Group Project Consolidation

Group Project FAR610
QUESTION 1
a) Identify the status of Lions Bhd., Cheetah Bhd., and Puma Bhd. in relation to Tiger Bhd. as at 31
December 2016.
Cheetah Bhd. and Puma Bhd. qualified as subsidiaries to Tiger Bhd. Tiger Bhd. as parent had
acquired about 75% of ordinary shares of Cheetah Bhd. and 60% of Puma Bhd. Meanwhile there
is no share acquired by Tiger Bhd. to Lions Bhd. since all shares were disposed at 31 December
2016. Thus, Lions Bhd. status to Tigers Bhd. is unrelated company or known as outsider.
b) Compute goodwill/ bargain purchase on acquisition of subsidiaries as at 31 December 2016.

Computation of Goodwill/ Bargain Purchase
Lions Bhd.
CT
NCI
(-) FVNA
OSC
RP (Pre)
ARR (Land)
SP
Goodwill /
40% (2308)
Cheetah Bhd.
Puma Bhd.
RM 'Million
RM 'Million
1,600.0
923.2
1,240.0
800.0
1,800
300
at FV
200 + 3/12
(122-20)
60
148
1,600
225
336
170
60% (400 x RM 1.40)

40% (425)
(13 + 12)
100
(2,308.0)
215.2
RM 'Million
400.00
25.00
-
(1,925.5)
114.5
(425)
81

c) Calculate gain/ loss from disposal of shares in Lion Bhd.
Gain/ (Loss) on Disposal of Shares in Lions Bhd

RM 'Million
Proceeds
1,600.00
(-)NA on 31 Dec 2016

OSC
1 800
RP b/f
352.00
ARR
SP
60.00
148.00
2 360
(-) Goodwill remaining

Gain/ (Loss) on Disposal
x 60%
(1,416.00)
(215.20)
(31.20)

d) Compute the group retained profit and non-controlling interest (NCI) of Tiger Bhd as at 31 December
2016 using schedule format.
Working Schedule
Working
Group Retained
Profit
NCI
RM 'Million
RM 'Million
800.00
170.00
923.20
(944.00)
400.00
NCI - Cheetah
NCI - Puma
NCI Lions
Disposal of NCI in Lions
6% Pref Shares of Cheetah
RP of Lions Bhd (S)
Bal b/f
(-) Pre RP
Post
RP of Cheetah Bhd. (S)
Bal b/f
(-) Pre RP
Post
(-) URP Inventory
RP of Puma Bhd. (S)

Bal b/f
(-) Pre RP
RP of Tiger Bhd. (H)

Bal b/f
(-)URP Machine
FV Change in Investment Puma
Over Depreciation Machine
(-)URP Land
(-)Loss on disposal shares in Lions
2360 x 40%
352.00
(300)
52.00
x 60%
31.20
x 40%
20.80
287.00
(225.5)
61.50
(4.5)
57.00
x 75%
42.75
x 25%
14.25
25.00
(25)
-
(140-100)
622.00
(30.00)
40.00
3.00
(90.00)
(31.20)
587.75
1,384.25

e) Prepare the Consolidated Statement of Profit or Loss and Other Comprehensive Income of Tiger
Bhd. for the year ended 31 December 2016.
Consolidated Statement of Profit or Loss & Other Comprehensive Income of Tiger Bhd.
for the year ended 31 December 2016
RM 'Million
Revenue
[ 900 + 750 + 9/12(840) ] -120 Intercomp. Transaction
2,160.00
(-) Cost of Sales
GROSS PROFIT
Gain on sales of asset
Dividend Income
(-) Admin Expenses
(-) Distribution Expenses
(-) Finance Cost
(-) Loss on Disposal of
Shares in Lions Bhd
Share of Profits from
Associates (Puma)
Gain on Virtual Sales of
Investment (Puma)
PROFIT BEFORE TAX
Taxation
PROFIT AFTER TAX
PROFIT ATTRIBUTABLE
TO:
Owners of the Company
Non-Controlling Interest
[ 660 + 500 + 9/12(600) ] -120 Intercomp Transaction + 4.5 URP

