ACT3126 ADVANCED FINANCIAL ACCOUNTING I (SEMESTER 1 2010/2011) QUESTION 1 (40 MARKS) (i) Determine the amount of goodwill on acquisition.

Investment in MUFC Less Share capital of MUFC Sdn Bhd (8,000 x 80%) 6,400 Revaluation Net assets (4,000 x 80%) 3,200 Retained profits brought forward (pre-acquisition) (6,000 x 80%) 4,800 14,400 Goodwill on acquisition 1,600 RM000 16,000

( = 1 mark, Total : 5 marks) (ii) Determine the share of non-controlling interest in the realized profit for the financial year end 2010. Profit for the year Add realization of profit on intercompany inventory brought forward Less unrealized profit in closing inventories Total profit for the year x 20% 5,700,000 400,000 (300,000) 5,800,000 1,160,000

( = 1/2 mark, Total : 3 marks) (iii) for (b). Sales Purchases to eliminate inter-company sales and purchases 300,000 300,000 Debit 4,000,000 Credit 4,000,000 Show all the consolidation entries in relation to the additional information

Closing inventories in comprehensive income Closing inventories in financial position - to eliminate unrealized profit in closing inventories 1 for correct positioning of debit and credit

( = 1 mark, Total : 7 marks) (iv)Present the consolidated financial statements of Kelate Bhd for the year ended 31 December 2010. Kelate Bhd Consolidated Statement of Comprehensive Income For the year ended 31.12.10 1

ACT3126 ADVANCED FINANCIAL ACCOUNTING I (SEMESTER 1 2010/2011) RM000 36,000 (19,900) 16,100 (2,400) 4,280 17,980 (440) 17,540 (2,700) 14,840

Revenue Cost of sales Gross profit Operating expenses Gain on sales of properties Profit from operations Finance cost Profit before taxation Taxation Profit for the year

Kelate Bhd Consolidated Statement of Financial Position As at 31.12.10 RM000 Non-current Assets: Property, plant and equipment Goodwill on combination Current Assets: Inventories Trade receivables Other receivables Bank balances TOTAL ASSETS Share capital of RM1 each Retained profits Equity attributable to owners of the Kelate Bhd Non-controlling interest TOTAL EQUITY Non-current Liabilities: Long term loans Redeemable preference shares of RM1 each Current Liabilities: Trade payables Other payables Taxation Bills payables TOTAL LIABILITIES TOTAL EQUITY AND LIABILITIES 1 if there is no mention of Investment in MUFC Sdn Bhd 2 48,280 2,000 50,280 15,700 14,000 2,560 6,960 39,220 89,500 32,000 22,920 55,900 5,460 61,360 15,000 2,000 21,000 6,200 1,270 2,650 2,000 12,120 33,120 94,480

ACT3126 ADVANCED FINANCIAL ACCOUNTING I (SEMESTER 1 2010/2011) ( = 1 mark, Total : 25 marks) QUESTION 2 (20 MARKS) (a) (i) Prepare the consolidated statement of financial position of Ilyas Bhd for the year ended 31 December 2010. Ilyas Bhd Consolidated Statement of Financial Position as at 31.12.10 RM000 RM000 Ordinary shares Consolidated profit and loss (150 + (110 30) x 25%) Liabilities Non-current assets Investment in associate Current assets Loan to associate 50 10 500 170 670 25 695 515 120 635 60 695

Investment in associate Net assets in Associate (200,000 + 30,000) x 25% Goodwill

57,500 62,500 120,000 ( = 1/2 mark, Total : 8 marks)

(ii)

Define the term significant influence as prescribed by FRS 128.

Significant influence is the power to participate in the financial and operating policy decisions of the investee but not control of those policy. ( = 1 mark, Total : 2 marks)

ACT3126 ADVANCED FINANCIAL ACCOUNTING I (SEMESTER 1 2010/2011)

(b) (i) Present the consolidated statement of financial position of Elsa Bhd for the year ended 31 December 2010 using proportionate consolidation. Elsa Bhd Consolidated Statement of Financial Position as at 31.12.10 Ordinary shares of RM1 each Group profit (150 + (110 30) x 25%) Current liabilities (45 + (30 x 25%)) Non-current assets (570+ (330 x 25%)) Goodwill (100 (200 + 30) x 25%) Current assets (25 + (10 x 25%)) RM000 500 170 670 52.5 722.5 652.5 42.5 27.5 722.5 ( = 1/2 mark, Total : 8 marks) (ii) Define the term joint control as prescribed by FRS 131. Joint control is the contractually agreed sharing of control over an economic activity, and exists only when the strategic financial and operating decisions relating to the activity require the unanimous consent of the parties sharing control (the venturers). ( = 1 mark, Total : 2 marks)

ACT3126 ADVANCED FINANCIAL ACCOUNTING I (SEMESTER 1 2010/2011)

Question 4 (a) S$000 Sales Cost of goods sold: Opening inventories Purchases Closing inventories Gross profit Expenses: Depreciation Interest expense Administrative expense Other expenses Profit before taxation Taxation Profit after tax Retained profit b/f Retained profit c/f 3,200 13,000 16,200 (4,800) (11,400) 8,600 680 370 200 660 (1,910) 6,690 (1,338) 5,352 9,600 14,952 2.66 2.66 2.66 2.66 2.66 Note 1 1,809 984 532 1,756 (5,081) 17,795 (3,559) 14,236 S$000 20,000 Rate 2.66 2.66 2.66 2.66 RM000 8,512 34,580 43,092 (12,768) (30,324) 22,876 RM000 53,200

S$000 Non-Current Assets: Land Property, Plant and Equipment (at cost) Less: Accumulated depreciation Current assets: Inventories Monetary current assets 8,680 1,140 4,800 15,680

S$000 6,000 7,540 13,540 20,480 34,020 8,000 4,800 14,952 27,752 5,000

Ordinary share capital of S$1 each Revaluation reserve Retained profits Long term liabilities: Loan Current liabilities: Short term borrowings Bills payable 5

1,000 268

1,268

ACT3126 ADVANCED FINANCIAL ACCOUNTING I (SEMESTER 1 2010/2011) 34,020