The summarized Statement of Financial Position of P Bhd. and S Bhd. as at 31 December 2016 is shown below: P Bhd. RM ‘000 S Bhd. RM ‘000 Non – current assets Property, plant & equipment 720 160 Investment in S Bhd. 185 Current assets 175 95 1,080 255 Share capital 400 100 Retained earnings b/f 500 60 Retained earnings – current year 60 12 Current liabilities 120 83 1,080 255 Additional information: (i) P Bhd. acquired 60% of S Bhd. on the date of acquisition (1/7/2016) (ii) P Bhd. adopts the proportional net assets value method in valuation of non- controlling interest. (iii) At date of acquisition, fair value of NCI was RM 50,000 Prepare the Consolidated Statement of Financial Position as at 31/12/2016
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
The summarized Statement of Financial Position of P Bhd. and S Bhd. as at 31
December 2016 is shown below:
P Bhd.
RM ‘000
S Bhd.
RM ‘000
Non – current assets
Property, plant &
equipment
720 160
Investment in S
Bhd.
185
Current assets 175 95
1,080 255
Share capital 400 100
Retained earnings –
current year
60 12
Current liabilities 120 83
1,080 255
Additional information:
(i) P Bhd. acquired 60% of S Bhd. on the date of acquisition (1/7/2016)
(ii) P Bhd. adopts the proportional net assets value method in valuation of non-
controlling interest.
(iii) At date of acquisition, fair value of NCI was RM 50,000
Prepare the Consolidated Statement of Financial Position as at 31/12/2016.
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