TEST 2

FAR 450
2 October 2006
===============================================================
Following are the income statements of H Bhd, S Bhd, A Bhd and J Bhd for the year
ended 31 December 2005.
H Bhd S Bhd A Bhd J Bhd
RM000 RM000 RM000 RM000
Turnover 100,000 75,000 50,000 25,000
Cost of sales (65,000) (50,000) (30,000 (12,500
) )
Gross profit 35,000 25,000 20,000 12,500
Income from investment:
In S Bhd 177.6
In A Bhd 66.6
Gain on disposal of motor vehicle 20
Expenses (20,000) (10,000) (8,000) (6,000)
Profit before tax 15,244.2 15,020 12,000 6,500
Taxation (3,958) (3,905) (3,120) (1,690)
Profit after tax 11,286.2 11,115 8,880 4,810
Preference dividend paid (59.2) (29.6)
Ordinary dividend paid (370) (296) (222) (148)
Transfer to General reserve (500) (500) (300) (300)
Retained profit for the year 10,357 10,289. 8,358 4,362
4
Retained profit brought forward 5,000 5,500 4,700 2,000
Retained profit carried forward 15,357 15,789. 13,058 6,362
4

Additional information:

1. Details about shares:

H Bhd S Bhd A Bhd J Bhd
RM000 RM00 RM00 RM00
0 0 0
Ordinary shares of RM1 each 5,000 4,000 3,000 2,000
8% Preference shares of RM1 1,000 500
each

2. H Bhd acquired 60% interest of S Bhd on 1 January 2000 for RM3,500,000 when
its profit and loss balance stood at RM1,000,000. On the same day H Bhd also
acquired 100,000 % of S Bhd at par.

3. On 1 January 2003, H Bhd with two other companies set up a joint venture
company named J Bhd. H Bhd purchased a 35% interest in this company at a cost
of RM1,000,000.
4. On 1 March 2005, H Bhd acquired a 30% interest in A Bhd for RM2,000,000. H
Bhd has appointed two board members to sit in A Bhd board meeting.

5. On 1 July 2005, H Bhd acquired another 15% interest in S Bhd for RM1,300,000.

6. During the current year, S Bhd sold a motor vehicle to H Bhd at RM20,000 more
than its book value. The remaining useful life of the motor vehicle on 1 January
2005 is another 2 years.

7. On 25 December 2005, H Bhd sold goods valued at RM200,000 to S Bhd. H Bhd

sells goods taking a profit of 20% on selling price. S had sold 40% of the goods
purchase from H Bhd.

8. The board of directors of the four companies had declared a 10% dividend (net of
26% tax). H Bhd had recognised part of its ordinary dividend from S Bhd and all
ordinary dividend from A Bhd. Preference dividend from B Bhd and ordinary
dividend from J Bhd had not been recognised by H Bhd yet.

Required:

Prepare a consolidated income statement and statement of changes in equity for H

Bhd and its member companies for the year ended 31 December 2005. (Show all
workings).