“IFRS 10 Consolidated Financial Statements states that there are few ways to ascertain if the investor ‘controls’ and ‘influences’ its investees.” Assuming P omitted certain transactions as illustrated below. You must discussabout the accounting treatment for the omitted (i) and (ii) with reference to anyapplicable accounting standard.P acquired a new warehouse for RM1,000,000 on 1st Jan 2020 with anestimated useful life of 20 years. The factory was brought into useimmediately on the same day. The company adopts a cost model for allproperty, plant and machinery.With a surplus funds of few millions, P invested in a number ofcommercial lots for RM3,000,000 during the year of 2020. Theseproperties are estimated to have a 20-years of useful life. The marketvalue of these properties stands at RM3,300,000 at the end of December2020.i)ii) Scenario:P acquires 100% of S's ordinary shares for RM1,500,000 on 31st December2018. S's reserves (consists of only retained earnings) were RM 400,000 at thedate of acquisition. The following presents the statement of financial position ofboth companies as at 31st December 2020.PSNotesRMRMAs at 31st Dec 2020*000000,Non-current assets:Property, Plant and equipment2,0001,000GoodwillInvestment in S1,500Net current asset3002003,8001,200Share capital300800Retained earnings3,5004003,8001,200

Answered: IFRS 10 Consolidated Financial…

Business

Accounting

IFRS 10 Consolidated Financial Statements states

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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