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Question - A XYZ Sdn Bhd provides bookkeeping services and has consistently invoiced its clients a total of RM35.000 per month since 2018. Due to its prudent management, XYZ Sdn Bhd has accumulated a sizeable surplus of funds. In October 2021, XYZ Sdn Bhd decided to use these funds to acquire a commercial building which in turn generated a monthly rental income of RM8.000 from November 2019. XYZ Sdn Bhd has a financial year ending on 31 December.

XYZ Sdn Bhd managed to secure four new clients in 2021, including its first overseas client based in Singapore, and entered into service contracts with the new clients to provide its bookkeeping service which will be invoiced in the beginning of the months listed in the table below. XYZ Sdn Bhd's bookkeeping fees from each of the new clients is RM5,000 per month.

Client name

Date

Gorgeous Sdn Bhd

February 2021

Singa Pty Ltd

March 2021

Violet Sdn Bhd

April 2021

Wowza Sdn Bhd

August 2021

Required - What are the implications if Violet Sdn Bhd is a wholly-owned subsidiary of XYZ Sdn Bhd?

Reference no: EM133079198

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