SUBJECT: FINANCIAL REPORTING

Tips:

• Working do beside
• for consolidated F/S do like this below

RE Answer ALL FIVE (5) compulsory questions. Question 1 Artic Garden Bhd. (Artic Garden), a public listed company, had acquired Swordfish Bhd. (Swordfish) on 1 November 2020. The following are the draft statements of financial position of Artic Garden and Swordfish as at 31 August 2021: Artic Garden RM'000 Swordfish RM'000 ASSETS Non-current assets Property, plant and equipment Investment Property Investments Investments in equity instruments 744,800 144,300 98,700 23,200 1,011,000 156,800 32,500 10,000 9,800 209,100 Current assets Inventories Trade and other receivables Bank 23,800 35,200 8,000 67,000 19,400 13,300 3,500 36,200 Total assets 1,078,000 245,300 EQUITY AND LIABILITIES Equity Ordinary shares Other components of equity Retained earnings - At 1 September 2020 - For the year ended 31 August 2021 580,200 212,500 174,800 36,300 1,003,800 120,000 42,200 38,200 8,800 209,200 Non-current liabilities Long-term loans Deferred tax liability 24,700 6,500 31,200 16,400 1,700 18,100 Current liabilities Trade and other payables Tax payables 28,800 14,200 43,000 14,800 3,200 18,000 Total equity and liabilities 1,078,000 245,300 Question 1 Continued) The following information is relevant: 1. The details of the acquisition of Swordfish are as follows: Date of acquisition : 1 November 2020 No. of issued and paid-up ordinary shares of Swordfish : 110 million No. of ordinary shares acquired by Artic Garden : 102.3 million Purchase consideration: An immediate cash payment of RM87 million. A share exchange of 1 share in Artic Garden for every 7 shares acquired in Swordfish. An issue of RM250 7.2% loan notes for every 3,000 shares acquired in Swordfish. At the date of acquisition, the unit share prices of the shares in Artic Garden and Swordfish were RM7.57 and RM8.94 respectively. As at 31 August 2021, the issue of the ordinary shares and 7.2% loan notes by Artic Garden to the shareholders of Swordfish have not been recorded in the financial statements of Artic Garden. Swordfish did not issue any shares after the acquisition of its shares by Artic Garden. The other components of equity of Swordfish as at 1 November 2020 was RM37.3 million. 2. At the date of acquisition, the fair values of the net assets of Swordfish were equal to their carrying amounts with the following exceptions: A leasehold property which had a fair value of RM11.8 million above its carrying amount. As at that date, the property had a remaining useful life of 24 years. An internally generated brand name developed by Swordfish which was valued by an independent professional valuer at RM7.2 million with an estimated useful life of 5 years. Swordfish uses straight-line depreciation/amortisation. Swordfish has not incorporated the above fair value changes into its financial statements as at 31 August 2021. 3. Artic Garden values the non-controlling interest in Swordfish at its proportionate share of the fair value of the subsidiary's identifiable net assets at the date of acquisition. Question 1 (Continued) 4. The investment in equity instruments in Artic Garden's statement of financial position was measured at fair value through profit or loss at 31 August 2020. The equity instruments had a fair value of RM18.6 million at 31 August 2021. 5. As at 31 August 2021, Artic Garden has revalued its freehold land to the market price with a revaluation surplus of RM42.5 million. 