Convincing Features
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Crocus Bhd has been serving customers in Kuala Lumpur for nearly two decades, offering premium furniture for kitchens, living rooms, and bathrooms. Over the years, the company has navigated intense competition from overseas manufacturers and online platforms. In response, Crocus Bhd embraced innovative strategies to remain resilient, driven by its commitment to becoming Malaysia’s most affordable furniture destination.
On 1 January 2022, Crocus Bhd acquired 60% of the ordinary shares in Rover Bhd. The acquisition was settled on the following terms:
As at that date, the retained profit and other reserves were RM42 million and RM10 million, respectively. The fair value of the net assets of Rover Bhd were equal to the fair value except for:
Rover Bhd has not incorporated these fair value changes into its financial statements. Additionally, goodwill on acquisition was impaired by RM1.6 million each year for 2023 and 2024, respectively.
On 1 January 2022, Crocus Bhd also acquired 20% of the 5% Debenture in Rover Bhd. The acquisition was settled with a cash payment of RM4 million.
On 1 January 2023, Crocus acquired 90 million of the ordinary shares of Tansy Bhd. On the date of acquisition, the retained profit and other reserves of Tansy Bhd were RM97 million and RM18 million, respectively. The fair value of Tansy Bhd’s net assets on the date of acquisition were equal to their carrying value.
On 1 April 2024, Crocus disposed all of its interest in the ordinary shares of Tansy Bhd at RM2 per share. The other reserve as at that date is RM20 million. The disposal transaction has not yet been recorded.
On 1 July 2024, Rover Bhd and Crocus Bhd acquired 30 million and 5 million ordinary shares of Iris Bhd, respectively. The fair value of the net assets of Iris Bhd were equal to their fair values except for:
Iris Bhd has not incorporated these fair value changes into its financial statements.
On 1 January 2023, Crocus Bhd acquired 13.5 million of the 45 million ordinary share capital of Leome Bhd for a cash consideration of RM15 million, when the retained profit of Leome Bhd was RM6 million. As of 31 December 2023 and 31 December 2024, the profit for the year of Leome Bhd was RM2 million and RM4 million, respectively. At year-end 2024, Leome Bhd declared a dividend of RM0.4 million.
The following information was taken from the books of Crocus Bhd and its group:
| Statements of Financial Position as at 31 December 2024 | ||||
| Â | Crocus Bhd | Rover Bhd | Tansy Bhd | Iris Bhd |
| Â | RM million | RM million | RM million | RM million |
| Non-Current Assets | ||||
| Property, Plant and Equipment | Â Â Â Â Â Â Â Â Â Â 207 | 101 | 220 | 50 |
| Investment in Tansy Bhd
Investment in Rover Bhd Investment in Iris Bhd |
162
122 24 |
26 |
– | – |
| Investment in Leome Bhd | 15 | – | – | – |
| Other Investment | 98 | 80 | 41 | 30 |
| Intangibles | 11 | 6 | 20 | 40 |
| Current Assets | ||||
| Trade Receivables | 20 | 22 | 7 | 12 |
| Inventories | 20 | 10 | 6 | 5 |
| Bill Receivables | 16 | 10 | 12 | 7 |
| Bank | 110 | 11 | 8 | 3 |
| 805 | 266 | 314 | 147 | |
| Equities | ||||
| 400 million units ordinary shares (OSC) | 400 | – | – | – |
| 100 million units OSC | – | 100 | – | – |
| 150 million units OSC | – | – | 150 | – |
| 50 million units OSC | – | – | – | 50 |
| 6% Preference shares | – | 50 | – | – |
| Retained profits | 228 | 48 | 101 | 25 |
| Other reserves | 30 | 14 | 20 | 8 |
| Non-Current Liabilities | ||||
| Long-term Loan | – | 6 | 30 | 50 |
| 5% Debenture | – | 20 | – | – |
| Current Liabilities | ||||
| Trade payables | 130 | 11 | 6 | 10 |
| Accrued interest on Debenture | – | 1 | – | – |
| Preference Dividend Payable | – | 3 | – | – |
| Ordinary Dividend Payable | 7.7 | 3 | – | 0.8 |
