BKAF3073 Chapter 3

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CHANGES IN

OWNERSHIP INTEREST

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Learning Objectives:

At the end o this cha!ter" st#dents $i%% be ab%eto:

Explain acquisition of subsidiary during the

accounting period.

Explain business combination achieved instages (piecemeal acquisition)

To account acquisiton of additional share

To account on disposal of a subsidiary anddisposal of shares in subsidiary.

To prepare the consolidated financial

statements.

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Acisition '#ring

an Acco#nting Period

the accounts of subsidiary/ies will be

consolidated for the whole accounting period.

pre acquisition reserve needs to bedifferentiated from post acquisition reserve

2 approaches to consolidate

!n pra"rata basis (part of the year)

#n full (whole"year)

Example 2.$% (T&Tpg. ') pra"rata basis

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Piece(ea% Acisitions

*arent acquire its shareholding in a subsidiary in

stages

2 situations

$. +tep",cquisition -usiness combination achieved in stages

(successive purchase of shares in an investee

that eventually result in control)

2. +uccessive purchases of shares in an existing

subsidiary

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.

-usiness combination achieved in stages (0+1 para %2) the need to consolidate the subsidiary only from the date in

which control is achieved

The effective date of control is at the time when the interest

of parent in subsidiary is more than 34.The different between the fair value of the previously held

interest and its carrying amount is recognised in +5#.

6oodwill is calculated only once7 i.e. on the date of control.

the acquirer shall remeasure its previously held equityinterest in the acquiree at its acquisition"date fair value

recognise the resulting gain or loss7 if any7 in profit or loss.

Ste!)Acisitions

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Ste!)Acisitions

#f the acquirer recognised changes in the value of its

equity interest in the acquiree in other comprehensive

income (for example7 because the investment was

classified as available for sale(,+)) in prior reporting

periods7

the amount that was recognised in other

comprehensive income shall be recognised on the

same basis as would be required if the acquirer

had disposed directly of the previously held equity

interest.

#nvestment in associate vs investment in ,+.

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I%%#stration*+,

,- -hd acquired 89 -hd through stages acquisition as

below

!n $ :une 23$37 the previously held $4 interest and theremaining %34 non"controlling interest were measured at

fair value of 0%7333 and 0$237333 respectively.

Date of

Acquisition

Number

of shares

acquired

Interest

acquired

Accumulated

interest

acquired

Retained

profits

Cost of

investment

1 Jan 2009 15,000 15% 15% 60,000 40,000

1 June 2010 75,000 45% 60% 130,000 135,000

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I%%#stration *+,

The balance sheets for the two companies as at 13 :une 23$3 wereas follows

AB Bhd XY Bhd

Share Capital of RM1.00 300 150

Retained profit 1!0 140

4!0 290

"n#et$ent in & 'hd 175 (

Sundr) net aet 305 290

4!0 290

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I%%#stration *+,

Reired:

$. 5alculate the gain or loss that should berecognised in the +5#.

2. 5alculate the goodwill on consolidation1. *repare the consolidation ;ournals for the year

ended 13 :une 23$3 if ,- -hd chooses to usefair value to measure the non"controllinginterest.

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So%#tion:

(a)

air value of previously held interest %7333

(") 5arrying amount %373336ain on

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So%#tion:

(b)>5# ?

>#,>5# ? @

0 0

5ost of investment (%4) $17333 $17333

>5# (%34) $$27333 $237333

@ of previously held interest ($4) %7333 %7333

2'27333 1337333>#, ($3 A$13) 2B37333 2B37333

6oodwill on consolidation $27333 237333

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So%#tion -cont./:

c/ Conso%idation jo#rna% entries:

C0 #nvestment in 89 -hd

506ain on reacquisition

(To record the gain on previously held interest)

C0 +hare 5apital '3

C0 0etained profits b/f B

C0 6oodwill on consolidation $250#nvestment in 89 -hd $B3

(To eliminate cost of investment in 89 -hd)

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So%#tion -cont./:

c/ Conso%idation jo#rna% entries -cont./:

C0 +hare 5apital (%34 x $3) D3

C0 0etained profits (%34 x $13) 2

C0 6oodwill on consolidation B

5r. >on"controlling #nterest $23

(To record non"controlling interest in +*)

Cr. >5# (+5#) ($3 x %34) %

5r. >5# (+*) %

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Ste!)Acisitions -cont./

Rec%assiication o co(!onents o Other Co(!rehensive Inco(e

the amount that was recognised in other comprehensive income shall be

recognised on the same basis as would be required if the acquirer had

disposed directly of the previously held equity interest.

