5 marks 4 Discuss the accounting treatment of the acquisition of joint venture

5 marks 4 discuss the accounting treatment of the

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(5 marks)
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4. Discuss the accounting treatment of the acquisition of joint venture that has been applied by the company. You are also required to discuss the appropriate accounting treatment as accordance with the relevant MFRS. Regarding to MFRS 128, joint venture is a ‘joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement’. For the Top Glove Corporation Berhad, the company just issue the standard but the standard did not effective yet. (5 marks)
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5. Do answer the following questions: i. How many percent have the associates/subsidiaries contributed to the total revenue of the Group for the current year? Subsidiaries contributed to the total revenue of the Group for current year is +23.6% from the year 2017. ii. How many percent have the associates/subsidiaries contributed to the net profit of the Group for the current year? Subsidiaries contributed to the net profit of the Group for the current year is +32.3% from the year 2017. (5 marks)
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PART B (50 MARKS) 1. Briefly discuss the company’s main business activities and industry. Top Glove Corporation Bhd is the world’s largest manufacturer of gloves. Top Glove also has marketing offices in these countries as well as USA, Germany and Brazil. Top Glove is a one-stop glove sourcing center, producing consistently high-quality gloves at an efficient, low cost. Its comprehensive glove range comprises latex, vinyl, and nitrile examination gloves, surgical gloves, cleanroom gloves, household gloves, industrial gloves, cast polyethylene (CPE) gloves and thermoplastic elastomer (TPE) gloves. Top Glove’s products are an essential item in the healthcare industry, ensuring human safety and helping to save lives. They are committed to continuous improvement, and are constantly looking for ways to improve their products and keep them cost effective. Top Glove has grown exponentially over the years. Today the company exports to over 2,000 customers across 195 countries in Asia, Europe, the Middle East, Africa and the Americas. Their complete range of quality gloves enables them to meet the needs of the company’s ever-expanding customer base. Their glove products cater to the medical profession, surgeons, cleanrooms, and industrial usage, as well as the food and beauty industry (5 marks)
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2. Compute and evaluate the relevant ratios (profitability ratio, liquidity ratio and efficiency ratio) for two years (i.e. 2018 and 2017).
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Profitability Ratio 1 Gross Profit Margin Ratio 2018 2017 Gross Profit x 100% Sales 846,871 x 100% 4,214,482 = 20.1% 605,319 x 100% 3,409,176 = 17.8% 2 Net Profit Margin Ratio 2018 2017 Net Income x 100% Sales 437,906 x 100% 4,214,482 = 10.4% 330,529 x 100% 3,409,176 = 9.7%
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Liquidity Ratio 1 Current Ratio 2018 2017 Current Assets Current Liability 1,619,295 = 1.12 1,451,044 1,251,356 = 1.57 795,738 2 Quick Asset Ratio 2018 2017 Current Assets – Inventory Current Liability 1,619,295 - 508,186 1,451,044 = 0.77 1,251,356 - 315,775 795,738 = 1.18 Efficiency Ratio 1 Inventory Turnover 2018 2017 Cost of Goods Sold Average Inventory 3,367,611 (508,186 + 315,775) / 2 = 8.17 2,803,857 (315,775 + 263,679) / 2 = 9.68 (20 marks) 3. Perform preliminary analytical review using the financial statements on the company performance by comparing the current year’s ratios (2018) with the previous year’s ratios (2017).
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(25 marks) Ratio Analysis Gross Profit Margin Ratio From the calculation, it is shows that ratio for year 2018 is higher than 2017 which are 20.1% and 17.8% respectively.
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