QUESTION 1
Bintang Bhd, a trader of stationery, was incorporated in Malaysia with an authorized capital of RM100,000,000 consisting of 80,000,000 ordinary shares of RM1.00 each and 10,000,000 5% preference shares of RM2.00 each. The trial balance of Bintang Bhd for the year ended 31 December 2023 is as follows:
| RM | RM | |
| Freehold land at cost | 5,000,000 | |
| Building at cost | 9,100,000 | |
| Plant and equipment at cost | 5,850,000 | |
| Motor vehicles at cost | 990,000 | |
| Accumulated depreciation on 1 January 2019: | ||
| Buildings | 660,000 | |
| Plant and equipment | 990,000 | |
| Motor vehicles | 220,000 | |
| Ordinary share capital | 10,000,000 | |
| 5% preference share capital | 3,000,000 | |
| Retained earnings as at 1 January 2019 | 2,890,000 | |
| Reserves | 190,000 | |
| Rental income | 140,000 | |
| Interim dividend- Ordinary Shares | 435,000 | |
| – Preference Shares | 75,000 | |
| Loan from BMMB | 870,000 | |
| 10% debentures | 800,000 | |
| Account Receivables | 650,000 | |
| Account Payables | 2,520,000 | |
| Sales | 9,270,000 | |
| Cost of sales | 5,716,000 | |
| Rental expenses | 200,000 | |
| Staff salaries | 1,290,000 | |
| Closing Inventories | 480,000 | |
| Cash at bank | 156,000 | |
| Debenture Interest | 40,000 | |
| Bank Loan Interest | 54,000 | |
| Administrative expenses | 460,000 | |
| Distribution costs | 324,000 | |
| Tax paid | 180,000 | |
| Dividend income | 120,000 | |
| Development cost | 670,000 | |
| 31,670,000 | 31,670,000 |
Additional information:
1. On 22 January 2024, inventories costing RM200,000 were damaged and had a net realizable value of RM150,000.
2. Sales does not include goods costing RM20,000 sold to a customer who had requested for the goods to be delivered on 2 January 2024. Goods sold were invoiced at RM50,000.
3. Freehold land and buildings are not depreciated. The company’s policy is to provide depreciation as follows:
Plant and equipment 10% on cost
(charged as administrative expenses)
Building 5% on cost
Motor vehicles 10% on cost (charged as selling and distribution expenses)
4. The directors have decided to transfer to general reserve RM500,000.
5. Tax expense for the year was RM200,000.
6. The company tables its annual report by 30 June every year.
Required:
Prepare the following statements in a form suitable for publication and in compliance with the Companies Act 2016 (as amended) and approved relevant accounting standards for:
a. Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2019.
b. Statement of Financial Position as at 31 December 2019.
c. Notes to the account for Property, Plant and Equipment to accompany the above statements.
QUESTION 2
Alam Maya Bhd, a trader of scooter boards, was incorporated in Malaysia with an authorized capital of RM100,000,000 consisting of 800,000,000 ordinary shares of RM1 each and 200,000,000 5% preference shares of RM2 each. The trial balance of Alam Maya Bhd for the year ended 31 December 2019 is as follows:
| Dr | Cr | ||
| RM | RM | ||
| Sales | 1,000,000,000 | ||
| Cost of sales | 563,980,000 | ||
| Administrative expenses | 110,000,000 | ||
| Sales and distribution expenses | 120,000,000 | ||
| Bad debts | 840,000 | ||
| Directors remuneration | 760,000 | ||
| Interest on debentures
Interest on overdraft |
800,000
200,000 |
||
| Dividend income | 1,800,000 | ||
| Non-current assets: | |||
| Land | 150,000,000 | ||
| Building | 300,000,000 | ||
| Plant and machinery | 146,000,000 | ||
| Motor vehicles | 100,000,000 | ||
| Accumulated depreciation 1 January 2019 | |||
| Building | 55,000,000 | ||
| Plant and machinery | 58,400,000 | ||
| Motor vehicles | 61,480,000 | ||
| Investment | 8,400,000 | ||
| Development cost | 6,000,000 | ||
| Inventories | 30,000,000 | ||
| Trade receivables | 38,000,000 | ||
| Bank | 19,620,000 | ||
| Trade payables | 35,000,000 | ||
| Tax paid | 45,000,000 | ||
| Bank overdraft | 20,308,000 | ||
| Ordinary Share Capital
5% Preferences Share Capital |
200,000,000
10,000,000 |
||
| Retained Earnings | 188,920,000 | ||
| 10% debentures | 16,000,000 | ||
| Interim dividend – OS
– PS |
6,808,000
500,000 |
||
| 1,646,908,000 | 1,646,908,000 |
Additional information:
1. Provisions are to be made for:
a. audit fees of RM200,000, and
b. half year debenture interest.
2. Accrued dividend income was RM200,000
3. The depreciation charge for the year was as follows:
a. Building – RM 15,000,000
b. Plant and machinery – RM14,600,000
c. Motor vehicles – 6,420,000
4. The current year’s tax expense was RM40,700,000.
5. The directors have decided to transfer to general reserve RM1,000,000.
6. On 31 May 2020, the company made a bonus issue of one share for every ten (10) ordinary shares held. The share premium account is to be utilized for this purpose. This transaction has not been recorded. The bonus shares do not rank for dividends for the current year.
7. The directors declared final dividends for the preference shares and 5% for ordinary shares on 31 January 2020.
5%x RM10m = RM500,000 (total dividend that should be paid to the Pref shareholders)
Interim dividend (has been paid) = RM500,000
Final dividend = RM0
5% x RM200m = RM10m (final dividend for OS)
Required:
Prepare the following statements in a form suitable for publication and in compliance with the Companies Act 2016 (as amended) and approved relevant accounting standards:
(a) Prepare a Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2019.