!nly exchange translation reserve shall be recycled as reclassification

ad;ustments to profit or loss

Equity investment as ,vailable"for"sale (,+) any change in fair value

had previously been recognised in other comprehensive income

retained in fair value reserve7 that ,+ investment shall be remeasured

to fair value at the acquisition date. ,ny change in fair value plus the

gain/loss previously recognised shall be included in the calculation of the

gain/loss on remeasurement. or revaluation reserve of **E direct transfer to retained profits within the

statement of changes in equity.

0evaluation of financial asset (0+ ') retained in fair value reserve "

direct transfer to retained profits within the statement of changes in equity.

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I%%#stration *+0,s at the end of the prior financial year ended 1$ Cecember 233B7

+ero;a -hd has the following non"controlling equity investments and the

related carrying amount

!n $ :anuary 233'7 +ero;a -hd increases its staFes in the two

companies as follows

+ero;a -hd assumes control of the two companies on $ :anuary 233'.

interest 5ost(0)

*rofit share/value

change (0)

0evaluationreserve

(0)

5arryingamount (0)

Gi;au -hd 134 3 %3 23 $$3

erah-hd

$4 23 1 "

#ncrease in state 5ash paid (0)

Gi;au -hd %4 22

erah -hd %34 $D3

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I%%#stration *+0

-ased on the marFet approach7 the consultant provides the

fair values of the two companies as follows

>et assets >5#

Gi;au -hd 01D3 0$2

erah -hd 023 0$B3

0equired 5ompute

a) the goodwill on consolidation

b) the gain or loss on remeasurement at acquisition date

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So%#tion *+0:

a) air value

6oodwill on consolidation

Hija# 1hd 2erah 1hd

@ of companies as whole(based on @ of >5#)

$2 / 24H 33

$B3 / %4H %33

@ of previously held equity interest 134 x 33H $3

$4 x %33H D3

Hija# 1hd 2erah 1hd

@ of consideration cash 22 $D3

@ of >5# $2 $B3

@ of previously held equityinterest

$3 D3

33 %33

@ of net assets 1D3 23

6oodwill on consolidation $%3 $3

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So%#tion *+0 -cont./:

b) 6ain or loss on remeasurement

:ournal entries Hija# 1hd

Cr. #nvestment in Gi;au $3

5r. 5arrying amount of investment $$3

6ain on remeasurement %3

Cr. 0evaluation reserved 23

5r. 0etained profit 23

Hija# 1hd 2erah 1hd

Equity interest 134 $4

@ of previously held equityinterest

$3 D3

(") 5arrying amount immediately

before acquisition date

($$3) ()

(A) @ reserved recycled 1

6ain on remeasurement %3 %3

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So%#tion *+0 -cont./:

b)

:ournal entries 2erah 1hdCr. #nvestment in erah D3

!ther comprehensive income 1

5r. 5arrying amount of investment

6ain on remeasurement %3

!ther illustration Example 1.$1 (pg $%D)

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S#ccessive !#rchases o shares

-SPOS/ in an e3isting

increase parent interst and decreased the non"

controlling interest.

>o gain or loss is recognised.

5hanges in a parentIs ownership interest in asubsidiary that do not result in a loss of control are

accounted for as eit4 transactions. (0+$27

!ara *5)

6oodwill no consequential ad;ustment to carryingamount

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I%%#stration *+*

,- -hd acquired a 34 interest in 89 -hd in $ :anuary 233B for acash consideration of 02$73337333. The net assets of 89 -hd at

that date were represented by share capital of 0$373337333

($373337333 units ordinary shares) and retained profits of

0$373337333. The fair value of the remaining 134 non"

controlling interest was amounted to 0'73337333. !n $ :anuary23$37 ,- -hd purchased another $34 interest in 89 -hd from

other shareholders of 89 -hd.

