Naga Bhd acquired an 80% interest in Garuda Bhd on 31 December 2012. The acquisition was paid in cash RM300,000 and issued 600,000 new ordinary shares of Naga Bhd for RM1.50 per share with par value RM1.00. On this date, the financial position statement of both company before the acquisition are as follow: Assets: Cash Account Receivable Inventories Land Building - net Equipment - net Equity and Liabilities: Ordinary Shares Retained Profit Long-term Loan Account Payable Naga Bhd (RM) 460,000 200,000 180,000 800,000 900,000 640,000 3,180,000 2,100,000 880,000 200,000 3,180,000 Garuda Bhd (RM) 70,000 100,000 120,000 400,000 600,000 280,000 1,570,000 900,000 480,000 120,000 70,000 1,570,000 All identifiable assets and liabilities of Garuda Bhd are stated at fair value except land which was revalued at RM450,000. The non-controlling interest was fair valued at RM300,000. REQUIRED: a) Calculate the cost of investment in Garuda Bhd and prepare the related journal entries to record the cost of investment. b) Prepare the consolidation journal entries as at 31 December 2012. c) Prepare a consolidated statement of financial position as at 31 December 2012.

Naga Bhd acquired an 80% interest in Garuda Bhd on 31 December 2012. The acquisition was paid in cash RM300,000 and issued 600,000 new ordinary shares of Naga Bhd for RM1.50 per share with par value RM1.00. On this date, the financial position statement of both company before the acquisition are as follow: Assets: Cash Account Receivable Inventories Land Building - net Equipment - net Equity and Liabilities: Ordinary Shares Retained Profit Long-term Loan Account Payable Naga Bhd (RM) 460,000 200,000 180,000 800,000 900,000 640,000 3,180,000 2,100,000 880,000 200,000 3,180,000 Garuda Bhd (RM) 70,000 100,000 120,000 400,000 600,000 280,000 1,570,000 900,000 480,000 120,000 70,000 1,570,000 All identifiable assets and liabilities of Garuda Bhd are stated at fair value except land which was revalued at RM450,000. The non-controlling interest was fair valued at RM300,000. REQUIRED: a) Calculate the cost of investment in Garuda Bhd and prepare the related journal entries to record the cost of investment. b) Prepare the consolidation journal entries as at 31 December 2012. c) Prepare a consolidated statement of financial position as at 31 December 2012.

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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