Inventory
(1,494.50)
665.50
20.00
19.75
(211.00)
(168.00)
(27.75)
[ 120 + 20 ] - 30 URP Machine - 90 URP Land

[ 40 - 60% (20) Div Lions - 75% (35 - 24) Div Cheetah
[ 100 + 60 + 9/12(72) ] - 3 Overdep. Machine
[ 70 + 83 + 9/12(20) ]
[ 14 + 10 + 9/12(5) ]
(31.20)
[ answer in (b) ]
1.5
[ 25% x 12 x 6/12 ]
38.5
[ Notes 2 ]
307.30
(109.75)
197.55
[ 54 + 25 + 9/12(41) ]
127.75
69.80
[ Working 1 ]
197.55
Working 1 (Profit Attributable to NCI)

RM 'Million
Cheetah
Profit After Tax
Gain on Sale of Asset
(-) Pref Dividend
(-) URP Inventory
Lions
Profit After Tax
(122-20) x 9/12
76.50
20.00
(24.00)
(4.50)
68.00
x 100%
24.00
x 25%
17.00
72.00
x 40%
28.80
69.80
4
Notes 1
RM 'Million
Cost of Investment
100.00
Net Assets of Associate

OSC
RP (Pre)
400.00
13 + 6/12(12)
19.00
419.00
x 25% =
(104.75)
Gain / (Loss) on Investment
4.75
Notes 2
Gain/ (Loss) on Virtual Sales of Investment (Puma Bhd)
RM 'Million
Proceeds
[ 25% x 400 Shares x RM1.40 ]
140.00
Cost
100.00
RP b/f - Post Acquisition
[ 12 + 6/12(12) ] - 0
Profit for 6 month in 2016
[ 6/12(12) ]
19.00
6.00
25.00
Carrying Amount
x 25% =
6.25
(106.25)
Gain on Investment (Notes 1)
4.75
Gain/ (Loss)
38.5

f)
Prepare the Consolidated Statement of Changes in Equity (extract) of Tiger Bhd. for the year ended
31 December 2016 showing the group retained profit and non-controlling interest (NCI).
Consolidated Statement of Changes In Equity (Extract) of Tiger Bhd.

For The Year Ended 31 December 2016
GRP
NCI
Working
RM' Million
RM' Million
Bal b/d
500.00
Acquisition during the year (Lions)
923.20
Acquisition during the year (Cheetah)
800.00
Acquisition during the year (Puma)
170.00
6% Preferences Shares (Cheetah)
400.00
+ Profit For The Year Ended
(-) Appropriations
Ordinary Dividend
Preference Dividend
W2 : W3
W4 : W5
127.75
69.80
(14.80)
(25.20)
(10.75)
(24.00)
(944.00)
587.75
1,384.25
Disposal of NCI Lions

Bal c/d
RM' Million
Working 2 (W2)
Ordinary Dividend (GRP)
Tiger - Ord Dividend
40 - 6%(420)
Working 3 (W3)
Ordinary Dividend (NCI)
Lions - Ord Dividend
Cheetah - Ord Dividend
40%(20)
25% [35 - 6%(400)]
Working 4 (W4)
Preference Dividend (GRP)
Tiger - Pref Dividend
6%(420)
25.2
Working 5 (W5)
Preference Dividend (NCI)
Cheetah - Pref Dividend
6%(400)
24
14.8
8
2.75
10.75

g) Prepare the Consolidated Statement of Financial Position of Tiger Bhd. as at 31 December 2016.
Consolidated Statement of Financial Position of Tiger Bhd.
as at 31 December 2016
Notes
RM 'Million
Non Current Assets
3 Property, Plant & Equipment
6,923.00
Other Investment
200.00
4 Intangible Assets
133.00
5 Goodwill
195.50
Current Assets
6 Inventories
476.50
7 Trade Receivables
409.00
8 Bill Receivables
211.00
9 Bank
1,652.00
10,200.00
Financed By:
10 Share Capital
Reserves
- Group Retained Profit

