Sabry Bhd Zamato Plc

RM'000 TJS'000
Ordinary shares 1,000,000 200,000
Retained earning 750,620 276,420

Short term loan 80,700 15,000

Trade payables 5,200 4,500
1,836,520 495,920

Property plant and equipment 1,167,200 441,300

Investment in Zamato Plc. 600,000 -
Inventory 19,220 27,020
Trade receivables 22,500 17,400
Bank 27,600 10,200
1,836,520 495,920

Sabry Bhd Zamato Plc

RM'000 TJS'000
Revenue 620,000 345,800
Cost of sales (126,500) (92,200)
Gross profit 493,500 253,600
Operating expenses (124,200) (49,200)
Finance cost (52,400) (9,500)
Profit before tax 316,900 194,900
Tax expense (63,380) (38,980)
Profit after tax 253,520 155,920

Ordinary shares Retained earning

RM'000 RM'000
Balance b/d 1,000,000 572,600
Profit for the year - 253,520
Dividend - (75,500)
Balance c/d 1,000,000 750,620

Ordinary shares Retained earning

TJS'000 TJS'000
Balance b/d 200,000 120,500
Profit for the year 155,920
Dividend - -
Balance c/d 200,000 276,420

RM:TJS1
1-Jan-16 1.85
1-Jan-18 1.90
1-Sep-18 1.86
30-Sep-18 1.92
31-Dec-18 2.05
Average for 2018 2.00
FAR610 - SOLUTION GROUP PROJECT 2 -JAN 2019
Method 2 Translation - from Functional currency to Presentation currency (Net Investment Method) Page 1

c. Translate the statement of financial position of Zamato @ YE c. Translate the statement of profit or loss
a. Advise BOD the appropriate method of translating. STEP 2 Translate closing balance SOFP STEP 3 Translate Closing balance SOPL
S S
The functional currency of Zamato Plc is Tajikistan Somoni because Zamato TJS'000 Rate RM'000
Plc has significant autonomy from the parent to conduct its business. It
Ordinary shares 200,000 1.90 / 380,000 TJS'000 Rate RM'000
manufactures consumer goods which is mainly sold locally in its own local
currency. And it is also not dependent on the parent for finance. Therefore, the ARR-pre 15,000 1.90 / 28,500 Revenue 345,800 2.00 / 691,600
most appropriate method to be used in translating the financial statements of Retained earnings-pre 120,500 1.90 / 228,950 Cost of sales (92,200) 2.00 / (184,400)
Zamato Plc is translating from Functional to Presentation currency or net Current year (155920 +1057 - W1) 156,977 bal. fig // 372,127 Gross profit 253,600 507,200
investment method. Short term loan 15,000 2.05 / 30,750 Operating expenses (49,200) 2.00 / (98,400)
Trade payables (4500-1057 - W1) 3,443 2.05 // 7,058 Finance cost (9,500) 2.00 / (19,000)
4 Marks 510,920 1,047,386 Profit before tax 194,900 389,800
Tax expense (38,980) 2.00 / (77,960)
PPE (441300 + 15000 + 5000 ) 461,300 2.05 // 945,665
b. Gain or loss on translation of goodwill Inventory 27,020 2.05 / 55,391 PAT as per Q 155,920 311,840
STEP 5: GOODWILL AND Translate GW on YE Trade receivables 17,400 2.05 / 35,670 Add: Forex gain (W1) 1,057 2.00 / 2,114

Bank (10200-5000) Profit after taxation

0.80 0.20 5,200 2.05 / 10,660 156,977 313,954
Consideration transfer TJS'000 Rate RM'000 510,920 1,047,386
Cash [RM600000/1.90] 315,789 // 6/ x 1/2 3 Marks
Working (W1) - Info 2 TJS'000 RM'000
NCI 67,100 / Due to Sabry @ 30/9/18 16,667 1.92 32,000 d. Exchange difference from translating financial statements
382,889 Payment to Sabry @ 31/12/18 15,610 2.05 32,000 STEP 4 Determine the exchange difference
Forex exchange (SOPL): Gain 1,057 /
FV of Net Assets Dr AP 1,057 SOFP SOPL Diff
Share capital 200,000 / Cr SOPL- Gain on forex 1,057 PAT (Step 2 vs Step 3) 372,127 313,954 58,173 //
Retained earning 120,500 / Goodwill 7,108 //
ARR 15,000 / DR: PPE 5,000.00 Total Exchange increase (OCI)
335,500 CR: Bank 5,000.00
0.8 0.2
Goodwill @ DOA @1/1/18 47,389 1.90 / 90,040 Parent NCI TOTAL
Goodwill @ 31/12/2018 (YE) 47,389 2.05 / 97,148 14/ x 1/2 7 Marks 46,538 11,635 58,173
Exchange difference - OCI 7,108 7,108 7,108
53,647 11,635 65,281
8/ x 1/2 4 Marks 4/ x 1/2 2 Marks
600,000.00
335,500
FV adjustment on acq date:
Dr PPE Zamato 15,000.00
Cr ARR-pre 15,000.00