The cost of investment for the acquisitions was as follows

R2

73337333 shares in 89 -hd 2$73337333$73337333 shares in 89 -hd 73337333

The financial statements of the two companies for the year ended

1$ Cecember 23$3 were as follows

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I%%#stration *+*

+tatement of 5omprehensive #ncome for the year ended 1$Cecember 23$3

AB Bhd

RM

XY Bhd

RM

*rofit +efore taation !,000 6,000

-aation 2,400/ 1,!00/

*rofit for the period 5,600 4,200

Retained profit +rouht forard 25,200 31,000

Retained profit +rouht forard 30,!00 35,200

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I%%#stration *+*

+tatement of inancial *osition as at 1$ Cecember 23$3AB Bhd

RM

XY Bhd

RM

Share Capital of RM1.00 40,000 10,000

Retained profit 30,!00 35,200

70,!00 45,200

"n#et$ent in & 'hd 2!,000 (

Sundr) net aet 42,!00 45,200

70,!00 45,200

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I%%#stration *+*

Reired:$. 5alculate the goodwill on consolidation

2. *repare the consolidation ;ournals for the year ended

1$ Cecember 23$3

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+olution

(a)

NCI 6 NIA NCI 6 78

0I333 0I333

5ost of investment (34) $/$/233B

2$7333 2$7333

>5# 9"555 '7333

27333 137333

@ >#, ($3 A $3) 237333 237333

6oodwill on consolidation 7333 $37333

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+olution

(a)

*ost"acquisition 0E ($/$/23$3) H 1$7333 $37333 H 2$7333

>5# 4 on post"acq 0E H 134 x 2$7333 H D7133

>5# ? >#, >5# ? @

$/$/23$3 0I333 0I333

5arrying amount of >5# $27133 $7133

Transfer to parent ($3/13) %7$33 7$33

234 interest carried forward B7233 $37233

5ost of investment 7333 7333

5hange to >5# %7$33 7$33

>egative movement in equity 27'33 $7'33

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+olution

-b/ Conso%idation jo#rna% entries *,,005,5

C0. +hare capital 7333

C0. 0etained profits b/f 7333

C0. 6oodwill on consol. 7333

50. #nvestment in 89 -hd 2$7333


C0. >5# (+5#) (234 x %7233) B%3

50. >5# (+*) B%3

(To record non"controlling interest in current year profit )

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So%#tion:(b) >5# ? @

C0. +hare capital 17333

C0. 0etained profits '7133

C0. 6oodwill on consol. 17333

50. >5# (+*) $7133

(To record minority interest in balance sheets)

C0. 0etained profits (b/f) $7'33

C0. >5# (+*) 7$33

50. #nvestment in 89 -hd 7333

(To record negative movement in parent equity)

Other i%%#stration: E3a(!%e *+,; -!g ,;9/

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So%#tion:

(b) >5# ? @>#,C0. +hare capital 17333

C0. 0etained profits '7133 (134 x 1$7333)

50. >5# (+*) $27133

(To record minority interest in balance sheets)

C0. 0etained profits (b/f) 27'33

C0. >5# (+*) %7$33

50. #nvestment in 89 -hd 7333

(To record negative movement in parent equity)

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'is!osa% o shares in s#bsidiar4

Cisposal of shares in subsidiary can becategoriJed as follows$) Total ($334) disposal of shares

2) *artial disposal of sharesa) a subsidiary

b) an associate

c) a simple investment

Cifferent gain/loss on disposal from

parentIs view and groupIs view

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Ca%c#%ation o gain or %oss on dis!osa% o shares ins#bsidiar4:

Co(!an4

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Gain or %oss on dis!osa% o shares in s#bsidiar4:

Gro#!

