BAC 3634 Corporate Accounting I

Trimester 1 2015/2016

Group Assignment

Topic:
IFRS & IAS and The Practical Disclosure In
Fraser & Neave Holdings Berhad

Prepared for:
Mdm. Haslin Binti Johari

Prepared by: No. | Name | ID | 1 | Tan Se Man | 1102703355 | 2 | Wong Chin Ang | 1102703373 | 3 | Gan Hui Leng | 1102703420 | 4 | Neo Zi Sin | 1102703513 | 5 | Cheah Zhi Qin | 1112701231 |

Table of Contents

List of Diagrams I 1.0 Introduction 1 1.1 Economics of F&N Holdings Berhad 1 2.0 The Users of Financial Statements and Their Information Needs 4 3.0 Discussion of Standards Related to Consolidation and its Actual Presentation 6 4.0 Conclusion 14 Reference 16

List of Diagrams

Exhibit 1 Group Structure & Summary of Ownership Interests in Subsidiary
Exhibit 2(a) Disclosure of Ownership Interest in Subsidiaries
Exhibit 2(b) Disclosure of Ownership Interest in Subsidiaries
Exhibit 3 Consolidated and Separate SOPL
Exhibit 4 Consolidated and Separate Statements of Comprehensive Income
Exhibit 5(a) Consolidated SOFP
Exhibit 5(b) Separate SOFP
Exhibit 6 Consolidated SOCIE
Exhibit 7 Separate SOCIE
Exhibit 8 Consolidated and Separate SOCF
Exhibit 9 Disclosure about Reporting Date
Exhibit 10 Acquisition Method of Business Combinations
Exhibit 11 Comparisons of Investment in Subsidiaries of 2 years
Exhibit 12 Goodwill as Intangible Assets and Computations
Exhibit 13(a) Goodwill Recognized on Acquisition Date
Exhibit 14 Goodwill shown in Intangible Assets
Exhibit 15 Investment in A Joint Venture
Exhibit 16 Equity Method of Joint Venture
Exhibit 17 Adjustments to CSOFP for MFRS 11 Adoption
Exhibit 18 Adjustments to CSOCIE & CSOCF for MFRS 11 Adoption
Exhibit 19 Adjustments to SOFP, and SOCF for MFRS 11 Adoption
Exhibit 20 Summary of Financial Information Investment in A Joint Venture
Exhibit 21 Separate Calculation for Investment in Associates
Exhibit 22 Recognition of Dividend Income
Exhibit 23 Dividend Income From Subsidiaries and Associate
Exhibit 24 Investment in An Associate
Exhibit 24 Summary of Financial Information Investment in An Associate

1.0 Introduction
The objectives of this assignment is to allow students to have a closer and thorough look in the accounting standards set out by the IASB and to gain knowledge on the requirement by the standards on how the companies should disclose the relevant information in their financial report in a proper manners as aligned to the standards, as well as to evaluate how is the standards being practically incorporated by the company in the real world.
Our group has decided to choose Fraser & Neave Holdings Berhad as our target company for conducting this assignment. The discussion and analysis of the practice of disclosures of the relevant consolidation standards by the company will be shown in the later paragraphs.

1.1 Economics of F&N Holdings Berhad

Background
Fraser and Neave is commonly known as “F&N” by the people were founded by 2 printing businessmen, John Fraser and David Neave in the formal name of Singapore and Straits Aerated Water Company a century back in the year of 1883 in producing carbonated soft drinks. The company changed the name to its present name, which then went public as Fraser & Neave Holdings Berhad in the year of 1898. The company later expanded the product lines to involve producing beer, dairies by late 50s. The company further expands their product lines to include ice cream products in the 70’s and isotonic drink in the early of 80’s. The company then diversified their business operation to involve property development and management in the early 90s and later involved in publishing & printing business in the year of 2000. Today, F&N becomes a leading Asia Pacific Consumer Group with their expertise and prominent standing in the Food & Beverage and Publishing & Printing industries and even been ranked as one of the most established and successful companies in Singapore for its impressive array of renowned brands and strong market leadership.

