Reference no: EM133041306

Question - On 1 July 2017, Venus Bhd acquired 400,000 units ordinary shares, 5,000 6% cumulative preference shares and RM15,000 10% debentures of Mercury Bhd. On that date, the retained earnings of Mercury Bhd was RM100,000. The summarized statements of Profit or Loss and statements of changes in equity (extract) of Venus Bhd and Mercury Bhd for the year ended 30 June 2019 are as follows:

Statements of Profit or Loss for the year ended 30 June 2019
	Venus Bhd RM	Mercury Bhd RM
Revenue	1,526,700	876,800
Cost of sales	(917,700)	(679,400)
Gross profit	609,000	197,400
Operating expenses	(467,800)	(97,200)
Finance costs	(22,000)	(5,000)
Investment income	98,000	-
Profit before taxation	217,200	95,200
Income tax expense	(42,500)	(30,400)
Profit for the year	174,700	64,800

 

Statements of Changes in Equity for the year ended 30 June 2019 (extract)
	Venus Bhd RM	Mercury Bhd RM
Retained profit brought forward	760,000	240,000
Profit for the year	174,700	64,800
Interim dividends - Ordinary	(30,000)	(6,000)
Interim dividends - Preference	(8,000)	(3,000)
Transfer to general reserve	(20,000)	(10,000)
Retained profit carried forward	876,700	285,800

Additional information -

1. The issued share capital of Venus Bhd and Mercury Bhd were as follows: Company Name Ordinary shares 8% Cumulative Preference shares 6% Cumulative Preference shares 10% Debentures Units Units Units RM Venus Bhd 1,800,000 200,000 - - Mercury Bhd 500,000 - 100,000 50,000

2. Land and building of Mercury Bhd have the following value: Land Building RM RM Fair value as at 1 July 2017 470,000 452,000 Carrying value as at 30 June 2017 350,000 350,000 Remaining useful lives of the building on the date of acquisition was 20 years. Building is depreciated on straight line method over its useful lives, and to be charged on yearly basis.

3. Investment income of Venus Bhd includes profit from sale of equipment to Mercury Bhd for RM14,000 and dividends received from Mercury Bhd of RM6,300. On the date of disposal, the remaining useful lives of the equipment is 5 years. Depreciation of the equipment is calculated on straight line method over its useful lives, and to be charged on yearly basis.

4. Finance costs of Mercury Bhd are all debenture interest expense. Venus Bhd has not yet recorded the debenture interest receivable from Mercury Bhd.

5. Mercury Bhd sold goods to Venus Bhd at a mark-up of 25% on cost. During the year, Mercury Bhd recorded sales of RM49,500 to Venus Bhd. As at the year-end, Venus Bhd still held one third (1/3) of these goods.

6. The directors of Venus Bhd and Mercury Bhd have declared the final preference dividend on 20 June 2019 but not yet recorded by both companies.

7. Goodwill on consolidation was impaired by RM10,000 as at 30 June 2019.

Required -

a. Make the Consolidated Statement of Profit or Loss of Venus Bhd and its subsidiary Mercury Bhd for the year ended 30 June 2019.

b. Make the Consolidated Statement of Changes in Equity (extract) for the year ended 30 June 2019 showing the group retained profit and non-controlling interest only.