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0+ Net Assets 2ethod

+ales proceeds&ess >et ,ssets at date of disposal

+hare 5apital*re"acquisition reserves*ost"acquisition reserves

"brought forward"current year profit after tax to date ofdisposal

&ess 6oodwill remaining

R2===

-==/-==/

-==/-==/

-==/

6ain/loss on disposal (group) ==

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Tota% dis!osa% o shares The equities shares in subsidiary will be nil.

,d;ustment of the gain or loss on disposal needs to bedone in the current yearIs consolidated profit and lossaccount.

5onsolidated +5# shall include the profit othercomprehensive income made retained by the subsidiaryduring the period prior to disposal.

The retained profits other reserves (gain/loss previouslyrecognised in other comprehensive income) broughtforward shall include the post"acquisition profits otherpost"acquisition reserves of the subsidiary that have beenrecognised as at the end of the previous financial year.

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I%%#stration *+>

,- -hd acquired a $334 interest in 89 -hd on $/$/2333 for

a cash consideration of 0$%73337333. The net assets of89 -hd at that date were represented by share capital of0$373337333 ($373337333 units ordinary shares) andretained profits of 0273337333.

!n 13/D/23327 ,- -hd sold its entire shareholdings in 89-hd for a cash consideration of 0$'73337333.

,ssume income tax rate was 134.

The financial statements for both companies are as follows:

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I%%#stration *+>

+5# for the year ended 1$ Cecember 2332

AB Bhd

RM

XY Bhd

RM

-urno#er 10,000 6,!00

e pene 12,000/ 4,000/

ain on dipoal of hare 5,000 (

*rofit +efore taation 3,000 2,!00

e -aation 900/ !40/



Retained profit arried forard !,000 5,600

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I%%#stration *+>

+* as at 1$ Cecember 2332

AB Bhd

RM

XY Bhd

RM

Share apital of RM1 eah 20,000 10,000

Retained profit !,000 5,600

2!,000 15,600

:ied aet 14,000 (

Sundr) net aet 14,000 15,600

2!,000 15,600

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I%%#stration *+>

0equired

a) 5alculate the gain or loss arising from the disposal of

shares in 89 -hd.

b) 0ecord the consolidation ;ournal entries for the year

ended 1$ Cecember 2332.

c) *repare the consolidated financial statements (5+) for

the year ended 1$ Cecember 2332.

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So%#tion

(a)Cate of acquisition H $ :anuary 2333

Cate of disposal H 13 :une 2332

Cate of 5+ H 1$ Cecember 2332

4 Cisposed of subsidiaryIs shares H $334

5!# disposed H $%73337333

$ :anuary 2333 13 :une 2332 H $334 K >5# H 34

13 :une 2332 1$ Cecember 2332 H 34

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So%#tion

(a)Ca%c#%ation o good$i%%:

R2et #dentifiable ,ssets

+hare 5apital $373330etained profits 27333

6oodwill on consolidation 27333

S % ti

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So%#tion

Gain or %oss on dis!osa% o shares?

+ales proceeds&ess 5ost of investment disposed

0I333$'7333$%7333

6ain to !arent(") *ost"acquisition reserves " brought forward (17D%3 27333)

" current year profit after tax to date of disposal ($7'D3 x D/$2)

7333

-,"9>5/

-@5/

6ain to gro#! 271B3

:/e"$

:/e"2

So%#tion

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So%#tion

-b/ Conso%idation Bo#rna% entries or the 4ear ended *, 'ece(ber 0550

-,/C0 6ain on disposal of shares $7D%3

50 0etained profits b/f $7D%3

(To ad;ust disposal of shares in subsidiary for post acquisition brought

forward)

-0/ C0 Expenses(%7333 x D/$2) 27333

C0 6ain on disposal of shares 'B3

C0 Taxation expenses (B%3 x D/$2) %23

50 Turnover (D7B33xD/$2) 17%33

(To consolidate the result of 89 -hd for the D month period and ad;ust

disposal of shares in subsidiary for post acquisition current year profit)

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So%#tion(c)

