Question

IAS 7 - CONSOLIDATED CASH FLOW

Assume that on 1 January 2003, HH Bhd (HHB) a parent company acquired 75% of interest in subsidiary SS Bhd (SSB). On that date the shareholders’ funds of SSB stood at RM700K. Assume that SSB is the only subsidiary that PPB has. An item of property plant and equipment (PPE) was found to be undervalued by RM40K and was subsequently revalued to its fair value. HHB had paid RM655K in cash. The following are the consolidated financial statement prepared by HHB for 2004 incorporating its subsidiary SSB.

Consolidated Statement of Comprehensive Income for the year ended 31 December 2004

	(RM)’000	(RM)’000
Sales		5,407
Cost of Goods Sold		(2,088)
Gross Profit		3,319
Less Expenses:
Depreciation	120
Other Expenses	890
		(1,010)
Operating Income		2,309
Gain on Sale of Investment		16
Loss on Sale of Machinery		(12)
Total Comprehensive Income		2,313
Profit after tax attributable to:
Shareholders of HHB		2,163
NCI in Net Income		150
Total Comprehensive Income		2,313

Consolidated Statement of Financial Position as at 31 December 2004

	(RM)’000	(RM)’000
	2004	2003
Cash	1,400	169
Accounts Receivable	960	260
Inventories	440	297
Investment	900	980
PPE	2,997	2,947
Accumulated Dep.	(1,046)	(986)
Goodwill	80	80
	5,731	3,747
Accounts Payable	270	204
Loan Payable	259	209
Share Capital	2,320	2,320
Retained Earnings	2,575	812
Asset Revaluation Reserve	40	40
Non-Controlling Interest	267	162
	5,731	3,747

Additional information:

(a) There is no impairment of goodwill recorded for the year.

(b). During current year, HHB paid RM400K dividend. SSB earned net income of RM600K and paid dividend of RM180K.

(c)   During the year, an item of machinery which had originally cost RM140K and had been depreciated RM60K was sold by HHB for RM68K. Another machine was immediately purchased for RM190K.

(d)   An investment which had originally cost RM80K was sold for RM96K cash.

(e)   An additional long term loan of RM50K was obtained during the year.

You are required to prepare:

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

b).     The consolidated statement of cash flows for the year ended 31 December 2004.

Answer 1