Benefit Expenses and Restructuring Costs Assignment
Order ID 53563633773 Type Essay Writer Level Masters Style APA Sources/References 4 Perfect Number of Pages to Order 5-10 Pages Description/Paper Instructions
Benefit Expenses and Restructuring Costs Assignment
Fqih acquires the whole of Aims on 1 January 2020 for a cash consideration of RM150,000,000. On this date, the retained profits of Aims are RM60,000,000. The summarized accounts of the two companies for the year ended 31 December 2020 are as follows:
Statement of Profit or Loss for the year ended 31 December 2020.
Fqih Aims RM’000 RM’000 Revenue 225,000 150,000 Operating expenses (150,000) (86,250) Termination Benefits – (7,500) Provision for restructuring costs – (11,250) Profit before taxation 75,000 45,000 Taxation (19,500) (12,600) Profit after taxation 55,500 32,400 Retained profits brought forward 64,500 30,000 Retained profits carried forward 120,000 62,400 Statement of Financial Position as at 31 December 2020.
Fqih Aims Assets: RM’000 RM’000 Property, plant and equipment 240,000 120,000 Investment in Sun Bud 75,000 – Current Assets 60,000 44,250 Total assets 375,000 164,250 Equity and Liabilities: Ordinary Share (par value RM1) 150,000 37,500 Retained profits 120,000 62,400 Non-Current Liabilities 75,000 22,500 Provisions – 18,750 Current Liabilities 30,000 23,100 375,000 164,250 Additional information:
- At 1 January 2020, Aims has created a provision called termination benefit expense to pay employees if the company is acquired. The estimated fair value of the termination benefit expense (treated as contingent liability) is RM15,000,000. The amount should be recognized as termination benefit expense in the statement of profit or loss and will be included in the provisions account.
- The management of Fqih has agreed to restructure Aims after the acquisition periods of 2020 and 2021. During the year, the plan for restructuring is finalized and a provision for restructuring cost of RM22,500,000 is recognized as a liability.
- Both termination benefit expenses and restructuring costs are allowable for tax deductions when paid to employees at tax rate of 19.5%.
Required:
Prepare the consolidated Statement of Profit or Loss and Statement of Financial Position of Fqih for the financial year 2020. Show all relevant working on goodwill calculation and the consolidation adjustment to recognize the goodwill and elimination of intercompany investment.
RUBRIC
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