A1 1hd and S#bsidiar4Conso%idated SCI or the 4ear ended *, 'ece(ber 0550

AB BhdRM

XY BhdRM

DRRM

CRRM

!R"#$RM

-urno#er 10,000 0 3,400% 13,400

e pene 12,000/ 0 2,000% 14,000/ain on dipoal ofhare

5,000 ( 9!0%

1,640&%'()

*rofit +efore taation 3,000 0 1,7!0

e -aation 900/ 0 420/% 1,320/

*rofit for the period 2,100 0 460Retained profit +rouhtforard 5,900 0 1,640& 7,540Retained profit arriedforard !,000 0 !,000

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So%#tion

5onsolidated +* as at 1$ Cecember 2332

AB Bhd

RM

XY Bhd

RM

!R"#$

RM

Share apital of RM1

eah

20,000 0 20,000

Retained profit !,000 0 !,000

2!,000 0 2!,000

:ied aet 14,000 0 14,000

Sundr) net aet 14,000 0 14,000

2!,000 0 2!,000

'is!osa% o shares $ith retention o

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'is!osa% o shares $ith retention o

S#bsidiar4 stat#s

This type of disposal will decrease parentIs equities insubsidiary and increase non"controlling interest.

5hanges in a parentIs ownership interest in a subsidiary

that do not result in a loss of control are accounted for as

eit4 transactions. (0+$27!ara *5)

There will be no gain or loss recognised in +5#.

Gowever7 the ad;ustment on disposal needs to be done in

the current yearIs consolidated +5#.

5arrying amount of >5# shall be ad;usted to reflect thechange in the parentIs interest

,ny difference between the amount by which >5# is so ad;usted

and @ of consideration paid/received7 if any7 shall be recognised

directly to equity attributed to owners of the parent.

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I%%#stration *+;

,- -hd acquired a B34 interest in 89 -hd on $ :anuary2333 for a cash consideration of 0$%73337333. The net

assets of 89 -hd at that date were represented by share

capital of 0$373337333 ($373337333 units ordinary shares)

and retained profits of 0273337333.

!n 13 :une 23327 ,- -hd sold 273337333 shares in in 89

-hd for a cash consideration of 0B7337333.


The financial statements for both companies are as follows

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I%%#stration *+;

+5# for the year ended 1$ Cecember 2332AB Bhd

RM

XY Bhd

RM

-urno#er 15,000 6,!00

e pene 12,000 4,0003,000 2,!00

!ain on disposal *'

*rofit +efore taation !,000 2,!00

e -aation 2,400 !40*rofit for the period 5,600 1,960


Retained profit arried forard 11,500 5,600

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I%%#stration *+;

+* as at 1$ Cecember 2332

AB Bhd

RM

XY Bhd

RM


Retained profit 11,500 5,600

31,500 15,600

"n#et$ent in & 'hd, at ot 10,500 (

Sundr) net aet 21,000 15,600

31,500 15,600

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I%%#stration *+;

0equired

a) 5alculate the movement in equity arising

from the disposal of shares in 89 -hd.

b) 0ecord the consolidation ;ournal entries

for the year ended 1$ Cecember 2332.

c) *repare the consolidated financial

statements for the year ended 1$

Cecember 2332.

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So%#tion

(a)Cate of acquisition H $ :anuary 2333



4 Cisposed of subsidiaryIs shares H 273337333/$373337333

H 234

5!# disposed H ($%73337333 / B) x 2 H 17337333

$ :anuary 2333 13 :une 2332 H B34 K >5# H 234

13/D" 1$/$2/2332 H D34 (+ubsidiary company)K >5# H %34

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So%#tion

,,0555 ) Ca%c#%ation o good$i%% or

5 interest:

RMCot of in#et$ent 14,000;on(ontrollin interet

3,500:< of the auiree a a hole 17,500

e ;et "dentifia+le et 12,000

oodill on onolidation 5,500

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So%#tion(+,+%% RM:air #alue of onideration reei#ed !,500(/ ;et aet

Share apital 10,000 *re(auiition reer#e 2,000

*ot auiition reer#e 3,640 = 2,000/ 1,640 Current )ear profit after ta 1,960 8 2/ 9!0 14,620 *erentae of interet dipoed 20% 2,924/

