Reference no: EM133122840
Question - Lariz Bhd acquired 80,000 ordinary shares and RM20,000 5% debentures of Stella Bhd on 1 January 2018 when Stella Bhd's general reserve and retained profits were nil and RM20,000, respectively.
The financial position statement of Lariz Bhd and Stella Bhd as at 31 December2020 are:
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Lariz Bhd RM
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Stella Bhd RM
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Plant, property and equipment
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393,000
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268,000
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Investment in StellaBhd:
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|
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Ordinary shares
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114,000
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-
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5% Debentures
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20,000
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-
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Inventories
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34,000
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30,000
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Trade receivables
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29,000
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34,000
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Bills receivable
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4,000
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5,000
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Bank
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90,000
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81,000
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Ordinary dividend receivable
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12,000
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-
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|
|
|
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696,000
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418,000
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Ordinary shares of RM1 each
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260,000
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100,000
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Non-redeemable Preference sharesof RM1 each
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150,000
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80,000
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5% Debentures
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60,000
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50,000
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General reserve
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80,000
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65,000
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Retained profits
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90,000
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60,000
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Trade payables
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39,000
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45,000
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Bills payable
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4,000
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3,000
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Ordinary dividend payable
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13,000
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15,000
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696,000
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418,000
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Additional information:
1. On the acquisition date, the fair value of the machinery of Stella Bhd was RM30,000 less than its carrying amount. The remaining useful life of the machine was 10 years. On the same date, the freehold land of Stella Bhd has an increased in fair value by RM10,000. No adjustments have beenmade in the books of StellaBhd to reflect the new values.
2. During the current year, Lariz Bhd sold inventories at an invoice price of RM15,300 toStella Bhd at a marginof 20% of the sellingprice. At the end of 2020, Stella Bhd has sold one-fourth of these inventories. Stella Bhd has paid half for the goods purchased.
3. All the bills payable of Lariz Bhd are due to Stella Bhd.
4. Trade receivables of Stella Bhd include RM12,000 from Lariz Bhd.
5. Debenture interest for the year ended 31 December 2020 is to be providedby Lariz Bhd and Stella Bhd.
6. Goodwill on consolidation of Stella Bhd is impaired by 20%.
7. Lariz Bhd's policy is to measure non-controlling interest at the proportionate share of the fair value of net assets of the subsidiary.
Required -
1. Compute goodwill or bargain purchase on the acquisition of Stella Bhd on 1 January 2018.
2. Determine the group reserve (general reserves and retained profits) and non-controlling interest by preparing the schedule.
3. Prepare a Consolidated Statement of Financial Position for Lariz Bhd group as at 31 December 2020 (Show all workings).
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