Tutorial 8 – Complex Group Structure (1)
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Tutorial 8 – Complex Group Structure Question 1 Parent Bhd holds an 80% interest in B Bhd and B Bhd holds a 60% interest in C Bhd. Parent Bhd acquired a shareholding interest in B Bhd on 1 January 2010 when the net assets of B Bhd which consists of share capital RM 500,000 and retained earnings of RM 30,000. B Bhd acquired C Bhd on 1 January 2013 when the net assets of C Bhd which consists of RM share capital RM 100,000 and retained earnings of RM 20,000. Given below are the balances extracted from the financial statements of Parent Bhd, B Bhd and C Bhd for the year ended 31 December 2013 Parent Bhd RM B Bhd RM C Bhd RM Income Statement Revenue 700,000 400,000 300,000 Expenses (400,000) (320,000) (250,000) Profit before tax 300,000 80,000 50,000 Taxation (100,000) (30,000) (20,000) Profit after tax 200,000 50,000 30,000 Retained earnings 1/1/13 100,000 50,000 20,000 Retained earnings 31/12/13 300,000 100,000 50,000 Financial Position Share capital 1,000,000 500,000 100,000 Retained earnings 300,000 100,000 50,000 Total liabilities 200,000 100,000 100,000 1,500,000 700,000 250,000 Investment in B Bhd (400,000 ordinary shares) 600,000 - - Investment in C Bhd (60,000 ordinary shares) - 90,000 - Total assets 900,000 610,000 250,000 1,500,000 700,000 250,000
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Transcript of Tutorial 8 – Complex Group Structure (1)
Tutorial 8 Complex Group Structure
Question 1
Parent Bhd holds an 80% interest in B Bhd and B Bhd holds a 60% interest in C Bhd. Parent Bhd acquired a shareholding interest in B Bhd on 1 January 2010 when the net assets of B Bhd which consists of share capital RM 500,000 and retained earnings of RM 30,000. B Bhd acquired C Bhd on 1 January 2013 when the net assets of C Bhd which consists of RM share capital RM 100,000 and retained earnings of RM 20,000.
Given below are the balances extracted from the financial statements of Parent Bhd, B Bhd and C Bhd for the year ended 31 December 2013Parent BhdRMB BhdRMC BhdRM
Income Statement
Revenue700,000400,000300,000
Expenses(400,000)(320,000)(250,000)
Profit before tax300,00080,00050,000
Taxation(100,000)(30,000)(20,000)
Profit after tax 200,00050,00030,000
Retained earnings 1/1/13100,00050,00020,000
Retained earnings 31/12/13300,000100,00050,000
Financial Position
Share capital1,000,000500,000100,000
Retained earnings300,000100,00050,000
Total liabilities200,000100,000100,000
1,500,000700,000250,000
Investment in B Bhd (400,000 ordinary shares)600,000--
Investment in C Bhd (60,000 ordinary shares)-90,000-
Total assets900,000610,000250,000
1,500,000700,000250,000
Required: Prepare a consolidated financial statement as at 31 December 2013 using the following approaches. Assume the group measures NCI based on the fair value of identifiable net assets.a) Stage by stage methodb) One stage method
Question 2
A Bhd holds an 70% interest in B Bhd and B Bhd holds a 60% interest in C Bhd. A Bhd acquired a shareholding interest in B Bhd on 1 January 2011 when the net assets of B Bhd which consists of share capital RM 500,000 and retained earnings of RM 80,000. B Bhd acquired C Bhd on 1 January 2013 when the net assets of C Bhd which consists of RM share capital RM 100,000 and retained earnings of RM 50,000.
Given below are the balances extracted from the financial statements of Parent Bhd, B Bhd and C Bhd for the year ended 31 December 2014.A BhdRMB BhdRMC BhdRM
Income Statement
Revenue800,000500,000300,000
Expenses(400,000)(300,000)(250,000)
Profit before tax400,000200,00050,000
Taxation(100,000)(50,000)(20,000)
Profit after tax 300,000150,00030,000
Retained earnings 1/1/14100,000100,00070,000
Retained earnings 31/12/14400,000250,000100,000
Financial Position
Share capital1,000,000500,000100,000
Retained earnings400,000250,000100,000
Total liabilities200,000100,000100,000
1,600,000850,000300,000
Investment in B Bhd 700,000--
Investment in C Bhd -100,000-
Total assets900,000750,000300,000
1,600,000700,000300,000
Additional information:(a) B Bhd provided management services to C Bhd and the agreed management fee was RM60,000 per year. Included in the expenses account in C Bhd was the management fee paid to B Bhd.(b) The group measures NCI based on the fair value of identifiable net assets.(c) Income tax rate is 25%.
Required: Prepare a consolidated financial statement as at 31 December 2014 using the following approaches. 1) Multiple stage method2) One stage method