(/ oodill 20% 5,500/ 1,100/*oiti#e $o#e$ent in parent euit) 4,476

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So%#tion

(+,+%% 5ost ethod

R2

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So%#tion-b/ Conso%idation Bo#rna% entries

C0 +hare capital (B34 x $37333) B7333

C0 0etained profits b/f (B34 x 27333) $7D33

C0 6oodwill on consolidation(733 x B34) %7%33

50 #nvestment in 89 -hd $%7333


C0 +hare 5apital (234 x $37333) 27333

C0 0etained profits b/f (234 x 17D%3) 2B

C0 6oodwill on consolidation (733 x 234) $7$3350 >on"controlling interest (+*) 17B2B

(To record non"controlling interest in +*)

S % ti

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So%#tion

C0 >5# (+5#) BB50 >5# (+*) BB(To credit non"controlling interest of current yearIs profit)

L($7'D3x05x D/$2)A($7'D3x>5 x D/$2)M

Cr. 6ain on disposal 7333 #nvestment in 89 1733

5r. >5# (+*) B733

(To reverse gain on disposal in parentIs a/c and to record >5#)

Cr. >5# (+*) %7%D

5r. 0etained *rofit b/f %7%D

(To record dilution from change in staFe from 234 to %34)

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A1 1hd and S#bsidiar4

5onsolidated +tatement of 5omprehensive #ncome

for the year ended 1$ Cecember 2332

' 'hdRM>000

& 'hdRM>000

?RRM>000

CRRM>000

R@A*RM>000

-urno#er 15,000 6,!00 21,!00

e pene 12,000 4,000 16,000/

3,000 2,!00 *')

ain on dipoal 5,000 5,000 *rofit +efore taation !,000 2,!00 *')

e -aation 2,400 !40 3,240/

*rofit for the period 5,600 1,960 %'*,

ttri+uta+le to

Non-controllin. interest 5!! 5!!

/quit0 holders of the parent 1,972

Retained profit +rouhtforard

5,900 3,640 1,6001%)

2'21,&&',))

Retained profit arried

forard 11,500 5,600 &(',,

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5onsolidated +tatement of inancial *osition as at 1$ Cecember 2332

,- -hd

0I333

89 -hd

0I333

C0

0I333

50

0I333

60!N*

0I333+hare capital of 0$each

237333 $37333 B733327333

237333

0etained profits $$733 7D33 $17DD3

Non)contro%%ing

interest

%7%D 17B2B

B733BB

B7%%3

1$733 $7D33 %27$33

#nvestment in 89 -hd $3733 " 1733 $%7333 3

+undry net assets 2$7333 $7D33 1272%Good$i%% onconso%idation

%7%33$7$33

733

1$733 $7D33 %27$33

'i % h ith t ti

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'is!osa% o shares $ith retention oan Associate stat#s

#n this situation7 the parent will consolidate the financialstatements until the effective date of disposal7 as thedisposal of shares will change the status of thesubsidiary to become an associate.

0etained earning b/f shall include post"acquisition profit

,fter the effective date of disposal7 the carrying amountof the remaining interest should be accounted underequity method (0+$2B).

The ad;ustment of the gain or loss disposal needs to bedone in the current yearIs profit and loss account.

The difference between fair value its carrying amountof remaining staFe is included in the gain/loss of disposal

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I%%#stration *+9

,- -hd acquired a B34 interest in 89 -hd on $ :anuary 2333 for a

cash consideration of 0$%73337333. The net assets of 89 -hd at



0273337333.

!n 13 :une 23327 ,- -hd sold %73337333 shares in in 89 -hd for a

cash consideration of 0$273337333. The remaining interest was

measure at fair value as 0B7337333.



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I%%#stration *+9

*rofit and &oss ,ccount for the year ended1$ Cecember 2332

AB Bhd

RM

XY Bhd

RM

-urno#er 10,000 6,!00

e pene 12,000 4,000



e -aation 900 !40




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I%%#stration *+9

-alance sheet as at 1$ Cecember 2332

AB Bhd

RM

XY Bhd

RM



2!,000 15,600

"n#et$ent in & 'hd, at ot 7,000 (

Sundr) net aet 21,000 15,600

2!,000 15,600

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I%%#stration *+9

Reired:

a) 5alculate the gain or loss arising from the

disposal of shares in 89 -hd.




statements for the year ended 1$

Cecember 2332.

