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    FAR610 - FAR620 - Q - Test 1 MAY 2023

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    FAR610 - FAR620 - Q - Test 1 MAY 2023

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    FAR610_FAR620_Q_Test 1 MAY 2023

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    FAR610 - FAR620 - Q - Test 1 MAY 2023

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    of 5

    1 AC/TEST1/MAY 2023/FAR610/620

    UNIVERSITI TEKNOLOGI MARA


    TEST 1

    COURSE : ADVANCED FINANCIAL ACCOUNTING AND


    REPORTING 1/ CONSOLIDATED FINANCIAL
    STATEMENTS

    COURSE CODE : FAR610/FAR620


    DATE : MAY 2023

    INSTRUCTIONS TO CANDIDATES

    1. This question paper consists of one (1) question.


    2. The answer should be in English.
    3. Show your workings where necessary.
    4. Please attach the Question with your answer script upon submission.

    This examination paper consists of 4 pages.

    © Hak Cipta Universiti Teknologi MARA


    2 AC/TEST1/MAY 2023/FAR610/620

    QUESTION

    Hyacinth Bhd was incorporated on 1 January 2007 and the company is mainly involved in
    manufacturing, marketing and distribution of office and home appliances. Since incorporation,
    Hyacinth Bhd has expanded its business operations through various business combinations
    and acquired interests in Gladioli Bhd and Freesia Bhd.

    The Statements of Financial Position of Hyacinth Bhd, Gladioli Bhd and Freesia Bhd as at 31
    December 2022 are as follows:
    Hyacinth Gladioli Freesia
    Bhd Bhd Bhd
    RM RM RM

    Non-current Assets
    Property, plant and equipment 9,400,000 1,330,000 1,500,000
    Investments in Gladioli Bhd:
    2,800,000 Ordinary shares 4,312,000 - -
    300,000 Preference shares 300,000 - -
    Investment in Freesia Bhd 1,100,000 3,206,500 -
    Other Investments 1,173,000 285,000 90,000
    Intangibles 201,000 38,500 -

    Current Assets
    Inventories 1,657,000 1,025,000 522,000
    Bills receivable 402,500 144,500 45,000
    Trade receivables 642,500 346,500 252,000
    Ordinary dividends receivables 148,000 45,000 -
    Current account – Gladioli Bhd 4,000
    Bank 591,500 143,000 84,500
    19,931,500 6,564,000 2,493,500

    Equity and liabilities


    Ordinary shares 12,995,000 4,000,000 1,500,000
    Preference shares 1,725,000 750,000 100,000
    Other equity components 1,035,000 323,000 150,000
    Retained profit as at 1 January 2022 1,224,500 665,000 180,000
    Profit for the year ended 31 December 2022 500,500 332,500 150,000

    Non-current liabilities
    Long term loan - - 200,000

    Current liabilities
    Trade payables 2,020,500 211,000 30,000
    Bills payable 431,000 90,500 108,500
    Current account – Hyacinth Bhd 2,000 45 = G
    Ordinary dividends payables - 190,000 75,000 15 = H
    19,931,500 6,564,000 2,493,500 15 = N

    133 = H
    57 = N

    © Hak Cipta Universiti Teknologi MARA


    3 AC/TEST1/MAY 2023/FAR610/620

    Investment in Gladioli Bhd

    Hyacinth Bhd acquired ordinary shares and preference shares in Gladioli Bhd on 1 January
    2020, when the other equity components and retained profit of Gladioli Bhd were RM100,000
    and RM250,000 respectively. The consideration for the acquisition of the ordinary shares was
    settled by Gladioli Bhd's shareholders accepting 300,000 ordinary shares of Hyacinth Bhd
    valued at RM1.50 each and RM3,862,000 in cash.

    The fair value of one ordinary share of Gladioli Bhd on 1 January 2020 was RM1.20, while on
    31 December 2022, it was RM1.45. On the acquisition date, the net assets of Gladioli Bhd
    were stated in the books at their fair values, except for a permit with the fair value of
    RM200,000 was not recorded in the books as it was granted at no cost to Gladioli Bhd. The
    permit has an indefinite useful life.

    Investment in Freesia Bhd

    On 1 May 2022, Hyacinth Bhd and Gladioli Bhd acquired 20% and 60% of the issued ordinary
    shares of Freesia Bhd, respectively when the other equity components of Freesia Bhd were
    RM40,000. The fair value of the non-controlling interest was measured at RM692,000 on the
    date of acquisition. The net assets of Freesia Bhd on 1 May 2022 were stated in the books at
    their fair value except for a machine whose fair value was RM50,000 more than the carrying
    value. No adjustment was made in the books of Freesia Bhd to reflect this value. The
    remaining life of the machine was 5 years.

    Additional information:

    1. Hyacinth Bhd sold RM100,000 worth of goods on credit to Freesia Bhd at cost plus 20%
    in July 2022. As at 31 December 2022, RM30,000 of these goods remained in the
    inventories of Freesia Bhd. No payment was made for the sales amount until year-end.

    2. During the year, Gladioli Bhd sold goods with a profit of RM20,000 to Hyacinth Bhd.
    Hyacinth Bhd sold 40% of these goods to third parties during the year. As at 31
    December 2022, Hyacinth Bhd had remitted the final payment of RM25,000 for the
    goods purchased from Gladioli Bhd, but Gladioli Bhd only received RM22,000.

    3. Bills payable of Freesia Bhd were in favor of Hyacinth Bhd. However, Hyacinth Bhd had
    sold 70% of these bills to a discount house.

    4. During the year, Hyacinth Bhd sold a motor vehicle to Gladioli Bhd at a profit of
    RM40,000. The motor vehicle has a remaining useful life of 4 years at the date of
    disposal.

    5. The directors of Gladioli Bhd and Freesia Bhd also declared the preference dividends
    before the year-end but not have been provided by them as follow:

    Gladioli Bhd Freesia Bhd


    Full-year preference dividend RM56,000 RM7,000

    6. Goodwill from the acquisition of Gladioli Bhd was impaired by 10% on 31 December
    2022.

    © Hak Cipta Universiti Teknologi MARA


    4 AC/TEST1/MAY 2023/FAR610/620

    7. The non-controlling interest is measured using the fair value method.

    8. All profits are deemed to accrue evenly throughout the years unless told otherwise.

    9. Depreciation of property, plant and equipment is calculated based on a yearly basis.

    Required:

    a. Compute goodwill/bargain purchase on the acquisition of Gladioli Bhd.


    (6 marks)

    b. Compute goodwill/bargain purchase on the acquisition of Freesia Bhd.


    (6 marks)

    c. Compute the group retained profit, group other components of equity and non-controlling
    interest using schedule form.
    (16 marks)

    d. Prepare a Consolidated Statement of Financial Position for Hyacinth Bhd's group as at


    31 December 2022.
    (22 marks)
    (Total: 50 marks)

    END OF QUESTIONS
    GOOD LUCK

    © Hak Cipta Universiti Teknologi MARA


    5 AC/TEST1/MAY 2023/FAR610/620

    © Hak Cipta Universiti Teknologi MARA

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