Pam acquired 80% of the 100 million ordinary shares of San for a cash consideration of RM720 million. The retained profit at that date was RM450 and the fair value of non-controlling interest was RM20 million. Goodwill on acquisition of San of RM16 million. On 1 September 2019, Pam disposed 80% of its interest in San for RM672 million. However, Pam was still able to participate in the financial and operating policy decisions of San through its significant representation on the board. On disposal date, the fair value of the net assets of San was RM1,140 million and the fair value of one ordinary share of San was RM10.40. Goodwill on acquisition of San was previously impaired by 20%. Required: a) Advise Pam the implication on its relationship with San before and after the disposal of 80% of its interest in San, in the context of MFRS 124 Related Party Disclosures and MFRS 10 Consolidated Financial Statements. b) Advise Pam on how the disposal of shares in San should be correctly dealt with in the consolidated financial statements, with reference to MFRS 10 Consolidated Financial Statements. Support your answer with computation of the gain or loss on disposal of San.
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Pam acquired 80% of the 100 million ordinary shares of San for a cash consideration of RM720 million. The retained profit at that date was RM450 and the fair value of non-controlling interest was RM20 million.
On 1 September 2019, Pam disposed 80% of its interest in San for RM672 million. However, Pam was still able to participate in the financial and operating policy decisions of San through its significant representation on the board. On disposal date, the fair value of the net assets of San was RM1,140 million and the fair value of one ordinary share of San was RM10.40. Goodwill on acquisition of San was previously impaired by 20%.
Required:
a) Advise Pam the implication on its relationship with San before and after the disposal of 80% of its interest in San, in the context of MFRS 124 Related Party Disclosures and MFRS 10 Consolidated Financial Statements. b) Advise Pam on how the disposal of shares in San should be correctly dealt with in the consolidated financial statements, with reference to MFRS 10 Consolidated Financial Statements. Support your answer with computation of the gain or loss on disposal of San. |
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