Group Structure
The corporate structure of Fraser & Neave Holdings Berhad’s is structured based on its business nature. As shown in Exhibit 1, it can be seen that there are 5 categories of business, of which a total of 23 subsidiaries companies and 1 associate company has been categorized into business lines of Soft Drinks, Dairies product in Malaysia, Dairies product in Thailand, Property and Others.
For the first category, there are 4 subsidiary companies that involved in the business of manufacturing and selling soft drinks products. F&N Beverages Manufacturing Sdn Bhd, being the direct subsidiary is wholly owned (100% interest) owned by Fraser & Neave Holdings Berhad, is involved in the manufacturing of Soft Drinks products. Through its 100% direct ownership of the shares in Borneo Springs Sdn Bhd by its direct subsidiary, it allows the parent company to gain indirect control over Borneo Springs which is in the same business practice. On the other hand, F&N Beverages Marketing Sdn Bhd is also a direct fully owned subsidiary company of Fraser & Neave Holdings Berhad, this subsidiary’s 100% ownership of the voting shares in F&N Beverages (Thailand) Limited has enabled the parent company to gain indirect control over the company.
Moving on, there are 6 direct subsidiaries companies involved in the second category of business operation about manufacturing dairies products in Malaysia. These 6 fully owned companies are F&N Dairies (Malaysia) Sdn Bhd, F&N Dairies Manufacturing Sdn Bhd, F&N Dairies Distribution (Singapore) Pte Ltd, Lion Share Management Limited, F&N Foods Sdn Bhd, and Premier Milk (Malaya) Sdn Bhd.
Next, there is only 1 subsidiary company called F&N Dairies (Thailand) Limited which is fully owned by Fraser & Neave Holdings Berhad. It falls in the third category of business nature, which is manufacturing Dairies products that based in Thailand.
The fourth nature of business of Fraser & Neave Holdings Berhad is property development in Malaysia. In total, there are 9 subsidiaries companies and 1 associate company of the parent involved, whereby 8 of them are fully owned by the parent, namely F&N Properties Sdn Bhd, Wimanis Sdn Bhd, Elsinburg Holdings Sdn Bhd, Greenclipper Corporation Sdn Bhd, Nuvak Company Sdn Bhd, Utas Mutiara Sdn Bhd, Tropical League Sdn Bhd, and Kuala Lumpur Glass Manufacturers Company Sdn Bhd. In particular, Lettricia Corporation Sdn Bhd being the direct subsidiary company is 70% owned by the parent. Vacaron Company Sdn Bhd, however, being 50% owned by the parent, is the only subsidiary company that is owned through investment in joint venture with FCL Centrepoint Pte Ltd (FCLC).
Finally, there are 3 subsidiary companies which are fully owned by Fraser & Neave Holdings Berhad. They fall in the last category of business nature that is other than Food and Beverages and Property Development, namely Fraser & Neave (Malaya) Sdn Bhd, F&N Capital Sdn Bhd, and Four Eights Sdn Bhd.

2.0 The Users of Financial Statements and Their Information Needs The objective of financial reporting is to provide financial information about the reporting entity that is useful to users. In the case of F&N Holdings Berhad, it is important to disclose information that fulfill the information needs of 3 information users, namely the investors, lenders, and creditors for their decision making. According to Lucian (2013), the group of investors consists of existing investors and potential investors. In particular, existing investors of F&N Holdings Berhad as the providers of risk capital and their advisers are concerned with the risk inherent in, and return provided by their investments. They need information to help them determine whether they should buy, hold or sell. Shareholders are also interested in information which enables them to assess the ability of the enterprise to pay dividends. Similarly, the potential investors of F&N Holdings Berhad would like such information to understand the prospects of the operation of the company’s business to determine the profitability and future growth of the shares before making investments. They are interested in the potential profits and the security of their investment. For this purpose, future profits may be estimated from the company’s past performance as shown in the income statement. The security of their investment will be revealed by the financial strength and solvency of the company as shown in the statement of financial position (SOFP). Moving on, lenders are interested in information that enables them to determine whether their loans, and the interest attaching to them, will be paid when due. The lenders of F&N Holdings Berhad will require financial statements in order to estimate the ability of the borrower to pay back all loaned funds and related interest charges. Banks and other financial institutions are interested in the company’s ability to pay liabilities upon maturity. For this purpose, it will depend on the solvency of the company, of which should be revealed by the statement of financial position. Also, long-term loans may be backed by security given by the business over specific assets. The value of these assets will be indicated in the SOFP. Loan creditors of the company, on the other hand, will consider cash flow and the Cash Flow Statement will be of particular interest here. Last but not least, the suppliers or other creditors of F&N Holdings Berhad are interested in information that enables them to determine whether amounts owing to them will be paid when due. Trade creditors are likely to be interested in an enterprise over a shorter period than lenders unless they are dependent upon the continuation of the enterprise as a major customer. They are nonetheless especially interested in the company's liquidity. Information pertaining to the ability to pay short-term obligations can be reflected from the SOFP. They would be interested in the financial stability of the business in terms of cash flow and the firm’s ability to meet its short-term liabilities.