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So%#tion(a)

Cate of acquisition H $ :anuary 2333


Cate of 5+H 1$ Cecember 2332

4 Cisposed of subsidiaryIs shares H %m/$3m units

H %34

5!# disposed H ($%73337333 / B) x % H 73337333$ :anuary 2333 13 :une 2332H B34 K >5# H 234

13 :une 2332 1$ Cecember 2332 H %34 (,ssociate company)

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So%#tion

Ca%c#%ation o good$i%% or 5

interest:

R2et #dentifiable assets

+hare 5apital B7333 (B34 x $37333)0etained profits $7D33 (B34 x 27333)

6oodwill on consolidation %7%33

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So%#tion

gain or loss on re"measurement remaining staFe

5ost of investment (%34),dd *ost"acquisition reserves

"brought forward (17D%3 27333) x 34 x B34 "current year profit after tax to date of disposal ($7'D3 x D/$2) x 34 x B34

0I3337333

DD

1'2

5arrying amount at disposal date

&ess @ of remaining staFe

B73%B

B733

0e"measurement 6ain %2

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So%#tion

gain or %oss on dis!osa% o shares


R25>

So%#tion

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So%#tion(b) 5onsolidation :ournal entries

0 O333C0 6ain on disposal of shares DD

C0 #nvestment in associate DD

50 0etained profit brought forward $71$2

(To ad;ust disposal of shares in subsidiary for post acquisition b/f and account

for associate)

C0 Expenses (%7333 x D/$2) 27333

C0 6ain on disposal of shares 1'2

C0 Taxation expenses (B%3 x D/$2) %23

C0 inority interest (*&)($7'D3 x234 x D/$2) $'D

C0 #nvestment in associate 1'2

50 Turnover (D7B33xD/$2) 17%33

(To consolidate the result of 89 -hd for the D month period7 ad;ust account for

its subsequent realiJation and account for associate)

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So%#tion

C0. +hare of taxation in associate(B%3 x %34 x D/$2) $DB

C0. #nvestment in associate($7'D3 x %34 x D/$2) 1'2

50. +hare of profit in associate D3

(27B33 x %34 x D/$2)

(To equity account for share of profit of 89 -hd for the D monthsafter disposal)

Cr. #nvestment in associate %2

5r. 6ain on disposal %2

(c)

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A1 1hd

5onsolidated *rofit and &oss ,ccount for the year ended 1$ Cecember 2332

' 'hdRM>000

& 'hdRM>000

?RRM>000

CRRM>000

R@A*RM>000

-urno#er 10,000 0 3,400 13,400

e pene 12,000 0 2,000 14,000

ain on dipoal of hare 5,000 656392

452 4,404

*rofit +efore taation 3,000 0 3!04

Share of profit in aoiate 560 560

e -aation 900 0 420 1320/

Share of ta in aoiate 16! 16!/

*rofit for the period 2,100 0 2!76

Minorit) interet 196 196/

Retained profit for the )ear 26!0

Retained profit +rouht forard 5,900 0 1,312 7212

Retained profit arried forard !,000 0 9,!92

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5onsolidated -alance sheet as at 1$ Cecember 2332

' 'hdRM>000

& 'hdRM>000

?RRM>000

CRRM>000

R@A*RM>000

Share apital ofRM1 eah

20,000 0 20,000

Retained profit !,000 0 9,!92

2!,000 29,!92

"n#et$ent inaoiate

7,000 0 656392392452

!,!92

Sundr) net aet 21,000 0 21,000

2!,000 15,600 29,!92

'is!osa% o shares $ith retention o a

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'is!osa% o shares $ith retention o aSi(!%e Invest(ent

#n this situation7 the parent will consolidate the financialstatements until the effective date of disposal7 as thedisposal of shares will change the status of the subsidiaryto become simple investment (#,+ 2).

