Prepare the consolidated statement of financial position for Cobb Bhd as at 31 December 2011. (Show all workings).

what can you do to ensure you maintain academic honesty throughout your graduate academic career?
July 15, 2019
How does the philosophy of ethical decision making have an effect on our everyday lives?
July 15, 2019

Prepare the consolidated statement of financial position for Cobb Bhd as at 31 December 2011. (Show all workings).

Prepare the consolidated statement of financial position for Cobb Bhd as at 31
December 2011. (Show all workings).

Question 1 (Total: 30 marks)
On 1 January 2011 Cobb Bhd acquired 80% of Eatwell Bhd’s equity shares in a
share exchange of two shares in Cobb Bhd for every one share in Eatwell Bhd. The
market prices of Cobb Bhd’s and Eatwell Bhd’s shares at the date of acquisition
were RM4.00 and RM5.00 each respectively. In addition, Cobb Bhd agreed to pay a
further amount on 1 January 2012 that was dependent upon the post-acquisition
performance of Eatwell Bhd. At the date of acquisition Cobb Bhd assessed the fair
value of this contingent consideration at RM10 million, but by 31 March 2012 it was
clear that the actual amount to be paid would be only RM8 million (ignore
discounting). Cobb Bhd has recorded the share exchange and provided for the
initial estimate of RM10 million for the contingent consideration.
On 1 July 2011 Cobb Bhd also acquired 35% of the equity shares of Daly Sdn Bhd
paying RM3.00 in cash per acquired share and issuing one 7% loan note with face
value of RM180 for every 100 shares acquired in Daly Sdn Bhd. This consideration
has also been recorded by Cobb Bhd.
Cobb Bhd has no other investments. The summarised statements of financial
position of the three companies at 31 December 2011 are:
Cobb
Bhd
Eatwell
Bhd
Daly
Sdn Bhd
RM’000 RM’000 RM’000
Non-current assets
Property, plant and equipment 80,000 51,000 42,000
Investments 124,480 Nil Nil
204,480 51,000 42,000
Current assets
Inventory 45,000 20,000 10,000
Trade receivables 20,600 4,000 6,000
Total assets 270,080 75,000 58,000
Equity and liabilities
Equity
Equity shares of RM1 each 100,000 15,000 11,000
Share premium 32,000 Nil Nil
Retained earnings
– at 1 January 2011 32,400 43,000 25,000
– for year ended 31 December 2011 22,000 3,000 10,000
186,400 61,000 46,000
Sunway University Business School Sample ACC3054 Final Examination
3
Non-current liabilities
7% loan notes 29,000 4,000 Nil
Current liabilities
Contingent consideration 10,000 Nil Nil
Other current liabilities 44,680 10,000 12,000
Total equity and liabilities 270,080 75,000 58,000
Additional information:
i. The fair values of the net assets of Eatwell Bhd at the date of acquisition
were equal to their carrying amounts with the exception of an item of plant
which had a carrying amount of RM8 million and a fair value of RM15
million. The fair values of the plant have not been reflected in Eatwell Bhd’s
financial statements. This plant had a remaining life of five years (straight-line
depreciation) at the date of acquisition of Eatwell Bhd. All depreciation is
charged to cost of sales.
ii. Also at the date of acquisition, Eatwell Bhd had an intangible asset of
RM1,000,000 for software in its statement of financial position. Cobb Bhd’s
directors believed the software to have no recoverable value at the date of
acquisition. Eatwell Bhd wrote it off shortly after its acquisition.
iii. At 31 December 2011 Cobb Bhd’s current account with Eatwell Bhd was
RM6.8 million (debit). This did not agree with the equivalent balance in
Eatwell Bhd’s books due to some goods-in-transit invoiced at RM3.6 million
that were sent by Cobb Bhd on 29 December 2011, but had not been
received by Eatwell Bhd until after the year end. Cobb Bhd sold all these
goods at cost plus 50%.
iii. In addition, Eatwell Bhd transferred some goods to Cobb Bhd for cash of
RM2.1 million in November 2011. This transfer price has been marked up by
20%. At the end of the financial period, Cobb Bhd has sold 80% of these
goods to unrelated customers at market price.
iv. Cobb Bhd’s policy is to value the non-controlling interest at fair value at the
date of acquisition. For this purpose Eatwell Bhd’s share price at that date
can be deemed to be representative of the fair value of the shares held by
the non-controlling interest.
v. Impairment tests were carried out on 31 December 2011 which concluded
that the value of the investment in Eatwell Bhd was not impaired but, due to
poor trading performance, consolidated goodwill was impaired by RM6.5
million.
vi. Assume all profits accrue evenly throughout the year and ignore the effect of
deferred taxation on all necessary fair value and consolidation adjustments.
Sunway University Business School Sample ACC3054 Final Examination
4
vii. Assume the market price of Cobb Bhd’s shares is a reliable indicator of the
purchase consideration transferred to acquire Eatwell Bhd.
Required
(a) Prepare the consolidated statement of financial position for Cobb Bhd as at 31
December 2011. (Show all workings).
(23 marks)
(b) Explain what “non-controlling” is and the accounting implications it has on the
preparation of the consolidated financial statements. Critically discuss whether
the non-controlling interest of a group should qualify as equity or a liability with
reference to the Framework for the Preparation and Presentation of Financial
Statements.
(7 marks)


 

. WITH nursing writers TODAY AND GET AN AMAZING DISCOUNT

get-your-custom-paper

The post Prepare the consolidated statement of financial position for Cobb Bhd as at 31 December 2011. (Show all workings). appeared first on nursing writers .

 

“Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!”

The post Prepare the consolidated statement of financial position for Cobb Bhd as at 31 December 2011. (Show all workings). appeared first on nursing writers.


Prepare the consolidated statement of financial position for Cobb Bhd as at 31 December 2011. (Show all workings). was first posted on July 15, 2019 at 4:29 pm.
©2019 "Nursing Paper Tutors". Use of this feed is for personal non-commercial use only. If you are not reading this article in your feed reader, then the site is guilty of copyright infringement. Please contact me at admin@nursingassignmenttutor.com

 

"Is this question part of your assignment? We Can Help!"

Nursing Coursework