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WS Bhd, its principal activity is property construction, acquired 80% interest in the equity capital of YY Bhd on 2 February 2019 for RM450,000,000. On 2 February 2019, YY Bhds share capital was RM200,000,000 with the share price of RM1.50 per unit, the retained earnings were RM150,000,000 and revaluation reserves were RM50,000,000 on 2 February 2019. The group policy is to apply the proportionate share of the net identifiable assets method to measure the noncontrolling interest. The financial statements of both companies for the year ended 31 December 2021 was as follows:

	WS Bhd RM000	YY Bhd RM000
Revenue	850,000	340,000
Cost of sales	530,000	200,000
Gross profit	320,000	140,000
Other income	260,000	180,000
Less:
Administration expenses	221,000	93,000
Staff cost	101,000	50,000
Selling and distribution expenses	65,000	58,000
Finance cost	10,000	4,000
Profit before tax	183,000	115,000
Less: Tax expenses	45,000	28,000
Profit for the year	138,000	87,000

	WS Bhd RM000	YY Bhd RM000
Retained earnings brought forward	310,000	180,000
+ Profit for the period	138,000	87,000
Dividend Retained earnings carried forward	(50,000)	(36,000)
	398,000	231,000

Additional information:

1. The companys income tax rate for the year was 24%. The tax effects on unrealized profit for intragroup transactions need to be accounted for.
2. The group policy is to depreciate the property, plant and equipment using the straight-line method and on full-year depreciation basis.
3. During the year, there is an impairment of goodwill amounting to RM25,000,000 (gross amount). The impairment loss is to journalize to administration expenses.
4. The companies declared and paid dividend during the year. The dividend received is to journalize to other income account.
5. During the prior year, WS Bhd sold goods to YY Bhd for RM16,000,000 with inventories balance of RM6,000,000 respectively. The profit margin was 20% on cost.
6. YY Bhd sold inventories to WS Bhd amounting to RM20,000,000 during the current year. From this amount, RM12,000,000 still remained in the ending inventories of WS Bhd at the year-end. The profit margin was 20% on cost.
7. On 28 February 2021, YY Bhd sold machinery to WS Bhd for RM25,000,000. YY Bhd originally bought the machinery at the value of RM50,000,000. The machinery was depreciated for four years and the remaining useful life is six years. The gain on disposal of machinery is to journalize to other income account and loss on disposal of machinery including depreciation is to journalize to administration expenses.
8. WS Bhd had acquired 25% interest in the equity capital of GG Bhd on 1 January 2021 amounting to RM30,000,000. WS Bhd used the cost method to record the transactions of GG Bhd. GG Bhd profit before tax 2021 is RM16,000,000. WS Bhd has provided an interest-free short-term borrowing to GG Bhd amounting to RM3,000,000 on 20 November 2021.
9. On 24 December 2021, GG Bhd declared and paid dividend of RM2,000,000. The dividend received is to journalize to other income account.

1. Prepare the Consolidated Statement of Profit or Loss and Other Comprehensive Income of WS Bhd for the year ended 31 December 2021.
2. Prepare the Consolidated Statement of Financial Position of WS Bhd as at 31 December 2021.
3. Discuss the ethical issue in intercompany transactions.