Marks this page 20

STEP 1 Translate opening balance SOFP
No need to translate - First year acquisition
FAR610 - SOLUTION GROUP PROJECT 2 -JAN 2019 Page 2

WORKINGS
e. CONSOLIDATED SOPL FYE 31/12/17
ANALYSIS OF FS c/d RM'000 RM'000 RM'000 Sabry Bhd Zamato Plc Adjusments Group
GRE Forex NCI RM'000 RM'000 RM'000
NCI @ DOA (67100 x 1.90) Subsidiary 127,490 Revenue 620,000 691,600 (32,000) 1,279,600 //
Cost of sales (W2) (126,500) (184,400) 32,000 (2,000) (280,900) ///
Gross profit 493,500 507,200 998,700
RE of Subsidiary 0.80 Administrative expenses (124,200) (98,400) (222,600) /
PAT Post 313,954 251,163 62,791 Finance cost (52,400) (19,000) (71,400) /
Forex gain (W1) - 2,114 2,114 //
Forex reserve 0.80 Profit before tax 316,900 391,914 706,814
Exchange diff (Step 4) 58,173 46,538 11,635 Tax expense (63,380) (77,960) (141,340) /
Exchange diff (Step 5) 7,108 7,108 PAT 253,520 313,954 565,474
Other comprehensive income
Forex gain 58,173 58,173 /
RE of Holding Forex gain goodwill 7,108 7,108 /
RE @ c/d 750,620 Total comprehensive income 630,755
URP - Inventory (2,000) PAT Attributable to:
249,000 249,000 Parent 502,683
500,163 53,647 201,915 NCI 313,954 X 0.20 62,791 //
565,474

TCI Attributable to:

Parent 556,330
NCI 62,791 + (58173 x 0.2) 74,425 //
630,755
- 16/ X 1/2 8 marks

f. CONSOLIDATED SOCE FYE 31/12/18

Ordinary Group Retained Forex g. CONSOLIDATED SOFP @ 31/12/17
Shares Earning Reserve NCI Sabry Bhd Zamato Plc Adjusments Group
RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
Balance b/d 1,000,000 572,600 - - // Ordinary shares 1,000,000 from f 1,000,000 /
Acquisition during the year / 127,490 // ARR - PRE 28,500 Eliminated with cost of -
Effect on forex during the year / 53,647 11,635 // Retained earning - pre 228,950 investment -
Retained earning 750,620 372,127 from f 999,783 /
Profit for the year / 502,683 62,791 Non-controlling interests - - from f 201,915 /
Dividend (75,500) / Forex reserve - - from f 53,647 //
Balance c/d 1,000,000 999,783 53,647 201,915 Short term loan 80,700 30,750 111,450 /
10/ x 1/2 5 Marks Trade payables 5,200 7,059 12,259 /
1,836,520 667,386 2,379,054

Working (W2) - Info 2 PPE 1,167,200 945,665 2,112,865 //

URP-stock= 1/4 x RM32m x 25%= 2,000 Investment in Zamato 600,000 - Eliminated with pre-reserve -
Goodwill - - from b 97,148 /
Inventory 19,220 55,391 (2,000) 72,611 //
Trade receivables 22,500 35,670 58,170 /
Marks this page 20 Bank 27,600 10,660 38,260 /
Marks from page 1 20 1,836,520 1,047,386 2,379,054
Total Marks 40 380,000 -
14/ X 1/2 7 marks
 Zamato Plc
TJS'000 Transaction Date RM'000 Rate €'000 Recorded Journal Entries (Zamato Book)
Ordinary shares of RM1/ TJS1 each 200,000 Purchase 30/9/18 32,000.00 1.920 16,666.67 Dr Purchases 16,666.67 Cr AP 16,666.67
Retained earning 277,477 Payment 31/12/18 32,000.00 2.050 15,609.76 Dr AP 15,609.76 Cr Bank 15,609.76
1,056.91
Non-current loan 15,000 AP still have balance 1,056.91
Trade payables (4500 - 1057) 3,443 Journal entries in the book of Zamato on 31 Dec 2018
495,920
Dr AP 1,056.91
Property plant and equipment 441,300 Cr Gain on foreign exchange 1,056.91
Investment in Zamato Plc. -
Inventory 27,020
Trade receivables 17,400
Bank 10,200
495,920
-

Zamato Plc
TJS'000
Revenue 345,800
Cost of sales (92,200)
Gross profit 253,600
Operating expenses (49,200)
Gain on foreign exchange 1,057
Finance cost (9,500)
Profit before tax 195,957
Tax expense (38,980)
Profit after tax 156,977