- NCI
11
- Share Premium
Other Reserves
5,620.00
587.75
1,384.25
340.00
213.00
Non Current Liabilities

12 Long Term Loan
1,132.00
Current Liabilities
13 Trade Payables
639.00
14 Bill Payables
205.00
15 Deposits
79.00
10,200.00
3) Property, Plant and Equipment
At cost
Accumulated depreciation
Acquisition
Disposal
Revaluation
Unrealised profit
Balance as at 31 Dec 2016
4)
5)
Land
Plant
Machineries
Total
RM Million
RM Million
RM Million
RM Million
2,050.00
3,270.00
2,938.00
8,258.00
(660.00)
(675.00)
(1,335.00)
390.00
130.00
520.00
(300.00)
(200.00)
(500.00)
100.00
100.00
(30.00)
(120.00)
2,163.00
6,923.00
(90.00)
2,150.00
2,610.00
Intangible Assets
Cheetah Bhd
Puma Bhd
Total
RM Million
RM Million
RM Million
Research & Development
25.00
50.00
75.00
Patent
28.00
30.00
58.00
53.00
80.00
133.00
Goodwill
Cheetah Bhd
Puma Bhd
Total
RM Million
RM Million
RM Million
Goodwill
114.50
81.00
195.50
114.50
81.00
195.50
6)
Inventories
Inventories
Tiger Bhd
Cheetah Bhd
Puma Bhd
Total
RM Million
RM Million
RM Million
RM Million
151.00
200.00
130.00
481.00
(4.50)
(4.50)
151.00
195.50
130.00
476.50
Unrealised profit
7)
Trade Receivables
Trade receivables
8)
Cheetah Bhd
Puma Bhd
Total
RM Million
RM Million
RM Million
RM Million
137.00
272.00
60.00
469.00
Inter-companies transaction
(60.00)
(60.00)
137.00
212.00
60.00
409.00
Bill Receivables
Bill receivables
9)
Tiger Bhd
Tiger Bhd
Cheetah Bhd
Puma Bhd
Total
RM Million
RM Million
RM Million
RM Million
81.00
96.00
40.00
217.00
(6.00)
(6.00)
81.00
96.00
34.00
211.00
Bank
Bank
Tiger Bhd
Cheetah Bhd
Puma Bhd
Total
RM Million
RM Million
RM Million
RM Million
99.00
137.00
12.00
248.00
(196.00)
(196.00)
Proceed from disposal of shares
1,600.00
1,600.00
1,699.00
137.00
(184.00)
1,652.00
Acquisition of additional shares
10)
Share Capital
Tiger Bhd
Total
RM Million
RM Million
8,000.00
8,000.00
4,000.00
4,000.00
420.00
420.00
1,200.00
1,200.00
5,620.00
5,620.00
Tiger Bhd
Total
RM Million
RM Million
Share premium
300.00
300.00
Issuing shares
40.00
40.00
340.00
340.00
Authorize share capital

Issued & paid up capital :
Ordinary shares of RM1 each
6% Cumulative preference share
Issuing new shares
11)
Share Premium

12)
13)
Long-term Loan
Tiger Bhd
Cheetah Bhd
Puma Bhd
Total
RM Million
RM Million
RM Million
RM Million
Long-term loan
664.00
400.00
68.00
1,132.00
664.00
400.00
68.00
1,132.00
Tiger Bhd
Cheetah Bhd
Puma Bhd
Total
RM Million
RM Million
RM Million
RM Million
Trade payables
325.00
304.00
70.00
699.00
(60.00)
(60.00)
265.00
304.00
70.00
639.00
Trade Payables
10
14) Bill Payables
Bill payables
Tiger Bhd
Cheetah Bhd
Puma Bhd
Total
RM Million
RM Million
RM Million
RM Million
112.00
69.00
30.00
211.00
(6.00)
(6.00)
106.00
69.00
30.00
205.00
15) Deposits
Tiger Bhd
Cheetah Bhd
Puma Bhd
Total
RM Million
RM Million
RM Million
RM Million
Deposits
32.00
40.00
7.00
79.00
32.00
40.00
7.00
79.00
11

h) Based on information available, prepare notes to the related-party transaction for the year ended 31
December 2016 in accordance with MFRS 124 Related Party Disclosures.
Related Party Transaction

