Reference no: EM133001446

QUESTION 1 - Hee Hee Bhd is a public listed company and listed on Bursa Malaysia since 2014. In January 2015, Hee Hee Bhd had acquired 80% interest in Choo Choo Bhd for RM30 million. A fair valuation exercise conducted on the date of acquisition revealed that Choo Choo Bhd's fair value of net assets was equal to its carrying amounts. On the date of acquisition, the fair value of the net assets of Choo Choo Bhd was RM25 million. On 1 January 2021, Hee Hee Bhd disposed 50% of its interests in Choo Choo Bhd to Adam Bhd for RM50 million when the fair value of the net assets of Choo Choo Bhd was RM70 million. On the date of disposal, the fair value of the remaining shares was RM20 million. The financial year ended of Hee Hee's group is on 31 December every year. The goodwill on acquisition remains unimpaired since the date of acquisition. It is the group's policy to value the noncontrolling interests at its proportionate share of the fair value of the subsidiary's identifiable net assets at the acquisition date.

a) Calculate the gain or loss on the disposal of the share for the Hee Hee Group.

b) Discuss the relationship between Hee Hee Bhd and Choo Choo Bhd after the disposal.

QUESTION 2 - On 1 January 2021, Apple Bhd held 45% of the voting rights in Grape Bhd, while Coconut Bhd and Strawberry Bhd equally held the remaining. Grape Bhd was involved in selling and marketing of fruits for many years. In the recent shareholders' meeting, it was agreed that Coconut Bhd would have the power to direct all relevant activities related to marketing issues due to their expertise in that field. Apple Bhd believes that it controls Grape Bhd due to its majority voting rights as compared to the other stakeholders in Grape Bhd. However, Coconut Bhd argued that it also has power over Grape Bhd even though it holds lesser voting rights.

Discuss whether any company has power over Grape Bhd in accordance with MFRS10?