Ordinary shares Retained earning

TJS'000 TJS'000
Balance b/d 200,000 120,500
Profit for the year 156,977

Dividend - -
Balance c/d 200,000 277,477

RM:TJS1
1-Jan-16 1.85
1-Jan-18 1.90
1-Sep-18 1.86
30-Sep-18 1.92
31-Dec-18 2.05
Average for 2018 2.00
FAR610 - SOLUTION GROUP PROJECT 2 -JAN 2019 Page 2
JOURNAL ENTRIES AT COMPANY LEVEL
WORKINGS In Subsidiary book (Local Currency) Dr Cr
e. CONSOLIDATED SOPL FYE 31/12/17 Land (Subsidiary) 15,000.00
ANALYSIS OF FS c/d RM'000 RM'000 RM'000 Sabry Bhd Zamato Plc Adjusments Group ARR - Pre 15,000
GRE Forex NCI RM'000 RM'000 RM'000
NCI @ DOA Subsidiary 127,490 Revenue 620,000 691,600 (32,000) 1,279,600 Account payable 1,057
Cost of sales (W2) (126,500) (184,400) 32,000 (2,000) (280,900) SOPL- Gain on forex - 1,057
Gross profit 493,500 507,200 998,700
RE of Subsidiary 0.80 Administrative expenses (124,200) (98,400) (222,600)
PAT Post 313,954 251,163 62,791 Finance cost (52,400) (19,000) (71,400)
Forex gain (W1) - 2,114 2,114
Forex reserve 0.80 Profit before tax 316,900 391,914 706,814
Exchange diff (Step 4) 58,173 46,538 11,635 Tax expense (63,380) (77,960) (141,340)
Exchange diff (Step 5) 7,108 7,108 PAT 253,520 313,954 565,474
Other comprehensive income
Forex gain 58,173 58,173
RE of Holding Forex gain goodwill 7,108 7,108
RE @ c/d 750,620 Total comprehensive income 630,755 CONSOLIDATION JOURNAL ENTRIES
URP - Inventory (2,000) PAT Attributable to: Dr Cr
249,000 249,000 Parent 502,683 1 OS of subsidiary 380,000
500,163 53,647 201,915 NCI 313,954 X 0.20 62,791 ARR- pre (Sub) 28,500
565,474 Retained earning - Pre (Sub) 228,950
Goodwill on consolidation 90,040
TCI Attributable to: Investment in Subsidiary 600,000
Parent 556,330 Non-controlling interests 127,490
NCI 62,791 + (58173 x 20) 74,425 (Eliminated pre-acquisition reserve with cost of investment)
630,755
- 16/ X 1/2 8 marks
2 Goodwill on consolidation 7,108
f. CONSOLIDATED SOCE FYE 31/12/17 Group forex reserve 7,108
Ordinary Group Retained Forex g. CONSOLIDATED SOFP @ 31/12/17 Consolidation Adjusments (Re-translate goodwill at year ended)
Shares Earning Reserve NCI Sabry Bhd Zamato Plc 1 2 3 4 5 Group
RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 Dr/(Cr) Dr/(Cr) Dr/(Cr) Dr/(Cr) Dr/(Cr) RM'000
Balance b/d 1,000,000 572,600 - - Ordinary shares (1,000,000) (380,000) 380,000 (1,000,000) 3 Cost of sales 2,000
Acquisition during the year / 127,490 ARR - PRE (28,500) 28,500 - Inventory (SOFP) 2,000
Effect on forex during the year / 53,647 11,635 Retained earning - pre (228,950) 228,950 - (Eliminated of URP on inventories
Retained earning (750,620) (372,127) 2,000 62,791 58,173 (999,783)
Profit for the year / 502,683 62,791 Non-controlling interests - - (127,490) (62,791) (11,635) (201,915)
Dividend (75,500) Forex reserve - - (7,108) (46,538) (53,647) 4 Group retained earning 62,791
Balance c/d 1,000,000 999,783 53,647 201,915 Short term loan (80,700) (30,750) (111,450) NCI 62,791
10/ x 1/2 5 Marks Trade payables (5,200) (7,058) (12,258) (Share of post acquisition profit to NCI and Group)
(1,836,520) (1,047,385) (2,379,053)

Working (W2) - Info 2 PPE 1,167,200 945,665 2,112,865 5 Group retained earning (Current year) 58,173
URP-stock= 1/4 x RM32m x 25/100= 2,000 Investment in Zamato 600,000 - (600,000) - NCI 11,635
Goodwill - - 90,040 7,108 97,148 Group forex reserve 46,538
Inventory 19,220 55,391 (2,000) 72,611
Trade receivables 22,500 35,670 58,170
Bank 27,600 10,660 38,260
1,836,520 1,047,386 - - - - 2,379,054
- 1.00 1.00
857,562 857,562
-