3.0 Discussion of Standards Related to Consolidation and its Actual Presentation
International Financial Reporting Standards (IFRS) are a set of accounting standards developed by the International Accounting Standards Board (IASB) that is becoming the global standard for the preparation of public company financial statements. In our analysis, 6 IFRSs related to consolidation, namely IFRS 3, IFRS 10, IFRS 11, IFRS 12, IAS 27 and IAS 28, are used to discuss the presentation and disclosure in the annual report of F&N Holdings Berhad.
IFRS 10 Consolidated Financial Statements outlines the requirements for the preparation and presentation of consolidated financial statements, requiring entities to consolidate entities it controls. The standard requires a parent entity to present consolidated financial statements defines the principle of control, and establishes control as the basis for consolidation set out how to apply the principle of control to identify whether an investor controls an investee. Therefore, it must consolidate the investee sets out the accounting requirements for the preparation of consolidated financial statements, defines an investment entity, and sets out an exception to consolidating particular subsidiaries of an investment entity.
An investor controls an investee if and only if the investor has all of the 3 elements. First, the power over the investee such that the investor has existing rights that give it the ability to direct the relevant activities that significantly affects the investee's returns. Power arises from such rights which can be straightforward through voting rights, or be complex embedded in contractual arrangements. Yet, protective rights cannot give rise to such control. Second, the exposure to variable returns from its involvement with the investee, whereby such returns must have the potential to vary as a result of the investee's performance. Third, a parent must have the ability to use its power over the investee to affect its returns from its involvement with the investee. In the case of F&N Holdings Berhad, there are 23 subsidiaries in total, observable in Exhibit 1, 2a & 2b, all of which are fully owned subsidiaries with 100% ownership interest held by the group, except for 1 subsidiary namely Lettricia Corporation Sdn Bhd. This subsidiary’s 70% ownership interest is help by the group, with non-controlling interest, which is not material to the Group. Also, disclosed and noted in the annual report that the percentage of ownership in all the subsidiaries is equal to the proportion of voting rights held. This has fulfilled the first requirement of control. In addition, the majority of ownership in these subsidiaries by F&N Holdings Berhad faces no interference from contractual agreements with other party nor government regulated contracts, have given rise to the fulfillment of other 2 requirements of control that are the exposure to variable returns from its involvement with the investee and the ability to use its power over the investee to affect its returns from its involvement with the investee. Thus, the fulfillment of all 3 requirements of control has shown that control in all 23 subsidiaries exist, requiring F&N Holdings Berhad to consolidate these entities it controls, asserted by IFRS 10. According to Tan Liong Tong (2013), an investor, who can exercise more than a majority of the voting rights, has control of the investee, and is especially important to prove the existence of control when no other parties holds a majority of the voting rights in an investee, and voting rights are clearly the only basis of assessment of control. As such, the control of F&N Holdings Berhad over the 23 subsidiaries is in line with Tan’s exertion.
IFRS 10 also exempts a parent’s need for the presentation consolidated financial statements if it is a wholly or partially owned subsidiary and is not object by its immediate parent for not presenting consolidated financial statements; its debt or equity instruments are not traded in a public market; it did not file, nor is it in the process of filing, its financial statements with a securities commission; and its ultimate or any intermediate parent of the parent produces financial statements available for public use that comply with IFRSs. In the case of F&N Holdings Berhad, exemption from preparing consolidated financial statements is unavailable, even though it has an ultimate holding company called TCC Assets Limited incorporated in the British Virgin Islands, but the group itself is already listed in the public market in Malaysia. Thus, it does not fulfill all the exemption requirements, requiring the group to prepare consolidated financial statements as shown in Exhibit 3 to 8. According to Jane Lazar (2015), such consolidation is done by combining items of assets, liabilities, equity, income, expenses and cash flows of the parent with those of its subsidiaries, offsetting the carrying amount of the parent's investment in each subsidiary and the parent's portion of equity of each subsidiary, and eliminating in full intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between entities of the group. This has been applied with due care by F&N Holdings Berhad in all of its consolidated financial statements presented in Exhibit 3 to 8.
IFRS 10 also specifies that the parent and subsidiaries are required to have the same reporting date. This is done by using the most recent financial statements of the subsidiary and adjusting for the effects of significant transactions or events between the reporting dates of the subsidiary and consolidated financial statements. The difference between the date of the subsidiary's financial statements and that of the consolidated financial statements shall be no more than three months. In the case of F&N Holdings Berhad, the financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the group, as disclosed in the notes to the financial statement, observable in Exhibit 9.
IFRS 3 Business Combinations outlines the accounting when an acquirer obtains control of a business. Such business combinations are accounted for using the acquisition method, which generally requires assets acquired and liabilities assumed to be measured at their fair values at the acquisition date. According to Tan Liong Tong (2013), a business combination occurs when there is evidence of transferring cash, incurring liabilities, issuing equity instruments, or by contract. Further, if it is structured to satisfy legal, taxation or other objectives, including one entity becoming a subsidiary of another transfer of net assets from one entity to another, such event has also give rise to a business acquisition. In the case of F&N Holdings Berhad, acquisitions of subsidiaries are accounted for using the acquisition method, as supported by Exhibit 10. In its application of acquisition method, the cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. Thus, any premium paid over the market value of the subsidiaries’ assets acquired (Goodwill) is reflected in the business combinations.
However, it is also important to note that, there were no additional investments in subsidiaries made in the year 2014. Hence, the balance of investments in subsidiaries has no changes from previous financial year 2013, which can be witnessed in the separate financial statement of the company (Investment in Subsidiaries in 2013-2014: RM955,010,000) [refer back Exhibit 1], even after accounted for the impairment loss, also observable in Exhibit 11. Such investment is not shown in the group financial statement (COSFP) because it has already been consolidated into the group financial statements as required by IFRS 10. This proves that F&N Holdings Berhad has applied IFRS strictly.
According to Moehrle and Reynolds (2001), Pooling of Interests Method does not present goodwill accurately, as using this method, balance sheets (assets and liabilities) of the combining companies are simply added together, item by item. Any premium paid over the market value of the assets or goodwill is not reflected in the merger or acquisition and, as such, does not need to be amortized and expensed on a going forward basis. In contrast, under the Acquisition Method, any premium paid over the fair market value is reflected on the acquirer’s balance sheet as goodwill which would ordinarily be amortized and expensed over a twenty years period. Therefore, it can be concluded that, without the information that the acquisition method provides, investors of F&N Holdings Berhad are left in the dark as to the real cost of one company buying another and are unable to track future returns on the investment.
IFRS 3 establishes 2 principles in relation to the recognition and measurement of items arising in a business combination. First, the recognition principle requires that identifiable assets acquired, liabilities assumed, and non-controlling interests (NCI) in the acquiree, to have separate recognition from goodwill. Second, the measurement principle requires that all assets acquired and liabilities assumed in a business combination are measured at acquisition-date fair value. In the case of F&N Holdings Berhad, it has recognized its assets acquired, liabilities assumed, and non-controlling interests in the acquiree, separately from goodwill, as supported by [refer back to Exhibit 8: CSOFP], following the principle of recognition. It is important to note that the balance of Goodwill has been incorporated into Intangible Asset in CSOFP, supported by Exhibit 12, of which Goodwill, Brand, NCI will be discussed further in the following paragraphs. Also, it has followed the measurement principle that all assets acquired and liabilities assumed in a business combination measured at acquisition-date fair value, although no additional acquisition was made during the financial year, observable by Exhibit 13(a).
IFRS 3 also requires that Goodwill is measured as the difference between the aggregate of (i) the value of the consideration transferred at fair value, (ii) the amount of any non-controlling interest, and (iii) in a business combination achieved in stages, the acquisition-date fair value of the acquirer's previously-held equity interest in the acquiree, shown in Exhibit 13(b). If the difference above is negative, the resulting gain is a bargain purchase in profit or loss. In the case of F&N Holdings Berhad, Goodwill resulted from the business combinations with subsidiaries are shown in Intangible Assets, of which the breakdown of computation after Impairment of Goodwill is disclosed [refer back to Exhibit 12: Goodwill as Intangible Assets]. According to KPMG (2010), MFRS 10 deals with both goodwill and intangible assets, whereas goodwill arising through a business combination is dealt in IFRS 3 Business Combinations while intangible assets are dealt with in a separate standard, that of IAS 38 Intangible Assets. The IASB takes the approach of combining both goodwill and intangible assets into one standard on the grounds that they are so closely related and to avoid accounting arbitrage that would arise as a result of giving similar items on the balance sheet different names. Hence, it is legitimate to present goodwill in combination with other intangible assets of F&N Holdings Berhad.
According to Jane Lazar (2015), Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interests over the net identifiable assets acquired and liabilities assumed. This is applied by F&N Holdings Berhad. However, it is important to note that Impairment of goodwill of RM5,392,000 in the previous financial year relates to goodwill arising from the acquisition of a subsidiary, Premier Milk (Malaya) Sdn Bhd, which has ceased operations and whose manufacturing licence was novated to F&N Dairies Manufacturing Sdn Bhd. The recoverable amount of the goodwill was determined to be RM nil.
In addition, IFRS 3 requires that acquired Intangible assets must be recognized and measured at fair value in accordance with the principles if it is separable or arises from other contractual rights, irrespective of whether the acquiree had recognized the asset prior to the business combination occurring. This is because there is always sufficient information to reliably measure the fair value of these assets. In the case of F&N Holdings Berhad, included as Intangible Assets consist of Brands resulted from Business Combinations with subsidiaries. The breakdown of the computation of Brands is also provided [refer back Exhibit 12: Brands as Intangible Assets]. Brands are noncurrent assets that are not recognized in the subsidiaries’ respective financial statements due to the reason of self-generated intangible assets, but should be disclosed in the CSOFP. The treatments of Brands are disclosed in the annual report, observable in Exhibit 14.
Furthermore, IFRS 3 allows an accounting policy choice, available on a transaction by transaction basis to measure NCI either at fair value (full goodwill method), or the NCI's proportionate share of net assets of the acquiree (partial goodwill method). In the case of F&N Holdings Berhad as discussed earlier, the NCI of the group is calculated based on the partial goodwill method, observable in Exhibit only resulted from the only subsidiary that is not fully owned by the company, constituting 30% ownership of interest held by non-controlling interests in the subsidiary called Lettricia Corporation Sdn Bhd. NCI is disclosed in the CSOPL, CSOCIE and CSOFP [refer back to Exhibit 3, 4 & 5].
IFRS 11 Joint Arrangements outlines the accounting by entities that jointly control an arrangement. Joint control involves the contractually agreed sharing of control and arrangements subject to joint control are classified as either a joint venture (representing a share of net assets and equity accounted) or a joint operation (representing rights to assets and obligations for liabilities, accounted for accordingly). In the case of F&N Holdings Berhad, the company had entered into a conditional subscription-cum-shareholders agreement with FCL Centrepoint Pte Ltd to form a joint venture in 2011, via its wholly owned subsidiary, Vacaron Company Sdn Bhd (VCSB) for the purpose of carrying out a proposed mixed development on the land. Such Investments in Joint Ventures has been disclosed in the CSOFP [refer back Exhibit 5]. Further details such as the computation, name of Joint Venture and proportion of ownership of interest are disclosed in Exhibit 15, showing that VCSB is the only investment in Joint Venture by the company with 50% ownership. Moreover, the joint venture had no other contingent liabilities or capital commitments as at 30 September 2014 and 2013
IFRS 11 also requires that a joint venturer recognizes its interest in a joint venture as an investment accounted using the equity method in accordance with IAS 28 Investments in Associates and Joint Ventures. In the case of F&N Holdings Berhad, the company has adopted IFRS 11 in replacement of MFRS 131 to account for JCE using the equity method, supported by Exhibit 16. According to Tan Liong Tong (2013), MFRS 11 removes the option to account for jointly controlled entities (JCE) using proportionate consolidation (PC). So, this brings up a change to using equity method, affecting VCSB that leads to an adjustment to its CSOFP, CSOCIE, CSOCF, SOFP, and SOCF, observable in Exhibit 17, 18 and 19.
According to Hanetsedet and Stockinger (2014), the elimination of the PC method was a step towards a more consistent framework that can be justified, and that leads to divergent conceptual results compared with the equity method, that comparability between IFRS reports is more difficult and that it contravenes the economic unity concept of the framework.

