Stunning Bhd, an established manufacturer in the textile industry since year 2005. The company had successfully...

 

 

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Stunning Bhd, an established manufacturer in the textile industry since year 2005. The company had successfully invested in few companies in recent years under its business strategic plan. The statement of profit or loss of these companies for the year ended 31 December 2020 are given as below: Statement of Profit or Loss for the year ended 31 December 2020 Vogue Bhd Stunning Bhd RM million RM million Revenue Cost of sales Dividend income Gain on disposal of asset Administrative expenses Selling & Distribution expenses Finance Costs Taxation Net Profit/ (Loss) Retained profits b/f Additional information: 400 (160) 240 16 10 (40) (60) 166 (10) 156 (37) 119 70 300 (120) 180 (50) (10) 120 (7) 113 (27) 86 40 Dazzle Bhd RM million 160 (64) 96 (20) (10) 66 (5) 61 (15) 46 15 1. On 1 January 2018, Stunning Bhd acquired 60% of ordinary shares in Vogue Bhd by paying cash of RM40 million. Ordinary shares of Vogue Bhd amounting to 30 million units at RM30 million. As at acquisition date, retained earnings of Vogue Bhd was reported at RM10 million. A piece of land of Vogue Bhd also had increased by RM5 million from its carrying value. Vogue Bhd has not adjusted its book to account for the increase. 2. A year after, on 1 January 2019, the management of Stunning Bhd is decided to make a new investment. Therefore, Stunning Bhd had embark on a joint venture project with another ventures. They formed a new joint venture company, Dazzle Bhd with 50% shareholding belong to Stunning. Dazzle Bhd's ordinary shares amounted to 20 million units. The cost of investment was settled with a cash consideration amounted to RM15 million. At the same date, Dazzle Bhd's retained profit was RM5 million. 3. In the early year 2020, Stunning Bhd acquired significant influence of 20% in Anglic Bhd when Anglic Bhd's retained profits shown a credit balance of RM2 million. As at 31 December 2020, Anglic Bhd reporting a net income of RM5 million in which Stunning Bhd yet recognized in its financial statement. 4. During the year 2020, the following transactions took place: i. Stunning Bhd sold an equipment to Vogue Bhd on 1 March 2020 at a gain of RM2 million. The equipment useful life is five years. Depreciation is to be provided in full in the year of purchase and none in the year of disposal 5. 6. ii. Sales of inventories from Stunning Bhd to Vogue Bhd (profit margin is 25%) at a selling price of: a. RM10 million on 15 March 2020. Vogue Bhd has yet sold 20% of the inventories. b. RM5 million on 20 September 2020. Vogue Bhd has sold all of the inventories. Stunning Bhd also sold inventories valued RM6 million to Dazzle Bhd on 15 October 2020 with profit margin of 25%. As at the year-end, 40% of these inventories are yet sold. Goodwill is limited to parent only and 20% is to be provided for the impairment of goodwill for the year. Dividend income reported by Stunning Bhd was received from its investee companies, Vogue Bhd and Dazzle Bhd. Required: Prepare the Consolidated Statement of Profit or Loss and Other Comprehensive for the year ended 31 December 202. Show all relevant workings. Stunning Bhd, an established manufacturer in the textile industry since year 2005. The company had successfully invested in few companies in recent years under its business strategic plan. The statement of profit or loss of these companies for the year ended 31 December 2020 are given as below: Statement of Profit or Loss for the year ended 31 December 2020 Vogue Bhd Stunning Bhd RM million RM million Revenue Cost of sales Dividend income Gain on disposal of asset Administrative expenses Selling & Distribution expenses Finance Costs Taxation Net Profit/ (Loss) Retained profits b/f Additional information: 400 (160) 240 16 10 (40) (60) 166 (10) 156 (37) 119 70 300 (120) 180 (50) (10) 120 (7) 113 (27) 86 40 Dazzle Bhd RM million 160 (64) 96 (20) (10) 66 (5) 61 (15) 46 15 1. On 1 January 2018, Stunning Bhd acquired 60% of ordinary shares in Vogue Bhd by paying cash of RM40 million. Ordinary shares of Vogue Bhd amounting to 30 million units at RM30 million. As at acquisition date, retained earnings of Vogue Bhd was reported at RM10 million. A piece of land of Vogue Bhd also had increased by RM5 million from its carrying value. Vogue Bhd has not adjusted its book to account for the increase. 2. A year after, on 1 January 2019, the management of Stunning Bhd is decided to make a new investment. Therefore, Stunning Bhd had embark on a joint venture project with another ventures. They formed a new joint venture company, Dazzle Bhd with 50% shareholding belong to Stunning. Dazzle Bhd's ordinary shares amounted to 20 million units. The cost of investment was settled with a cash consideration amounted to RM15 million. At the same date, Dazzle Bhd's retained profit was RM5 million. 3. In the early year 2020, Stunning Bhd acquired significant influence of 20% in Anglic Bhd when Anglic Bhd's retained profits shown a credit balance of RM2 million. As at 31 December 2020, Anglic Bhd reporting a net income of RM5 million in which Stunning Bhd yet recognized in its financial statement. 4. During the year 2020, the following transactions took place: i. Stunning Bhd sold an equipment to Vogue Bhd on 1 March 2020 at a gain of RM2 million. The equipment useful life is five years. Depreciation is to be provided in full in the year of purchase and none in the year of disposal 5. 6. ii. Sales of inventories from Stunning Bhd to Vogue Bhd (profit margin is 25%) at a selling price of: a. RM10 million on 15 March 2020. Vogue Bhd has yet sold 20% of the inventories. b. RM5 million on 20 September 2020. Vogue Bhd has sold all of the inventories. Stunning Bhd also sold inventories valued RM6 million to Dazzle Bhd on 15 October 2020 with profit margin of 25%. As at the year-end, 40% of these inventories are yet sold. Goodwill is limited to parent only and 20% is to be provided for the impairment of goodwill for the year. Dividend income reported by Stunning Bhd was received from its investee companies, Vogue Bhd and Dazzle Bhd. Required: Prepare the Consolidated Statement of Profit or Loss and Other Comprehensive for the year ended 31 December 202. Show all relevant workings.

Answer rating: 100% (QA)

To prepare the Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2020 we need to consolidate the financial information of Stunning Bhd Vogue Bhd an... View the full answer