SUA far4 - Word LOGENTIREN A/L PALANISAMY LA File Home Insert Design Layout References Mailings Review View Help Tell me what you want to do Share Times New Roma - 12 Aa v T of Cut Le Copy Format Painter Clipboard AaBbCCI AaBbCcl AaBbc AaBbCct AaB AaBbccc AaBbCcD 1 Normal 1 No Spac... Heading 1 Heading 2 Title Find v abc Replace Select Paste BI Uabe X, x AalyA = = TE Subtitle Subtle Em... Font Paragraph Styles Editing Statement of Financial Position As at 31 December 2021 WS Bhd YY Bhd RM'000 RM000 458,000 Non-current assets - Property, plant and equipment Land held for property development Investment in YY Bhd Investment in GG Bhd Other investments 30,000 Total non-current assets 488,000 280,000 550,000 450,000 30.000 50,000 1,360,000 Current assets Property development costs Inventories Receivables Cash and bank balances Total current assets Total assets 280,000 200,000 290,000 160,000 930,000 2,290,000 184,000 213,000 176,000 573,000 1,061,000 Equity Share capital (RM1 per unit) Retained earnings 500,000 398,000 200,000 231,000 Page 2 of 4 774 words 100% [1* English (Malaysia) Accessibility: Unavailable Type here to search B W 34C Light rain ca ENG 2:37 PM 17/5/2022 SUA far4 - Word LOGENTIREN A/L PALANISAMY LA File Home Insert Design Layout References Mailings Review View Help Tell me what you want to do Share Times New Roma - 12 Aa v T of Cut Le Copy Format Painter Clipboard AaBbCCI AaBbCcl AaBbc AaBbCct AaB AaBbccc AaBbCcD 1 Normal 1 No Spac... Heading 1 Heading 2 Title Find v abc Replace Select Paste BI Uabe X, x Aaly A TE Subtitle Subtle Em... Font Paragraph Styles Editing Revaluation reserves 75,000 Total equity 90,000 30,000 262,000 1,160,000 Non-current liabilities Deferred tax liabilities Long term Islamic debts Long term borrowings Total non-current liabilities Current liabilities Payables Short term Islamic debts Short term borrowings Total current liabilities 215,000 Total liabilities Total equity and liabilities 680,000 1,130,000 555,000 2,290,000 1,061,000 Additional information: 1. The company's income tax rate for the year was 24%. The tax effects on unrealized profit for intragroup transactions need to be accounted for. [1* English (Malaysia) Accessibility: Unavailable Type here to search B 34C Light rain 14 Page 3 of 4 774 words 100% W HE ca ENG 2:38 PM 17/5/2022 SUA far4 - Word LOGENTIREN A/L PALANISAMY LA File Home Insert Design Layout References Mailings Review View Help Tell me what you want to do Share Times New Roma - 12 Aa v T of Cut Le Copy Format Painter Clipboard AaBbCCI AaBbCcl AaBbc AaBbCct AaB AaBbccc AaBbCcD 1 Normal 1 No Spac... Heading 1 Heading 2 Title Find v abc Replace Select Paste BI Uabe X, x AalyA = = TE Subtitle Subtle Em... Font Paragraph Styles Editing Statement of Financial Position As at 31 December 2021 WS Bhd YY Bhd RM'000 RM000 458,000 Non-current assets - Property, plant and equipment Land held for property development Investment in YY Bhd Investment in GG Bhd Other investments 30,000 Total non-current assets 488,000 280,000 550,000 450,000 30.000 50,000 1,360,000 Current assets Property development costs Inventories Receivables Cash and bank balances Total current assets Total assets 280,000 200,000 290,000 160,000 930,000 2,290,000 184,000 213,000 176,000 573,000 1,061,000 Equity Share capital (RM1 per unit) Retained earnings 500,000 398,000 200,000 231,000 Page 2 of 4 774 words 100% [1* English (Malaysia) Accessibility: Unavailable Type here to search B W 34C Light rain ca ENG 2:37 PM 17/5/2022 SUA far4 - Word LOGENTIREN A/L PALANISAMY LA File Home Insert Design Layout References Mailings Review View Help Tell me what you want to do Share Times New Roma - 12 Aa v T of Cut Le Copy Format Painter Clipboard AaBbCCI AaBbCcl AaBbc AaBbCct AaB AaBbccc AaBbCcD 1 Normal 1 No Spac... Heading 1 Heading 2 Title Find v abc Replace Select Paste BI Uabe X, x Aaly A TE Subtitle Subtle Em... Font Paragraph Styles Editing Revaluation reserves 75,000 Total equity 90,000 30,000 262,000 1,160,000 Non-current liabilities Deferred tax liabilities Long term Islamic debts Long term borrowings Total non-current liabilities Current liabilities Payables Short term Islamic debts Short term borrowings Total current liabilities 215,000 Total liabilities Total equity and liabilities 680,000 1,130,000 555,000 2,290,000 1,061,000 Additional information: 1. The company's income tax rate for the year was 24%. The tax effects on unrealized profit for intragroup transactions need to be accounted for. [1* English (Malaysia) Accessibility: Unavailable Type here to search B 34C Light rain 14 Page 3 of 4 774 words 100% W HE ca ENG 2:38 PM 17/5/2022

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