IFRS 12 Disclosure of Interests in Other Entities is a consolidated disclosure standard requiring disclosures about an entity's interests in subsidiaries, joint arrangements, associates and unconsolidated structured entities. Disclosures are presented as a series of objectives, to enable users of its financial statements to evaluate the nature, extent and financial effects of its interests in joint arrangements and associates, and also the risks associated with its interests in joint ventures and associates. In the case of F&N Holdings Berhad, the information related to such objective has been disclosed according as discussed in the previous paragraphs [refer back to Exhibit 15-19]. Investments in Joint Ventures has been disclosed in accordance with IFRS 12, with all information is summarized in Exhibit 20.
IAS 27 Separate Financial Statements outlines the accounting and disclosure requirements for separate financial statements, which are prepared for either at cost or in accordance with IAS 39 Financial Instruments: Recognition and Measurement or IFRS 9 Financial Instruments. In the case of F&N Holdings Berhad, the company has prepared separate financial statements and consolidated financial statements respectively in the annual report [refer back Exhibit 3, 4, 6 and 8].
IAS 27 also requires that if an entity elects, in accordance with IAS 28, to measure its investments in associates or joint ventures at fair value through profit or loss in accordance with IFRS 9, it shall also account for those investments in the same way in its separate financial statements. In the case of F&N Holdings Berhad, the company has prepared separate calculation for the Investment in Joint Venture, observable in Exhibit 19 & 21. In the Company's separate financial statements, investments in associates and joint ventures are accounted for at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.
IAS 27 also requires that an entity recognizes a dividend from a subsidiary, joint venture or associate in profit or loss in its separate financial statements when its right to receive the dividend in established. In the case of F&N Holdings Berhad, Dividend income was recognized when the Group's right to receive payment is established, supported by Exhibit 22. Further, it has disclosed separately about Dividend Income from Subsidiaries and Associates, as shown in Exhibit 23.

