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225 280 MedicEquip Bhd. (Medic) is a company that retails medical equipment. Medie is also a medical equipment manufacturer and sells its products to all public hospitals in Malaysia. The following are the extracts from the consolidated financial statements of the Medic Group for the years ended 31 July Extract of the Consolidated Statement of Financial Position as at 31 July: 2021 2020 RM'million RM 'million ASSETS Non-current assets Property, plant and equipment $75 565 Investment in associate 180 Financial assets 315 280 1,070 845 Current assets Inventories 235 290 Trade receivables Cash and cash equivalents 563 455 1,045 1,025 Total assets 2,115 1,870 Current liabilities Trade payables 235 461 Current tax payable 149 238 Total liabilities 404 699 Extract of the Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 July 2021: RM million Revenue 1.538 Cost of sales (1,086) Gross profit 452 Other income 130 Administrative expenses (145) Other expenses (154) Operating profit 283 Finance costs (111) Share of associate profit 112 Profit 284 The following information relates to the consolidated financial statements of Medie Group: 1. On 1 August 2020, Medic acquired all the share capital of Eyelaz Sdn Bhd. (EyeLaz), a manufacturer of Eye Laser equipment, for RM130 million. The fair values of the identifiable assets and liabilities of EyeLaz at the date of acquisition are set out below. There were no other acquisitions by Medie during the period. The fair values in the table below have been reflected in the year-end balances of Medic's consolidated financial statements: The Question 1 (Continued) Property, plant and equipment Inventories Trade receivables Cash and cash yuivalents Total assets Trade payables Net assets at acquisition 1 August 2020 RM million 114 106 103 102 425 (105) 320 2. The property, plant and equipment comprises the following: RM million 563 180 108 Carrying value at 1 August 2020 Additions at cost including assets acquired on the purchase of subsidiary Gains on property revaluation Disposals Depreciation Carrying value at 3 July 2021 (149) (129) $75 Medic has constructed a laser machine which is a qualifying asset under IAS 23/MFRS123 Borrowing Costs and has paid construction costs of RM104 million. This amount has been charged to other expenses. Medic Group paid RM111 million in interest costs during the year, which were recorded as finance cost, and which included RM101 million of interest which Medic wishes to capitalise in accordance with IAS 23/MFRS123 Borrowing Costs. There was no deferred tax implication regarding this transaction. The disposal proceeds were RM163 million. The gain on disposal is included in administrative expenses. On 1 August 2020, Medic had also acquired a 30 % interest in a Medical and Robotic engineering business, known as RobMed Sdn. Bhd. (RobMed), for cash. RobMed made a profit after tax of RM140 million and paid a dividend of RM110 million out of these profits in the year ended 31 July 2021. An impairment test carried out on 31 July 2021 showed that goodwill and other intangible assets were impaired by RM126.5 million and RM190 million respectively. The impairment of goodwill relates to 100% owned subsidiaries 4. 5. The finance costs were all paid in cash in the period. Required: (b) Prepare the cash generated from operations for inclusion in the consolidated statement of cash flows for Medic Equip Bhd. Group for the year ended 31 July 2021, using the indirect method, in accordance with IAS 7/MFRS 107 Statements of Cash Flows. For each line of item, explain the reason for its inclusion in the cash generated from operations. (15 marks) 225 280 MedicEquip Bhd. (Medic) is a company that retails medical equipment. Medie is also a medical equipment manufacturer and sells its products to all public hospitals in Malaysia. The following are the extracts from the consolidated financial statements of the Medic Group for the years ended 31 July Extract of the Consolidated Statement of Financial Position as at 31 July: 2021 2020 RM'million RM 'million ASSETS Non-current assets Property, plant and equipment $75 565 Investment in associate 180 Financial assets 315 280 1,070 845 Current assets Inventories 235 290 Trade receivables Cash and cash equivalents 563 455 1,045 1,025 Total assets 2,115 1,870 Current liabilities Trade payables 235 461 Current tax payable 149 238 Total liabilities 404 699 Extract of the Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 July 2021: RM million Revenue 1.538 Cost of sales (1,086) Gross profit 452 Other income 130 Administrative expenses (145) Other expenses (154) Operating profit 283 Finance costs (111) Share of associate profit 112 Profit 284 The following information relates to the consolidated financial statements of Medie Group: 1. On 1 August 2020, Medic acquired all the share capital of Eyelaz Sdn Bhd. (EyeLaz), a manufacturer of Eye Laser equipment, for RM130 million. The fair values of the identifiable assets and liabilities of EyeLaz at the date of acquisition are set out below. There were no other acquisitions by Medie during the period. The fair values in the table below have been reflected in the year-end balances of Medic's consolidated financial statements: The Question 1 (Continued) Property, plant and equipment Inventories Trade receivables Cash and cash yuivalents Total assets Trade payables Net assets at acquisition 1 August 2020 RM million 114 106 103 102 425 (105) 320 2. The property, plant and equipment comprises the following: RM million 563 180 108 Carrying value at 1 August 2020 Additions at cost including assets acquired on the purchase of subsidiary Gains on property revaluation Disposals Depreciation Carrying value at 3 July 2021 (149) (129) $75 Medic has constructed a laser machine which is a qualifying asset under IAS 23/MFRS123 Borrowing Costs and has paid construction costs of RM104 million. This amount has been charged to other expenses. Medic Group paid RM111 million in interest costs during the year, which were recorded as finance cost, and which included RM101 million of interest which Medic wishes to capitalise in accordance with IAS 23/MFRS123 Borrowing Costs. There was no deferred tax implication regarding this transaction. The disposal proceeds were RM163 million. The gain on disposal is included in administrative expenses. On 1 August 2020, Medic had also acquired a 30 % interest in a Medical and Robotic engineering business, known as RobMed Sdn. Bhd. (RobMed), for cash. RobMed made a profit after tax of RM140 million and paid a dividend of RM110 million out of these profits in the year ended 31 July 2021. An impairment test carried out on 31 July 2021 showed that goodwill and other intangible assets were impaired by RM126.5 million and RM190 million respectively. The impairment of goodwill relates to 100% owned subsidiaries 4. 5. The finance costs were all paid in cash in the period. Required: (b) Prepare the cash generated from operations for inclusion in the consolidated statement of cash flows for Medic Equip Bhd. Group for the year ended 31 July 2021, using the indirect method, in accordance with IAS 7/MFRS 107 Statements of Cash Flows. For each line of item, explain the reason for its inclusion in the cash generated from operations. (15 marks)

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