,fter the effective date of disposal7 the carrying amount ofthe remaining interest should be accounted under costmethod.

The ad;ustment of the gain or loss disposal needs to be

done in the current yearIs profit and loss account. The remaining staFe should re"measured to air @alue.

0e"measurement gain/loss is included in gain/loss ondisposal

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I%%#stration *+D

,- -hd acquired a B34 interest in 89 -hd on $ :anuary 2333 for acash consideration of 0$%73337333. The net assets of 89 -hd at



0273337333.

!n 13 :une 23327 ,- -hd sold D73337333 shares in in 89 -hd for a

cash consideration of 0$7337333. The remaining interest was

measure at fair value as 073337333.



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I%%#stration *+D

*rofit and &oss ,ccount for the year ended 1$ Cecember 2332

AB Bhd

RM

XY Bhd

RM

-urno#er 10,000 6,!00

e pene 12,000 4,000



e -aation 900 !40




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I%%#stration *+D

-alance sheet as at 1$ Cecember 2332

AB Bhd

RM

XY Bhd

RM



2!,000 15,600

"n#et$ent in hare, at ot 3,500 (

Sundr) net aet 24,500 15,600

2!,000 15,600

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I%%#stration *+D

0equired

a) 5alculate the gain or loss arising from the

disposal of shares in 89 -hd.




statements for the year ended 1$Cecember 2332.

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So%#tion

Cate of acquisition H $ :anuary 2333



4 Cisposed of subsidiaryIs shares H Dm/$3m units

H D34

5!# disposed H ($%73337333 / B) x D H $37337333

$ :anuary 2333 13 :une 2332 H B34K >5# H 234

13 :une 2332 1$ Cecember 2332 H 234

(+imple investment company)

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So%#tion

Ca%c#%ation o good$i%% or 5

interest: RM

Cot of in#et$ent 14,000e ;et "dentifia+le aetShare Capital !,000 !0% 10,000/Retained profit 1,600 !0% 2,000/

oodill on onolidation 4,400

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So%#tion

gain or %oss on re)(eas#re(ent ore(aining shares:

5ost of investment (234)

,dd *ost acquisition reserves "brought forward (17D%3 27333) x 234 "current year profit after tax to date of disposal ($7'D3 x D/$2) x 234

0I3331733

12B

$'D

5arrying amount0emeasurement to @

%732%7333

6ain on remeasurement 'D

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So%#tion

gain or %oss on dis!osa% o shares


0I333$733$3733

6ain to parent&ess *ost"acquisition reserves "brought forward (17D%3 27333) x 4 x B34 "current year profit after tax to date of disposal

($7'D3 x D/$2) x 4 x B34,dd 6ain on re"measurement

7333

('B%)

(BB)'D

6ain/loss to group %7%3%

So%#tion

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R2

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R2

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So%#tion

5onsolidated *rofit and &oss ,ccount for the year ended 1$ Cecember

2332' 'hdRM>000

& 'hdRM>000

?RRM>000

CRRM>000

R@A*RM>000

-urno#er 10,000 0 3,400 13,400

e pene 12,000 0 2,000 14,000

ain on dipoal of hare 5,000 9!45!!

976 4,404

*rofit +efore taation 3,000 0 3,!04

e -aation 900 0 420 1,320

*rofit for the period 2,100 0 2,4!4

NCI 196 196Retained profit for the )ear 2,2!!

Retained profit +rouht forard 5,900 0 1,312 7212

Retained profit arried forard !,000 0 9,500

So%#tion

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So%#tion

5onsolidated -alance sheet as at 1$ Cecember 2332

' 'hdRM>000

& 'hdRM>000

?RRM>000

CRRM>000

R@A*RM>000

Share apital ofRM1 eah

20,000 0 20,000

Retained profit !,000 0 3'*

2!,000 29,500

"n#et$ent in

hare

3,500 0 32!

196976

5,000

Sundr) net aet 24,500 0 24,500

2!,000 15,600 29,500

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End of the 5hapter

BKAF3073 Chapter 3

Documents

Transcript of BKAF3073 Chapter 3