| Other Current Liabilities | 9.3 | 10 | 7 | 3.2 |
| 805 | 266 | 314 | 147Â | |
| Statements of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2024 | ||||
| Â | Crocus Bhd | Rover Bhd | Tansy Bhd | Iris Bhd |
| Â | RM million | RM million | RM million | RM million |
| Revenue | 42 | 72 | 40 | 26 |
| Cost of Sales | (15) | (18) | (16) | (13) |
| Gross Profit | 27 | 54 | 24 | 13 |
| Gain on Disposal | 5 | – | – | – |
| Loss on Disposal | – | (1) | – | – |
| Investment income | 5.4 | 5.7 | 2 | 0.3 |
| Expenses | (14.8) | (20) | (18) | (8.3) |
| Profit before Taxation | 22.6 | 38.7 | 8 | 5 |
| Taxation | (4.9) | (10.2) | (2) | (1.2) |
| Net Profit | 17.7 | 28.5 | 6 | 3.8Â |
| Crocus Bhd
Statement of Changes in Equity for the year ended 31 December 2024 |
|||||
| Â | Share Capital | Â | Other Reserves | Â | Retained Profits |
| Â | RM million | Â | RM million | Â | RM million |
| Balance b/d | 400 | 30 | 218 | ||
| Net Profit | – | – | 17.7 | ||
| Dividend | – | – | (7.7) | ||
| Balance c/d | 400 | Â | 30 | Â | 228Â |
| Rover Bhd
Statement of Changes in Equity for the year ended 31 December 2024 |
|||||
| Â | Share Capital | Â | Other Reserves | Â | Retained Profits |
| Â | RM million | Â | RM million | Â | RM million |
| Balance b/d | 150 | 14 | 25.5 | ||
| Net Profit | – | – | 28.5 | ||
| Dividend (preference dividend and ordinary dividend) | – | – | (6) | ||
| Balance c/d | 150 | Â | 14 | Â | 48Â |
| Tansy Bhd
Statement of Changes in Equity for the year ended 31 December 2024 |
|||||
| Â | Share Capital | Â | Other Reserves | Â | Retained Profits |
| Â | RM million | Â | RM million | Â | RM million |
| Balance b/d | 150 | 20 | 95 | ||
| Net Profit | – | – | 6 | ||
| Dividend | – | – | – | ||
| Balance c/d | 150 | Â | 20 | Â | 101Â |
| Iris Bhd
Statement of Changes in Equity for the year ended 31 December 2024 |
|||||
| Â | Share Capital | Â | Other Reserves | Â | Retained Profits |
| Â | RM million | Â | RM million | Â | RM million |
| Balance b/d | 50 | 8 | 22 | ||
| Net Profit | – | – | 3.8 | ||
| Dividend | – | – | (0.8) | ||
| Balance c/d | 50 | Â | 8 | Â | 25Â |
| Carrying value | RM10 million |
| Proceeds from sales (at fair value) | RM14 million |
| Yearly market rental | RM2.5 million (payment in arrears) |
The incremental borrowing cost of Crocus Bhd on the transfer date is 8%. The present value of the lease payment is RM9.982 million. No recording has been made.
Required:
a. Calculate the goodwill/bargain purchase on the acquisition of Rover Bhd as at 1 January 2022. (5 marks)
b. Calculate the goodwill/ bargain purchase on the acquisition of Tansy Bhd as at 1 January 2023. (3 marks)
c. Calculate gain or loss on the subsequent disposal of Tansy Bhd as at 1 April 2024. (4 marks)
d. Calculate the goodwill/ bargain purchase on the acquisition of Iris Bhd ordinary shares as at 1 July 2024. (4 marks)
e. Calculate the goodwill/bargain purchase on the acquisition of Leome Bhd as at 1 January 2023. (2 marks)
f. Prepare a Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2024 for Crocus Bhd Group. (22 marks)
g. Prepare a Consolidated Statement of Changes in Equities for the year ended 31 December 2024 for Crocus Bhd Group. (10 marks)
h. Prepare a Consolidated Statement of Financial Position as at 31 December 2024 for Crocus Bhd Group. (20 marks)
(Total: 70 marks)
(Calculate in RM million to the nearest three decimal points)
A. Jay Bhd operates as a manufacturer of heavy-duty machines for export markets and prepares its financial statements on 31 December every year. Jay Bhd recently acquired interests in the following companies:
(i) Jay Bhd acquired 70% of the ordinary shares of Next-Gen Bhd, a company specialising in marketing customised machinery outside Malaysia. Next-Gen Bhd’s reporting date is 31 October each year.
