Topic 2 - Example (1).docx - Consolidation Subsequent To...

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Consolidation Subsequent To The Date Of Acquisition Example: On 1 February 2010, Garden Bhd acquired 90% interest in Blue Bhd. for a cash consideration of RM120 millions. On that date, market price of shares and the retained profits of Blue Bhd were RM1.50 and RM20 millions respectively. The financial statements of both companies for the year 2014 are as follows: Statement of Comprehensive Income for the year ended 31 December 2014 Garden Bhd RM’000 Blue Bhd RM’000 Turnover 120,000 70,000 Cost of sales (72,000) (35,000) Gross profit 48,000 35,000 Less: Operating expenses (23,000) (21,000) Operating profit 25,000 14,000 Dividend revenue 2,700 Profit before taxation 27,700 14,000 Less: Taxation (6,250) (4,000) Profit after taxation 21,450 10,000 Dividend paid (5,000) (3,000) Retained profit for current year 16,450 7,000 Retained profit, 1 January 2012 119,350 62,900 Retained profit, 31 December 2012 135,800 69,900 Statement of Financial Position as at 31 December 2014 Garden Bhd RM’000 Blue Bhd RM’000 Investment in Blue Bhd 120,000 Other non-current assets (net) 180,000 120,000 Current assets 100,000 80,000 400,000 200,000 Financed by: Ordinary shares (RM1 each) 200,000 100,000 Retained profit 135,800 69,900
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