(b) Statement of Financial Position at 31 December 2019.
(c) Notes to the account for Property, Plant and Equipment to accompany the above statements:
QUESTION 3
The following is the preliminary trial balance of GemilangBhd. at 30 June 2021:
| Debit | Credit | |
| RM’000 | RM’000 | |
| Revenue (note 1) | 550,000 | |
| Cost of sales | 411,500 | |
| Administrative expenses | 30,900 | |
| Sales and distribution expenses | 21,500 | |
| Director’s remuneration | 2,320 | |
| Staff benefits expenses | 6,770 | |
| Finance expenses (note 3) | 700 | |
| Dividend income | 1,428 | |
| Non-current assets – at cost | ||
| Freehold Land | 60,000 | |
| Building | 41,200 | |
| Plant and machinery | 94,500 | |
| Research and development | 15,600 | |
| Accumulated depreciation at 1 July 2020 (note 7) | ||
| Building | 20,000 | |
| Plant and machinery | 24,500 | |
| Research and development | 7,800 | |
| Investments (note 4) | 12,450 | |
| Inventory (note 2) | 3,480 | |
| Trade receivables | 12,200 | |
| Bank | 13,700 | |
| Trade payables | 1,200 | |
| 7% Term Loan | 6,550 | |
| Bank overdraft (unsecured) | 288 | |
| Tax paid (note 6) | 14,250 | |
| Ordinary share capital | 70,000 | |
| 10% Redeemable preference shares | 35,000 | |
| Retained earnings as at 1 July 2019 | 17,604 | |
| Deferred tax liability | 6,700 | |
| 741,070 | 741,070 |
Additional information:
1. Part of the revenue is a RM138,000 order that has been recognized, however delivery has been postponed until 15 July 2021 due to manufacturing problems. The sale is made on a credit basis. The value of the goods has been accounted for in the closing inventory.
2. Closing inventories valued at RM125,800 were determined to be damaged, with a net realizable value of RM20,950.
3. Finance expenses of RM700,000 includes:
RM’000
Interest on bank overdraft 20
Lease rentals 680
700
The lease rentals were for a plant which was used 10% for administrative purposes and 90% for distribution.
4. Investments comprise financial assets valued at:
Carrying Amount Fair Value
RM’000 RM’000
Fair value through profit or loss 1,050 900
Fair value through other comprehensive income 2,490 2,600
At amortised cost 8,910 8,820
12,450 12,320
None of these investments were acquired or sold during the year.
Fair value shown above is as at 30 June 2021.
5. Dividends on preference shares for the year have not been provided. The preference shares are redeemable at holder’s option.
6. The tax paid account is related to the tax paid during the year for the current year. The current year’s tax expense was estimated to be RM20,500,000 inclusive of an increase to deferred tax liability of RM8,000,000 of which RM33,000 was related to financial assets at fair value through other comprehensive income.
7. Gemilang Bhd depreciates its assets on the following basis. The depreciation for the year has not been made:
| Depreciation expenses based on | Annual Percentage
(%) |
|
| Building | Cost | 2 |
| Plant and machinery | Cost | 10 |
| Research and development | Cost | 20 |
All depreciation expenses are classified as administrative expenses.
8. The government declared in April 2021 that businesses that employ disabled individuals will be compensated for their expenses regarding the salaries provided to these employees. GemilangBhd received a letter from the government on 27 June 2021 promising a refund to Gemilang for RM175,000 in salary paid to disabled employees hired during the year. On 25 July 2021, the cash was received from the government.
Required:
(a) Prepare the statement of comprehensive income for the year ended 30 June 2021.
(b) Prepare the statement of financial position as at 30 June 2021.
Note: Clearly show your workings.
QUESTION 4
CasaBhdcommenced the construction of an item of preperty,plant and equipment on 1st March 2020 and funded it with RM10 million loan.The rate of interest on the borrowing was 5% per annum. Due to strike no construction took place between on 1st October 2020 and November 2020
Required:
Calculate the amount of interest to be capitalised and interest expenses on 31 December 2020.
QUESTION 5
The Hulk Construction Bhd is an established property development in Melaka, In the middle of the year 2010, the company obtained a project to construct 100 units of residual house in Gaint. A 10% interest borrowing term loan of RM450 million was arranged to part finance the project. The term loan was filly drawn down on 1st November 2012 was completed on 31st December 2015. From the period of 2012 to 2015, surplus fund from the loan were invested in money market intrumnets.
The interest income as follows:
| Period Investment | Interest income
RM (000) |
| 1.1.2012-31 December 2012 | 20 |
| 1.1.2013-31 December 2013 | 450 |
| 1.1.2014-31 December 2014 | 200 |
| 1.1.2015-31.12.2015 | 50 |
| Total Interest Income | 720 |
The interest cost on the loan were as follows:
| Period Loan | Interest Charged RM (000) |
| 1.11.2012-31.12.2012 | 5,000 |
| 1.1.2013-31.12.2013 | 13,000 |
| 1.1.2014-31.12.2014 | 12,000 |
| 1.1.2015-31.12.2015 | 15,000 |
| Total Interest charged | 45,000 |
Required:
Calculate the amount of interest that should be capitalised each year.
Answers to Above Questions on Financial Accounting
Answer 1: The preparation of statement of profit or loss and other comprehensive income for the year ended 31 December 2019 is performed as follows:
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