(ii) 40% of the ordinary shares of Knot Bhd, a company well known for specialising in manufacturing custom-designed machinery. Initially, Knot Bhd had 10 million ordinary shares, but recently the company repurchased (share buyback) 20% of its ordinary share capital from the market. Knot Bhd’s reporting date is on 31 December every year.
(iii) Jay Bhd acquired 7 million out of 12 million of the ordinary shares of Utamas Bhd, a government-linked company. Jay Bhd appoints the majority of the board members and the management teams. Utamas Bhd’s reporting date is on 31 December each year.
Jay Bhd is preparing its consolidated financial statements.
Required:
Discuss whether Jay Bhd should include the above companies when preparing the Consolidated Financial Statements.
(10Â marks)
B. Glitter Bhd is a public listed company in Malaysia and the ultimate parent of several subsidiaries and investments. The company owns 70% of Twinkle Sdn Bhd, a subsidiary, and 40% of Shine Sdn Bhd. In addition, Glitter Bhd has a joint control of Shine Sdn Bhd through a contractual arrangement.
During the financial year 2025, Glitter Bhd sold specialised components worth RM1,800,000 to Twinkle Sdn Bhd at normal margins. Additionally, Glitter Bhd provided a short-term loan of RM500,000 to Shine Sdn Bhd at an interest rate of 3%, which is lower than the market rate of 5%.This resulted in an interest receivable of RM15,000 at year-end.
Glitter Bhd appointed Puan Tasha as the Chief Financial Officer. In 2025, she earned a total annual salary of RM600,000. Moreover, Glitter Bhd has appointed Sparkle Consultancy for 2025 employee training services, at a cost of RM260,000. This consultancy firm is owned by Puan Tasha’s husband, Encik Malik. The selection of the consultancy firm did not follow the company’s established tender procedures.
Additionally, Gleam Ltd, a private investment entity, holds a 28% stake in Glitter Bhd and has two representatives on its board. During the year, Glitter Bhd sold land to Gleam Ltd for RM5,400,000, even though the land’s fair value was RM6,000,000.
In addition, Glitter Bhd purchased raw materials valued at RM2,100,000 from Quantum Metals Bhd. The chairman of Quantum Metals Bhd had previously served on Glitter Bhd’s board but resigned four years ago and no longer has any ties to the company.
Required:
a. Discuss briefly five (5) parties that may be considered related to Glitter Bhd and justify your answers. ( 5 marks)
b. Based on the information above, prepare the related party disclosure of Glitter Bhd for the year ended 31 December 2025. Your disclosure should include the nature of each relationship, types and amounts of transactions (5 marks)
c. Kimmy Bhd, Azlan Bhd, Channa Bhd and Youself Bhd invested in Khencana Bhd, a joint arrangement entity. The details of their investments are as follows:
| Company | % |
| Kimmy Bhd | 30 |
| Azlan Bhd | 25 |
| Channa Bhd | 30 |
| Youself Bhd | 15 |
They are in the process of preparing the joint arrangement agreement and are currently stuck on deciding who should have the authority to give consent if any item in the agreement needs to be changed in the future. The options are:
Option 1
85% votes are required to alter any item in the agreement between them.
Option 2
Two-thirds of the votes are required to alter any item in the agreement between them.
Required:
a. Explain which parties have joint control of Khencana Bhd according to each of the options.
(6 marks)
b. With reference to the above and your answer in (a) for Option 1, explain the meaning of “a party to a joint agreement of the business”.
(4 marks)
END OF THE QUESTION
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