Accordance to MFRS 124 Related Party Disclosure, it states that a related party transaction is a
transfer of resources, services or obligations between related parties, regardless of whether a price
is charged.
Whenever exist, related party transaction also includes transaction with entities that are controlled,
joint ventures or significantly influenced directly by any key management personnel or their close
family members
In addition to related party transaction and balances mentioned elsewhere in the financial statements,
set out below are significant related party transactions and balance which were carried out amongst
the related parties which involves Cheetah Bhd. and Puma Bhd. as subsidiaries to Tiger Bhd. on 31
December 2016. Meanwhile there is no share were acquired by Tiger Bhd. so no investment was
made. Thus it is considered as unrelated company to Tiger Bhd.
Transaction
Group
Company
RM' Million
RM' Million
Intercompany Sales of Machines
130
Intercompany Sales of Goods
120
Disposal of Land
390
Undiscounted Bill Receivables
[ 8 (20% x 40) ]
Dividend from subsidiary
[ 60%(20) + 75%(11) ]
20.25
12
QUESTION 2
a) Explain the difference between control and joint-control. Provide one example of each in your
explanation.
Control
Control exist when an entity acquires control over another entity, the acquirer is called the holding
or parent entity and the acquiree is called the subsidiary. Together they form a group although both
the entities remain separate physically and legally. An investor determines whether it is a parent by
assessing whether it controls the investee. The investor controls the investee only if it has power over
the investee, exposure, or right, to variable returns from its involvement with the investee and the
ability to use its power over the investee to affect the amount of the investors return. For example,
an acquirer 60% of ordinary share of B. So, A has power to govern B because have more than 50%
voting right.
Joint control
Joint control exists where the parties contractually agree to share control and decisions about the
relevant activities of the joint arrangement have the unanimous consent of all the parties sharing
control. The parties have to access the extent to which the parties should act together to direct the
activities that significantly affect the returns of the joint arrangement. No single party controls the
arrangement on its own but a party to joint control can prevent the other parties from controlling the
arrangement. For example, A,B and C are parties to an arrangement where A has 40% voting power,
with B and C each having 30% voting power. The contractual agreement is at least 80% of voting
right are required to make decision about relevant activities or arrangement. All three have joint
control as all three have to agree on all decision.
13
b) State your opinion on Sheela and Devis view. Discuss your opinion with reference to the relevant
MFRSs.
MFRS 10 is consolidated financial statement, MFRS 11 is joint Arrangement while MFRS 128
is investment in Associates and joint venture. In this case, Rajni BHD, Dehli Bhd and Madrass Bhd
get in a contractual agreement that bounds them into joint control over Bashaa Bhd. Joint control exist
where the parties contractually agree to share control and decisions about the relevant activities of the
joint arrangement have the unanimous consent of all the parties sharing control. Rajni Bhd cannot
apply acquisition method because in a joint arrangement no single party controls the arrangeme nt
on its own. A party with joint control of an arrangement can prevent any of the other parties,
or a group of the parties, from controlling the arrangement. So in this case, since Raini Bhd cannot
control over Bashaa Bhd even it has highest interest in Bashaa which is 40%, Rajni Bhd has to use
equity method under MFRS 128. The investment in an associate that is initially recognise at cost and
the carrying amount is increased or decreased by the investors share of the post-acquisition profits or
lossess of the investee.
c) Provide any three (3) evidences (as mentioned in MFRS 128) to support the existence of significant
influence over an investee company.
MFRS 128 defines significant influence as power to participate in the financial and operating
policy decisions of the investee but not control or joint control of the policies.
An investor is presumed to have significant influence over the investee if the investor holds,
directly or indirectly, 20 percent or more of the voting power of the investee, unless it can be clearly
demonstrated that is not the case. On the other hand, if the investor holds less than 20 percent of the
voting power of the investee, it is presumed that the investor does not have significant influence, unless
such can be clearly demonstrated. Significant influence is evidenced by participation in the financ ia l
and operating policy decisions of the investee but not control of those policies. An investor may
exercise significant influence in several ways usually by representation on the board of directors,
participation in policy making processes, material intercompany transactions, interchange of
managerial personnel or dependence on technical information.
14
d) I.
Compute the goodwill/ bargain purchase on acquisition of Roses shares on 1 January 2016.
RM'000
Cost of investment
RM'000
700.00
Net Assets of Rose at 1 January 2016