6. For the year ended 31 August 2021, Swordfish has sold goods to Artic Garden at RM1.3 million per month and at a mark-up of 30%. Artic Garden still has two-thirds of these goods in its inventories as at 31 August 2021. Required: (a) Prepare the consolidated statement of financial position as at 31 August 2021 of Artic Garden Bhd. Group in accordance with appropriate International Financial Reporting Standards. (12 marks) (b) Compute the following amounts that will be included in the consolidated statement of financial position of Artic Garden Bhd. Group as at 31 August 2021: (i) Consolidated goodwill (5 marks) (ii) Consolidated other components of equity (3 marks) (iii) Consolidated retained earnings (4 marks) (iv) Non-controlling interest (1 mark) [Total: 25 marks] 1:05 11.0 Vo 4G KB/S LTE 75 D F G H B RM'000 285,000 (164,315) 2 B E AIKALSU DI. SOPL FTYE 30/4/2021 9 10 Revenue 11 Cost of sales 12 {144,200 + 14,500 +4.320 + (188.500-7200/35 yrs x 3/12]} 13 Gross profit 14 Other income (2,000 + 38) 15 Government grant released (45,400/35 x 312) 16 Distribution costs 17 Administrative expenses [57,600 - 140 - (170,000 x 2.6sen)] 19 Finance costs [2,700 + (4.8% x 28,400 x 4/12)] 20 Profit before tax 21 Income tax expense (-900 +6,250 +2,120) 22 Profit FTY 23 Notes: Deferred income method for Govt Grant is used. 120,685 2,038 324 (32,300) (53.040) 18 (3,154) 34,553 (7,470) 27.083 24 25 26 22 28 29 General R RM000 94,800 Total RM1000 366, 700 30 31 32 456 33 34 94.800 367,156 Aikatsu Bhd. SOCE FIYE 30/4/2021 Ord, SC RE RM'000 RM000 Bal as at 1/5/2020 236,200 35,700 Prior Year Adjustments Credit sale understated 456 (13,820 - 13,220) x 76% Restated bal at 1/5/2020 236,200 36,156 Changes in Equity Bonus issue 47,240 (16,540) [170,000 shr x (236,200/170,000shr) x 1/5] (47.240 - 30,700) Transfer from GR to RE 14,400 Dividends (11,560) [(170,000 x 2.6sen) + (170,000 x 6/5 x 3.5sen)] PFTY 283,440 49,539 35 36 (30,700) 37 38 39 (14,400) 40 (11,560) 41 42 27,0837 27,083 382,679 49,700 43 44 45 46 (b) Aikatsu Bhd. SOFP (extract) as at 204/2021 47 48 RM1000 49 50 NCA PPE (188,500 - [(188,500-7,200)/35 yrs x 3/12) 187,205 51 52 53 NCL Deferred income - Government grant 54 43,779 Suer 55 56 CL Defered income - Government grant 57 1,297 58 59 60 61 62 RM000 45,400 (324) 1 63 64 Working Deferred income a/c 1/2/21 Grant received Less: Grant released (45,400/35 x 3/12) 30/4/21 Balance Less: Grant released (45,400/35) 30/4/22 Balance 65 66 45,076 (1.297) 43,779 67 68 E RE Answer ALL FIVE (5) compulsory questions. Question 1 Artic Garden Bhd. (Artic Garden), a public listed company, had acquired Swordfish Bhd. (Swordfish) on 1 November 2020. The following are the draft statements of financial position of Artic Garden and Swordfish as at 31 August 2021: Artic Garden RM'000 Swordfish RM'000 ASSETS Non-current assets Property, plant and equipment Investment Property Investments Investments in equity instruments 744,800 144,300 98,700 23,200 1,011,000 156,800 32,500 10,000 9,800 209,100 Current assets Inventories Trade and other receivables Bank 23,800 35,200 8,000 67,000 19,400 13,300 3,500 36,200 Total assets 1,078,000 245,300 EQUITY AND LIABILITIES Equity Ordinary shares Other components of equity Retained earnings - At 1 September 2020 - For the year ended 31 August 2021 580,200 212,500 174,800 36,300 1,003,800 120,000 42,200 38,200 8,800 209,200 Non-current liabilities Long-term loans Deferred tax liability 24,700 6,500 31,200 16,400 1,700 18,100 Current liabilities Trade and other payables Tax payables 28,800 14,200 43,000 14,800 3,200 18,000 Total equity and liabilities 1,078,000 245,300 Question 1 Continued) The following information is relevant: 1. The details of the acquisition of Swordfish are as follows: Date of acquisition : 1 November 2020 No. of issued and paid-up ordinary shares of Swordfish : 110 million No. of ordinary shares acquired by Artic Garden : 102.3 million Purchase consideration: An immediate cash payment of RM87 million. A share exchange of 1 share in Artic Garden for every 7 shares acquired in Swordfish. An issue of RM250 7.2% loan notes for every 3,000 shares acquired in Swordfish. At the date of acquisition, the unit share prices of the shares in Artic Garden and Swordfish were RM7.57 and RM8.94 respectively. As at 31 August 2021, the issue of the ordinary shares and 7.2% loan notes by Artic Garden to the shareholders of Swordfish have not been recorded in the financial statements of Artic Garden. Swordfish did not issue any shares after the acquisition of its shares by Artic Garden. The other components of equity of Swordfish as at 1 November 2020 was RM37.3 million. 