a. Prepare the consolidated statement of profit or loss and other comprehensive income for the year ended 31 December 2013. b. Prepare the consolidated statement of changes in equity (extract) for t
QUESTION CSOPL- ASSOC-SKYPE
The statements of profit or loss and statements of changes in equity of Skype Bhd, Tweet Bhd, Vine Bhd and Apps Bhd for the year ended 31 December 2013 are as follows:
Statements of Profit or Loss for the year ended 31 December 2013
| Skype Bhd RM’000 | Tweet Bhd RM’000 | Vine Bhd RM’000 | Apps Bhd RM’000 | ||||
| Revenue | 59,000 | 42,500 | 36,000 | 23,600 | |||
| Cost of sales | (23,000) | (19,500) | (21,000) | (10,300) | |||
| Gross profit | 36,000 | 23,000 | 15,000 | 13,300 | |||
| Operating expenses | (12,500) | (9,000) | (6,600) | (4,900) | |||
| Dividend income | 600 | 510 | |||||
| Income from other investments | 1,200 | 1,500 | 900 | ||||
| Profit before tax | 24,100 | 15,710 | 9,900 | 9,300 | |||
| Taxation | (8,400) | (4,750) | (3,900) | (3,500) | |||
| Profit for the year | 15,700 | 10,960 | 6,000 | 5,800 | |||
| Statements of Changes in Equity for the year ended 31 December 2013 | |||||||
| Skype Bhd RM’000 | Tweet Bhd RM’000 | Vine Bhd RM’000 | Apps Bhd RM’000 | ||||
| Retained profit brought forward | 9,980 | 5,260 | 4,450 | 4,870 | |||
| Profit for the year | 15,700 | 10,960 | 6,000 | 5,800 | |||
| Ordinary dividend paid | (1,250) | (550) | (600) | (900) | |||
| Retained profit carried forward | 24,430 | 15,670 | 9,850 | 9,770 | |||
Additional information:
On 1 January 2010, Skype Bhd acquired 3,000,000 of the 5,000,000 ordinary shares of RM1 of Tweet Bhd when the retained profit of Tweet Bhd was RM2,500,000. On the date of acquisition, the fair value of a non-depreciable asset of Tweet Bhd was RM1,380,000 more than its carrying amount. During the current year, the fair value of this asset had increased by another RM300,000. The goodwill on consolidation was RM600,000. 20% of the goodwill was impaired for the current year.
The fair value of non-controlling interest on 1 January 2010 in Tweet Bhd was RM7,000,000.
On 1 January 2012, Skype Bhd acquired 3,000,000 of the 10,000,000 ordinary shares of RM1 of Apps Bhd. On that date, the retained profit of Apps Bhd was RM2,100,000 and the fair value of one of the depreciable assets of Apps Bhd was RM5,000,000 more than its carrying value. The remaining useful life of the asset was 10 years.
On 1 September 2013, Tweet Bhd acquired 85% of the ordinary shares of Vine Bhd for a cash consideration of RM10,000,000. The bargain purchase arising from the acquisition was RM2,690,000.
The non-controlling interest in Vine Bhd attributable to Skype Bhd had a fair value of RM5,760,000 on 1 September 2013.
On 1 January 2012, Skype Bhd sold an equipment with a carrying value of RM1,500,000 to Tweet Bhd for RM2,000,000. The remaining life of the equipment on that date was five years. The equipment was still in Tweet Bhd’s books as at 31 December 2013.
In April 2013, Tweet Bhd sold inventory invoiced at RM3,000,000 to Skype Bhd. Tweet Bhd made a profit of 6% on the selling price. RM2,000,000 of these goods were still in the inventory of Skype Bhd at the end of the year. There was also an unrealised profit of RM350,000 in the opening inventory of Skype Bhd. The opening inventory was also purchased from Tweet Bhd.
All entities had paid their dividends in December 2013. Skype Bhd and Tweet Bhd had received all their shares of dividends from their investee companies.
All profits and losses are deemed to accrue evenly throughout the year.
The group’s policy is to value non-controlling interests at fair value at the acquisition date.
Required:
Prepare the consolidated statement of profit or loss and other comprehensive income for the year ended 31 December 2013.
(17 marks)
Prepare the consolidated statement of changes in equity (extract) for the year ended 31 December 2013, showing group retained profit and non-controlling interest.
(8 marks)
(Total: 25 marks)