Ordinary share capital
Retained profit
Fair value adjustment: ARR
1,200.00
400.00
200.00
1800.00
x 40%
Bargain Purchase
(720.00)
(20.00)
II. Calculate the carrying amount of investment in Rose Sdn. Bhd. in the Flowers Bhds book as at
31 December 2016
RM'000
Retained Profit at 31 December 2016
(-) Pre Retained Earning
Post Retained Earning
Asset Revaluation Reserve at 31 December 2016

(-) Pre ARR
Post ARR
RM'000
900.00
(400.00)
500.00
x 40%
200.00
600.00
(200.00)
400.00
x 40%
160.00
RM'000
Cost of Investment
700.00
(-) Retained Profit
200.00
(-) Asset Revaluation Reserve
160.00
1,060.00
(-) Dividend 31 December 2016

(-) Bargain Purchase
Carrying amount at 31 December 2016
(100 x 40%)
(40.00)
(20.00)
1,000.00
15

Group Project Consolidation

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Group Project FAR610

b) Compute goodwill/ bargain purchase on acquisition of subsidiaries as at 31 December 2016.

60% (400 x RM 1.40)

Group Project FAR610

Gain/ (Loss) on Disposal of Shares in Lions Bhd

(-)NA on 31 Dec 2016

(-) Goodwill remaining

Group Project FAR610

RP of Puma Bhd. (S)

RP of Tiger Bhd. (H)

Group Project FAR610

[ 660 + 500 + 9/12(600) ] -120 Intercomp Transaction + 4.5 URP

[ 120 + 20 ] - 30 URP Machine - 90 URP Land

Working 1 (Profit Attributable to NCI)

Group Project FAR610

Net Assets of Associate

Gain / (Loss) on Investment

[ 25% x 400 Shares x RM1.40 ]

RP b/f - Post Acquisition

Profit for 6 month in 2016

Gain on Investment (Notes 1)

Group Project FAR610

Consolidated Statement of Changes In Equity (Extract) of Tiger Bhd.

Disposal of NCI Lions

Group Project FAR610

3 Property, Plant & Equipment

- Group Retained Profit

Non Current Liabilities

Group Project FAR610

3) Property, Plant and Equipment

Research & Development

Balance as at 31 Dec 2016

Balance as at 31 Dec 2016

Group Project FAR610

Balance as at 31 Dec 2016

Balance as at 31 Dec 2016

Proceed from disposal of shares

Balance as at 31 Dec 2016

Acquisition of additional shares

Group Project FAR610

Authorize share capital

Balance as at 31 Dec 2016

Balance as at 31 Dec 2016

Balance as at 31 Dec 2016

Group Project FAR610

14) Bill Payables

Balance as at 31 Dec 2016

Balance as at 31 Dec 2016

Group Project FAR610

Related Party Transaction

Intercompany Sales of Machines

Intercompany Sales of Goods

Undiscounted Bill Receivables

Dividend from subsidiary

Group Project FAR610

Group Project FAR610

Group Project FAR610

Net Assets of Rose at 1 January 2016

Asset Revaluation Reserve at 31 December 2016

(-) Retained Profit

(-) Asset Revaluation Reserve

(-) Dividend 31 December 2016