Reference no: EM13491570

QUESTION

Extracts from the statement of comprehensive income and consolidated statement of changes in equity of the Huihui Ltd Group for the year ended 30 June 2012 and its two most recent statements of financial position are set out below:

Huihui Ltd Group Consolidated statement of comprehensive income for the year ended 30 June 2012 $000 Revenues Sales revenue 26,500 Profit from sale of plant and equipment 50 26,550 Expenses from ordinary activities Cost of sales (19,500) Depreciation expense (850) Goodwill impairment (50) Bad debts (20) Other operating expenses (2,530) Profit before income tax 3,600 Income tax expense (2,700) Profit for the period 900 Non-controlling interest 100 Parent interest 800

Huihui Ltd Group Consolidated statements of financial position as at 30 June 2012 2011 Assets $000 $000 Cash and cash equivalents 4,100 4,800 Trade receivables 4,300 4,900 Inventories 4,350 3,000 Property, plant and equipment 24,750 19,000 Less: Accumulated depreciation (5,400) (4,700) Goodwill 940 - 33,040 27,000 Current liabilities Trade and other payables 8,400 7,500 Income tax payable 2,700 1,500 Shareholders' equity Issued share capital Parent equity interest 13,000 12,000 Non-controlling interest 2,240 - Retained profits Parent equity interest 5,800 6,000 Non-controlling interest 900 - 33,040 27,000

Huihui Ltd Group Statement of changes in equity for the year ended 30 June 2012 Issued capital Retained earnings Total PI NCI CFS

Balance as at 1 July 2011 12,000 6,000 18,000 18,000 Share of retained earnings of new subsidiary* 1,000 1,000 Proceeds of share issue 1,000 1,000 2,240 3,240 Total comprehensive income for the year 800 800 100 900 Dividends paid (1,000) (1,000) (200) (1,200) Balance as at 30 June 2012 13,000 5,800 18,800 3,140 21,940

*includes NCI in acquired retained profits of Liu Ltd, i.e. 40% x $2.5m.

Additional information

(a) On 31 December 2011, Huihui Ltd acquired a 60% interest in Liu Ltd. Details of the acquisition are as follows:

Fair value of subsidiary net assets at date of acquisition Issued capital 6,000 Retained earnings at 31 December 2011 2,500 8,500 Represented by Cash and cash equivalents 3,700 Trade receivables 2,300 Property, plant and equipment 5,100 Trade and other payables (3,000) 8,100 Cost of acquisition - cash purchase price 5,850 Share of subsidiary net assets acquired at fair value (60%) (4,860) Goodwill on acquisition 990

(b) During the year to 30 June 2012, items of plant and equipment with a carrying amount of $350,000 (accumulated depreciation of $150,000) were sold for a total of $400,000.

Required:

Prepare the consolidated statement of cash flows of the Huihui Ltd group for the year ended 30 June 2012 in accordance with AASB107, using the direct method. Include a note that reconciles profit with cash flows from operating activities. Show all workings.

[Adapted from: Arthur, N., Luff, L, & Keet, P. (2012). Accounting for Corporate Combinations and Associations (7th ed.). Pearson Australia, NSW]