Macadamia Berhad acquired a subsidiary, Almond Berhad, on 1

Macadamia Berhad acquired a subsidiary, Almond Berhad, on 1 October 2018. The statements of financial position of Macadamia Bhd and Almond Bhd as at 30 September 2019 are as follows:

The following information is available:

1. The share capital of Almond Bhd consists of ordinary shares of RM1 each. There have been no changes to the balances of share capital and share premium during the year. No dividends were paid or proposed by Almond Bhd during the year.

2. Macadamia Bhd acquired all the shares in Almond Bhd on 1 October 2018.

3. At 1 October 2018, the retained earnings of Almond Bhd were RM24,700,000.

4. The fair value of the non current assets of Almond Bhd at 1 October 2018 was

RM37,000,000. The book value of the non current assets at 1 October 2018 was

RM33,000,000. The revaluation has not been recorded in the books of Almond Bhd (ignore any effect on the depreciation for the year). There were no other differences between the book value and the fair value of the other assets and liabilities of Almond Bhd at the date of acquisition.

Required:  

1. Prepare a Consolidated Statement of Financial Position of Macadamia Group as at 30 September 2019.

(15 marks)

2. Assume Macadamia Bhd. are willing to pay RM40,000,000 to takeover Almond Bhd due to the high reputation of Almond in the industry, and no other changes in the other components involved. Recalculate whether there will be a positive goodwill, a negative goodwill or none. Briefly explain the requirement of the accounting treatment for the item that existed from there onwards.