QUESTION 1

The following Statements of Profit or Loss and Other Comprehensive Income relate to Pomenta
Berhad (Pomenta) and its investee companies, Somewa Berhad (Somewa) and Fanta Berhad
(Fanta).
Statement of Profit or Loss and Other Comprehensive Income for the year ended 31
March 2015
Pomenta Somewa Fanta
RM million RM million RM million

Revenue 976.0 420.0 63.0

(–) Cost of sales (687.0) (228.0) (26.2)

Gross profit 289.0 192.0 36.8

Operating expenses (68.0) (54.0) (13.4)
Finance cost (12.0) (18.0) (6.2)
Other income 6.1 - -
Dividend received 8.1 - -

Profit before taxation 223.2 120.0 17.2

Taxation (45.0) (30.0) (3.2)

Profit for the year 178.2 90.0 14.0

Other comprehensive income

Gains on revaluations of 15.0 12.0 2.0

property

Total comprehensive income 193.2 102.2 16.0

Reserves balance total at 1 April

2014 2,350.0 625.0 145.0
Share capital at 1 April 2014 1,000.0 775.0 10.0

1. Pomenta bought a 60% holding in the share of Somewa on 1 April 2014. The purchase
price of the investment was agreed at RM900 million, of which RM600 million was
 paid in cash. The balance was satisfied by the immediate issue of a 5% 2024 bond to the
seller at par value. Somewa’s net assets had a fair value of RM1,400 million on 1 April
2014, represented by share capital RM775 million and retained earnings RM625
million. It was decided to apply the proportion of net assets method to calculate goodwill
on acquisition. No impairment loss arose during the year.
2. The interest on the above loan notes is payable annually in arrears. The first year’s
interest payment has not yet been made, nor has it been provided for.
3. Pomenta sold its entire 60% holding in Somewa on 31 March 2015 for RM1,150 million
in cash. No entry has yet been made to reflect this transaction.
4. Pomenta has owned 90% of the shares in Fanta since incorporation. No goodwill arose
on this acquisition. There were no reserves in existence at the acquisition date.
5. During the year, Pomenta sold goods to Fanta for RM15 million. These goods were sold
by Pomenta at a mark-up of 50% on cost price. Three fifths of the goods remained in
the inventory of Fanta at 31 March 2015. An amount of RM4.3 million remained
outstanding to Pomenta in respect of these goods at 31 March 2015.
6. On 1 March 2015, Fanta declared an interim dividend of RM9 million. Pomenta has
recorded its share of this dividend as income. No other dividends were declared by group
companies.
7. Ignore taxation for all transactions.
8. Assume all expenses and gains accrue evenly throughout the year unless otherwise
instructed. No new share capital was issued by any group company during the year.
9. All calculations may be taken to the nearest RM0.1 million.
REQUIRED:
(a) Calculate the consolidated gain or loss on the disposal of the shares in Somewa on 31
March 2015, in accordance with IFRS. Show the journal entries required to record the
disposal in the group financial statements.
(9 marks)
(b) Prepare the consolidated Statement of Profit or Loss and Other Comprehensive Income
for the Pomenta Group for year ended 31 March 2015 in accordance with IFRS.
(13 marks)
(c) Prepare the consolidated Statement of Changes in Equity for the Pomenta Group for
year ended 31 March 2015, showing share capital and reserves. The non-controlling
interest column is not required.
(6 marks)
QUESTION 2
Karcher, a public limited company, operates in the technology sector and has investments in
other entities operating in the sector. The draft statements of financial position at 31 March
2015 are as follows:
Statement of Financial Position
As at 31 March 2015
Karcher Hammel Moron
RM million RM million RM million

Assets:
Land 50 14 8
Property, plant and equipment 216 41 38
Investment in subsidiary

Moron 52

318 55 46

Current assets 44 25 64

Total assets 362 80 110

Equity and liabilities:

Share capital of RM1 each 43 13 26
Retained earnings 41 24 15
Other components of equity 12 5 4

Total equity 96 42 45

Non-current liabilities 67 12 28

Current liabilities:
Trade and other payables 199 26 37

Total liabilities 266 38 65

 Total equity and liabilities 362 80 110

1. On 1 October 2014, Karcher acquired 70% of the equity interests of Hammel, a public
limited company. The purchase consideration is RM42 million in cash. The market price
of Karcher’s shares on 1 October 2014 was RM2 per share and that of Hammel was
RM4·20 per share. Karcher wishes to measure the non-controlling interest at fair value
at the date of acquisition. At acquisition, the fair value of the non-controlling interest
(NCI) in Hammel was based upon quoted market prices. On 1 October 2014, the fair
value of the identifiable net assets acquired was RM48 million and retained earnings of
Hammel were RM18 million and other components of equity were RM3 million. The
excess in fair value is due to non-depreciable land. No entries had been made in the
financial statements of Karcher for the acquisition of Hammel.

2. On 1 April 2014, Karcher acquired 80% of the equity interests of Moron, a privately
owned entity, for a consideration of RM57 million in cash. At the date of acquisition,
the identifiable net assets of Moron had a fair value of RM55 million, retained earnings
were RM12 million and other components of equity were RM4 million. The excess in
fair value is due to non-depreciable land. Moron had made a net profit attributable to
ordinary shareholders of RM3·6 million for the year to 31 March 2014.

Karcher wishes to measure the non-controlling interest at fair value at the date of
acquisition. The fair value of Moron is RM68.4 million.

3. Karcher had purchased an 80% interest in Niche for RM40 million on 1 April 2014
when the fair value of the identifiable net assets was RM44 million. The partial goodwill
method had been used to calculate goodwill and an impairment of RM2 million had
arisen in the year ended 31 March 2015. There were no other impairment charges or
items requiring reclassification. The holding in Niche was sold for RM50 million on 31
March 2015 and the gain on sale in Karcher’s financial statements is currently recorded
in other components of equity. The carrying value of Niche’s identifiable net assets other
than goodwill was RM60 million at the date of sale. Karcher had carried the investment
in Niche at cost.

Required:

Prepare the consolidated statement of financial position for the Karcher Group as at 31 March
2015.
(30 marks)