Pam also acquired 25% ordinary shares of Dil on 1 April 2019 for RM30 million, when the carrying amount of net assets reflected their fair value except for a building. The fair value of this building was RM8 million more than the carrying value and the remaining useful life was 10 years. The group’s policy was to depreciate property, plant and equipment on a yearly basis, using the straight-line method.
At reporting date 31 December 2019, it was found that the carrying value of Pam’s investment in Dil was in excess of its recoverable amount by RM1 million. Dil made a profit of RM24 million for the year ended 31 December 2019.
Required:
Discuss the presentation of Pam’s investment in Dil in the consolidated financial statements. Support your discussion with appropriate computation of the amount to be presented in the consolidated statement of profit or loss for the year ended 31 December 2019.
