 10% Debentures 840,000 Current assets Inventories 1,974,000 1,701,000 Trade receivable 840,000 1,036,000 Bills receivable 924,000 896,000 Current account - Bintang Bhd 420,000 Ordinary dividend receivable 490,000 Cash at bank 2,926,000 2,345,000 27,384,000 14,798,000 Equity Ordinary shares 14,000,000 7,000,000 Preference shares 2,800,000 1,400,000 Retained profit 3,080,000 1,680,000 General reserve 1,176,000 800,000 Asset revaluation reserve - Machinery 240,000 Non-current liabilities 5% debentures 2,492,000 1,120,000 Current liabilities Trade payable Bills payable Ordinary dividend payable 1,260,000 808,000 1,163,400 616,000 1,120,000 700,000 Preference dividend payable 168,000 84,000 Debenture interest payable 124,600 Current account - Bulan Bhd 350,000 27,384,000 14,798,000 Additional information: 2. 1. 3. 4. 5. 6. 7. 8. 9. At the date of acquisition, revaluation of Bintang Bhd's assets reveals the following: a piece of land was revalued at RM280,000 more than its carrying value. a machinery was revalued at RM140,000 less than its carrying value. Bintang had not adjusted its books to reflect these changes. The group's policy is to depreciate its plant and machinery at a rate of 20% using the straight-line method. Depreciation for the entire year is accounted for in the year of acquisition, but not in the year of disposal. Bulan Bhd was the beneficiary of all of Bintang Bhd's bills payables, of which RM280,000 had not been discounted. Bulan Bhd purchased a motor vehicle from Bintang Bhd for the sum of RM1,260,000 throughout the course of the year. With a carrying value of RM1,120,000, the automobile is now in use. The motor vehicle had five years remaining useful life. This year, Bintang Bhd declared and provided a 6% dividend on preference shares. Dividend income on preference shares from Bintang Bhd has not yet been reported by Bulan Bhd. For the year, Bintang Bhd has not yet accrued and reported interest on debentures. Bintang Bhd remitted RM70,000 as payment of the loan from Bulan Bhd on 30 September 2023, which Bulan Bhd had not yet received at the reporting date. Throughout the year, Bulan Bhd made sales to Bintang Bhd totaling RM1,540,000 and applied a profit margin of 25% based on the selling price. As of 30 September 2023, Bintang Bhd still has RM700,000 worth of unsold stocks. Bintang Bhd still owes RM200,000 that has to be paid. The preference shares of both companies are non-redeemable. The non-controlling interest is measured at a proportionate share of fair value of net assets of Bintang Bhd. Required: a. Find the goodwill or bargain purchase arising from the acquisition of Bintang Bhd by Bulan Bhd. (10 marks) b. Show the journal entries to recorded goodwill on consolidation or bargain purchase (where applicable) for the acquisition of ordinary shares in Bintang Bhd by Bulan Bhd on the date of acquisition. (10 marks) c. Prepare a schedule showing the analysis of the group retained profit, non-controlling interest and other reserves as at 30 September 2023. (24 marks) d. Prepare the Consolidated Statement of Financial Position of Bulan Bhd's group as at 30 September 2023. Your answers should be in RM thousand with two decimal points. Show all workings. (36 marks)