QUIZ 1

Hooray Bhd is a parent company of Surrey Bhd.

The companies separate financial

statements are as follows:

a. Statements of Comprehensive Income & Retained Profits for the year
ended 31 December 2015
a. Statement of Financial Position as at 31 December 2015
Hooray Bhd
Surrey Bhd
Hooray Bhd
Surrey Bhd
RM000
RM000
RM000
RM000
Sales
56,000
38,400
Ordinary shares of RM1 each
60,000
20,000
Cost of inventories sold
Retained profits
13,220
9,710
Opening inventories
(7,200)
(5,820)
Shareholders funds
73,220
20,710
Purchases
(35,000)
(20,000)
Current liabilities:
Closing inventories
6,600
(35,600)
4,660
21,160
Trade and other payables
13,200
5,600
Gross profit
20,400
17,240
Loan from parent (Hoorey)
10,000
86,420
36,310
Other income
Gain on disposal of equipment
1,600
Property, plant and equipment
55,000
28,000
Interest income
300
12,000 Shares in Strawberry Bhd at cost
20,000
Consultancy fee income
1,200
Current assets
Rental income
360
Inventories
4,320
3,800
Dividend income (net)
2,100
4,360
450
1,650
Receivables and bank balances
7,100
4,510
24,760
18,890
Loan to subsidiary (Surrey)
10,000
Operating expenses
86,420
36,310
Wages and salaries expenses
8,450
6,750
Interest expenses
560
300
Consultancy fee expenses
940
Rental expenses
2,240
640
Depreciation expenses
3,670
3,330
Other operating expenses
4,330
1,690
20,190
12,710
Profit before taxation
4,570
6,180
Taxation
(820)
(330)
Profit for the year
3,750
5,850
Retained profits brought forward
9,470
3,860
Retained profits carried forward
13,220
9,710
Additional Information:
1. Hooray Bhd acquired a 60% interest in Surrey Bhd for RM20 million on 1 March 2015.
2. Following intragroup transactions are occurred during current financial year.

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AFRB463 Semester 3 2015/2016

a. Hooray Bhd sold goods amounting to RM4 million to Surrey Bhd. At year end,
RM800,000 of these goods are remained unsold. The cost of sales of these goods
to Hooray Bhd is 80% of selling price.
b. Hooray Bhd provides a RM10 million loan to Surrey Bhd at an interest rate of 2%
per annum. However, for the current year, Horrey Bhd charged RM360,000 to
Surrey Bhd on the interest loan.
c. Starting 1 July, Hooray Bhd lets out their biggest factory building to Surrey Bhd,
charging a monthly rental of RM60,000.
d. Surrey Bhd provided consultancy services on cost restructuring to Hooray Bhd at a
consideration of RM200,000.
e. Included in wages and salaries of Hooray Bhd, is a Surrey Bhds operating director
salaries of RM12,000 per month. He is a permanent staff of Hooray Bhd, but
currently attached to Surrey Bhd. Until the year end, his salaries is paid and
charged in the account of Hooray Bhd.
f. Surrey Bhd sold equipment at RM4.8 million to Hooray Bhd. The net book value
of the equipment was RM3.2 million, and is classified as property, plant and
equipment by Surrey Bhd. The equipment has another 4 years useful life, and a full
years depreciation is being charged in the year of purchase.
3. Assume that profits accrue evenly throughout the year and an income tax rate of 26%.
Ignore tax effect for unrealized profits on intragroup transactions. Non-controlling
interests are measured at the acquisition-date fair value.

Required:
(a) Show the necessary journal entries for the current year transactions and to arrive at the
consolidated financial statements.
(b) Prepare a consolidated financial statement (comprehensive income and financial
position) for the year ended 31 December 2015 using the worksheet technique (with a
debit and credit column).
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