QUESTION 2 (30 MARKS)
Given below are the Statements of Financial Position of the parent company.
Parent
RM'000
Subsidiary
RM'000
Ordinary shares at RM1 each
715,000
506,000
Revaluation reserves
165,000
44,000
Retained profit
275,000
110,000
Liabilities
44,000
64,000
Building
1,199,000
365,000
Machinery
724,000
364,000
350,000
250,000
Inventory
88,000
44,000
Trade receivables
77,000
44,000
Cash at bank
319,000
22,000
Parent company purchased all the ordinary shares of subsidiary company on 1 January 2020 for RM200,000 which was discharged by payment of cash and so offered ordinary shares of subsidiary company one ordinary share in subsidiary company valued RM1.50 per share.
Required:
Prepare journal entries in the books of the parent company to record the acquisition of shares in the subsidiary company. (4 marks)
Prepare the Statement of Financial Position of the parent company immediately after the takeover. (10 marks)
Prepare the Consolidated Financial Statement as at 31 December 2020.