2. At the date of acquisition, the fair values of the net assets of Swordfish were equal to their carrying amounts with the following exceptions: A leasehold property which had a fair value of RM11.8 million above its carrying amount. As at that date, the property had a remaining useful life of 24 years. An internally generated brand name developed by Swordfish which was valued by an independent professional valuer at RM7.2 million with an estimated useful life of 5 years. Swordfish uses straight-line depreciation/amortisation. Swordfish has not incorporated the above fair value changes into its financial statements as at 31 August 2021. 3. Artic Garden values the non-controlling interest in Swordfish at its proportionate share of the fair value of the subsidiary's identifiable net assets at the date of acquisition. Question 1 (Continued) 4. The investment in equity instruments in Artic Garden's statement of financial position was measured at fair value through profit or loss at 31 August 2020. The equity instruments had a fair value of RM18.6 million at 31 August 2021. 5. As at 31 August 2021, Artic Garden has revalued its freehold land to the market price with a revaluation surplus of RM42.5 million. 6. For the year ended 31 August 2021, Swordfish has sold goods to Artic Garden at RM1.3 million per month and at a mark-up of 30%. Artic Garden still has two-thirds of these goods in its inventories as at 31 August 2021. Required: (a) Prepare the consolidated statement of financial position as at 31 August 2021 of Artic Garden Bhd. Group in accordance with appropriate International Financial Reporting Standards. (12 marks) (b) Compute the following amounts that will be included in the consolidated statement of financial position of Artic Garden Bhd. Group as at 31 August 2021: (i) Consolidated goodwill (5 marks) (ii) Consolidated other components of equity (3 marks) (iii) Consolidated retained earnings (4 marks) (iv) Non-controlling interest (1 mark) [Total: 25 marks] 1:05 11.0 Vo 4G KB/S LTE 75 D F G H B RM'000 285,000 (164,315) 2 B E AIKALSU DI. SOPL FTYE 30/4/2021 9 10 Revenue 11 Cost of sales 12 {144,200 + 14,500 +4.320 + (188.500-7200/35 yrs x 3/12]} 13 Gross profit 14 Other income (2,000 + 38) 15 Government grant released (45,400/35 x 312) 16 Distribution costs 17 Administrative expenses [57,600 - 140 - (170,000 x 2.6sen)] 19 Finance costs [2,700 + (4.8% x 28,400 x 4/12)] 20 Profit before tax 21 Income tax expense (-900 +6,250 +2,120) 22 Profit FTY 23 Notes: Deferred income method for Govt Grant is used. 120,685 2,038 324 (32,300) (53.040) 18 (3,154) 34,553 (7,470) 27.083 24 25 26 22 28 29 General R RM000 94,800 Total RM1000 366, 700 30 31 32 456 33 34 94.800 367,156 Aikatsu Bhd. SOCE FIYE 30/4/2021 Ord, SC RE RM'000 RM000 Bal as at 1/5/2020 236,200 35,700 Prior Year Adjustments Credit sale understated 456 (13,820 - 13,220) x 76% Restated bal at 1/5/2020 236,200 36,156 Changes in Equity Bonus issue 47,240 (16,540) [170,000 shr x (236,200/170,000shr) x 1/5] (47.240 - 30,700) Transfer from GR to RE 14,400 Dividends (11,560) [(170,000 x 2.6sen) + (170,000 x 6/5 x 3.5sen)] PFTY 283,440 49,539 35 36 (30,700) 37 38 39 (14,400) 40 (11,560) 41 42 27,0837 27,083 382,679 49,700 43 44 45 46 (b) Aikatsu Bhd. SOFP (extract) as at 204/2021 47 48 RM1000 49 50 NCA PPE (188,500 - [(188,500-7,200)/35 yrs x 3/12) 187,205 51 52 53 NCL Deferred income - Government grant 54 43,779 Suer 55 56 CL Defered income - Government grant 57 1,297 58 59 60 61 62 RM000 45,400 (324) 1 63 64 Working Deferred income a/c 1/2/21 Grant received Less: Grant released (45,400/35 x 3/12) 30/4/21 Balance Less: Grant released (45,400/35) 30/4/22 Balance 65 66 45,076 (1.297) 43,779 67 68 E