IAS 28 Investments in Associates and Joint Ventures outlines the application and limited exceptions, the equity method to investments in associates and joint ventures. The standard also defines an associate by reference to the concept of "significant influence", which requires power to participate in financial and operating policy decisions of an investee. An entity holds 20% or more of the voting power (directly or through subsidiaries) on an investee, it will be presumed the investor has significant influence. According to Jane Lazar (2015), under the equity method, on initial recognition the investment in an associate or a joint venture is recognized at cost, the carrying amount is increased or decreased to recognize the investor's share of the profit or loss of the investee after the date of acquisition.
In the case of F&N Holdings Berhad, Investments in An Associate of total RM78,386,000 has been disclosed in the CSOFP [refer back Exhibit 5]. Further details such as the computation, name of an associate, principal activities, and proportion of ownership of interest are disclosed in Exhibit 24, showing that Cocoaland Holdings Berhad (CHB) is the only investment in Associate by the company with 27.19% ownership. This is in line with the standard to of significance influence of the company onto CHB, as it holds 20% or more of the voting power. Moreover, the share of results of an associate is derived from the sum total of its unaudited quarterly results recognized by the Group for the four quarters ended 30 June 2014. Furthermore, the breakdown of Investments in Associates is shown in Exhibit 25.It has included all the changes in the interest of Investment in Associates like proportion of the group’s interest in the asset and liability in CHB, and its share of interest in CHB’s profit for the year, of which the Investment in An Associate is presented as RM68,353,000 in the CSOPF [refer back to Exhibit 5(a)].

