Question

IAS 7- Consolidated Cash Flow Statement

On 1 October 2005, MN Bhd (MNB) a parent company disposed of 80% of the issued shares of its wholly own subsidiary PQ Bhd (PQB) for RM280K cash. On the date of the disposal, the balance sheet of PQB, which is consistent with the fair values, is as follows:

B Bhd Balance Sheet as at 1 October 2005

		(RM)’000
Cash		8
Accounts Receivable (net)		25
Inventories		32
Investments		10
PPE (net)		280
		355
Accounts Payable		16
Loan Payable		39
Share Capital		250
Retained Earnings		50
		355

Consolidated Income Statement for the year ended 31 December 2005

	(RM)’000	(RM)’000
Sales		5,100
Cost of Goods Sold		(2,050)
Gross Profit		3,050
Interest Income		55
Gain from sale of subsidiary		40
Gain from sale of investment		30
Loss from sale of machinery		(20)
		3,155
Less Expenses:
Depreciation	140
Amortization	12
Interest Expenses	15
General & Administrative Expenses	188
		(355)
Operating Income		2,800
NCI in Net Income		(70)
Consolidated Net Income		2,730

Consolidated Balance Sheet as at 31 December 2005

	(RM)’000	(RM)’000
	2005	2004
Cash	2,441	420
Accounts Receivable	305	380
Inventories	110	108
Investments	450	560
PPE	2,770	3,150
Accumulated Dep	(750)	(650)
Goodwill	108	120
Investment in Associate	60	-
	5,494	4,088
Accounts Payable	210	220
Loan Payable	11	100
Share Capital	3,300	3,300
Retained Earnings	1,768	258
Non-Controlling Interest	205	210
	5,494	4,088

Additional information:

(a)     An investment which had originally cost RM100K was sold for RM130K during the year.

(b)     At the end of the year, a piece of machinery costing RM100K & had been depreciated by RM40K was sold for RM40K cash.

(c)     50% of the balance of notes payable was settled during the first quarter of the year.

(d)A dividend of RM1,220K was paid by MNB during the year to its shareholders.

(e)The other subsidiary net income for the year amounted to RM350K of which RM70K was the share of MI.

(f)During the year MNB received subsidiary dividend of RM300K.

You are required to prepare:

a).     The worksheet for the preparation of a consolidate cash flow statement.

b).     The consolidated statement of cash flows for the year ended 31 December 2005.

Answer 1

a)

b)

Pending... need further evaluation