4.0 Conclusion In completing the assignment, we utilize the database of Bloomberg and the official website of F&N Holdings Berhad for the quick access of the relevant background information and economics of group. For a better and comprehensive understanding on the financial reporting standards for reporting entity in Malaysia, we have referred to several secondary sources of literature, such as refereed academic journals, professional journals and books. In particular, we have referred to the books at the academic market, which are "Company and Group Financial Reporting" by Jane Lazar and "Consolidated Financial Statements" by Tan Liong Tong. Both of the books provide us a general framework on the requirements of financial reporting for a reporting entity and how the financial statements should be presented and disclosed on the annual report. Besides, we have referred to various refereed academic journals, such as "Information Needs of Financial Statement Users-Between Harmony and Conflict" by Lucian, etc. (refer to Reference) and the information of academic journals published are being referred to and cited accordingly. In our analyses discussions, we have cited the professional journals, "Intangible Assets and Goodwill in the Context of Business Combinations" by KPMG as we found that it is more closely aligned to professional needs and relatively more practical as compared with the refereed academic journals. Generally, different user categories have respective needs on company's financial information depending upon their functions. From the analysis, we learned that the information needs of the users are of central concern on future net cash inflows of organization, quality of management's stewardship as well as an entity’s economic resources and claims. The users, including the investors, lenders, and creditors, put their primary concern on the organization's ability to pay back the liabilities and its profitability prior to the decision of investment and credit approval. Hence, an appropriate financial reporting which complied with the IFRS is crucial in order to disclose the financial strength and solvency of the company to the users. For the presentation and disclosure on financial reporting, we found that it is important to comply in accordance with IFRS 3 Business Combinations, IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 12 Disclosure of Interests in Other Entities, IAS 27 Separate Financial Statements and IAS 28 Investments in Associates and Joint Ventures. In the case of F&N Holdings Berhad, it managed to disclose the sufficient and appropriate information as required under all the above mentioned IFRSs.

Reference

International Accounting Standards Board (2010) The Conceptual Framework for
Financial Reporting 2010

KPMG. (2010) Intangible Assets and Goodwill in the Context of Business Combinations (2010): 27.

Lazar, J. (2015). Company & Group Financial Reporting. 8th ed. Bangsar, Kuala Lumpur:
Pearson Malaysia Sdn Bhd.

Lucian, I. S. (2013) Information Needs of Financial Statement Users-Between Harmony and
Conflict. Pg. 644

Reynolds, J., & Moehrle, S. (2001). Say Good-Bye to Pooling and Goodwill
Amortization. Journal of Accountacy. Business & Industry/Financial Reporting Web. 18 Sept. 2015.

Stockinger, M., & Hanetseder, S. (2014). How Does the Elimination of the Proportionate
Consolidation Method for Joint Venture Investments Influence European Companies?. Journal of Finance and Risk Perspectives, 3(1), 18-18.

Tan, Liong Tong. Consolidated Financial Statements. 7th ed. Kuala Lumpur: CCH, 2013.

Appendix

Exhibit 1 Group Structure & Summary of Ownership Interests in Subsidiary

Exhibit 2(a) Disclosure of Ownership Interest in Subsidiaries Exhibit 2(b) Disclosure of Ownership Interest in Subsidiaries Exhibit 3 Consolidated and Separate SOPL Exhibit 4 Consolidated and Separate Statements of Comprehensive Income Exhibit 5(a) Consolidated SOFP Exhibit 5(b) Separate SOFP Exhibit 6 Consolidated SOCIE Exhibit 7 Separate SOCIE CSOCF & SOCF continue next page… Exhibit 8 Consolidated and Separate SOCF

Exhibit 9 Disclosure about Reporting Date

Exhibit 10 Acquisition Method of Business Combinations

Exhibit 11 Comparisons of Investment in Subsidiaries of 2 years

Exhibit 12 Goodwill as Intangible Assets and Computations Exhibit 13(a) Goodwill Recognized on Acquisition Date Exhibit 13(b) Goodwill Computation Method Exhibit 14 Goodwill shown in Intangible Assets

Exhibit 15 Investment in A Joint Venture

Exhibit 16 Equity Method of Joint Venture Exhibit 17 Adjustments to CSOFP for MFRS 11 Adoption

Exhibit 18 Adjustments to CSOCIE & CSOCF for MFRS 11 Adoption

Exhibit 19 Adjustments to SOFP, and SOCF for MFRS 11 Adoption Exhibit 20 Summary of Financial Information Investment in A Joint Venture Exhibit 21 Separate Calculation for Investment in Associates Exhibit 22 Recognition of Dividend Income

Exhibit 23 Dividend Income From Subsidiaries and Associate Exhibit 24 Investment in An Associate Exhibit 24 Summary of Financial Information Investment in An Associate