1-help mrsaiful toexplain the purpose ofa conceptual framework.

2-identify the importance of conceptual framework

3-describe briefly the following characteristics of useful accounting information. state whether each of the characteristic is fundamental quality or ingredient to fundamental quality.

COMPREHENSIVE CASE 1 BKAR1013 Financial Accounting and Reporting 1 Conceptual Framework, Presentation of Financial Statements & Property, Plant & Equipment A161 2016/2017 Submission date: 9 October 2016 While Mr Siful conducts a friendly meeting with his friend Mr Samad, they start talking about preparing financial statements in according to conceptual framework and MFRS standards. Sifool still doubt about the purpose and the importance for such conceptual framework and has kind of confusion between the characteristics of fundamental quality and ingredient of fundamental quality. Mr Siful is a new appointed accountant in Herhiza Bhd that located in Jitra, Kedah. Mr Siful is responsible to prepare the company's financial statements, and he is under pressure to be in the safe-side by providing a financial statement that prepared in accordance to standards required by MASB. Mr Samad is a chartered accountant and has a well-known office. While they are talking in this meeting, Mr Siful remembered some events that he had a bad experience with them such as stolen money from company's night safe amount of RM 19,200 and dealing with a case that one customer sued company for negligence even though company win the case. Mr Siful faces difficulties to record these different events. A few days later, Mr Siful has a meeting with his team, providing them anonymous company financial data for the year ended 2014. He asked each member of the team to prepare a statement of profit or loss and other comprehensive income based on a format of any Malaysian listed company. 1 X Bhd Trial balance 31 December 2014 Debit RM Rent revenue Purchase discounts Salaries and wages payable Sales revenue Accumulated depreciation-equipment Cash Accounts receivable Sales discounts Accumulated depreciation-buildings Selling expenses Administrative expenses Share capital-ordinary Income tax expense Cash dividends Allowances for doubtful accounts Sales returns and allowances Notes payable Inventory Supplies Freight-in Land Provision for retirement benefits Gain on sale of land Buildings Accounts payable Equipment Revaluation of land and buildings Retained earnings Purchases Total Credit RM 18,000 11,000 15,000 1,500,000 28,000 270,700 222,000 14,500 18,600 232,000 99,000 350,000 53,900 45,000 7,000 17,500 51,000 89,000 64,000 20,000 170,000 100,000 25,000 198,000 71,000 140,000 23,000 260,000 842,000 2,477,600 Inventory in 31/12/2014 is RM 69,000 10% of the notes payable will due in June 2015. 2 2,477,600 Provision for retirement benefits of RM15,000 need to be settled in August 2015. Mr Siful also want to evaluate X Bhd's ability to efficiently issue credit to its customers and collect account receivable from them in a timely manner. Additional information is provided as follows: for year 2014, the beginning accounts receivable balance was RM75,000. Based on this information, Mr. Siful asked his staff to calculate company's accounts receivable turnover. Whilst for liquidity analysis, Mr. Siful requires his team to calculate current cash debt coverage ratio in order to measure the relationship between net cash provided by operating activities and the average current liabilities of the company. Suppose X Bhd generated RM105,000 cash from operations during the last year, and the average current liabilities is RM 92,000. Mr Siful also asks the team to evaluate the company's ability to generate income using profit margin ratio. Mr Siful also reviews the journal entries made by the account assistant for the acquisition of fixed assets as follows: 1. Land, buildings and equipment were acquired from a bankrupt company, Hazam Sdn. Bhd. for a lump-sum price of RM680,000. On acquisition date, the book value and market value of Hazam Sdn Bhd's assets were as follows: Book value RM Land Buildings Equipment 200,000 230,000 300,000 Market value RM 150,000 350,000 300,000 To be conservative, the account assistant chooses to take the lower of the two values for each asset acquired as journalized below: Dr Land Buildings Equipment Cr Cash 150,000 230,000 300,000 680,000 2. An office equipment is purchased for RM20,000, terms 2/10, n/30. No journal entry is made until it paid for the acquisition. The entry was: Dr Equipment Cr Cash Purchase discount 20,000 19,600 400 3. The company recently acquired a machine in exchange for 30,000 ordinary shares of RM1 par. The market value of the machine is RM180,000. The shares were actively traded on the Bursa Malaysia at RM6.50 on the date of exchange. The company also paid RM1,200for freight and RM3,000 for installation. The entry was: Dr Machine Expenses 195,000 4,200 3 Cr Share capital Share premium Cash 30,000 165,000 4,200 4. The company incurred the following cost in relation to the construction of a new factory and the introduction of its products to the local market. RM'000 Site preparation costs 240 Materials used 1,500 Labour costs 3,190 Payment to city council for approval of 12 factory construction Safety fence around the construction site 15 External driveways, parking bays and safety lighting 150 Removing of safety fence 10 New fence surrounding the factory 200 Payment for opening ceremony 50 END OF CASE CASE INSTRUCTIONS (a) If you were Mr. Samad, help your friend Mr. Siful to explain the purpose of a conceptual framework. (b) Identify the importance of conceptual framework. (c) Describe briefly the following characteristics of useful accounting information. State whether each of the characteristic is fundamental quality or ingredient to fundamental quality. i. Relevance ii. Faithful representation iii. Understandability iv. Comparability v. Neutrality (d) Identify the main constraint that limits company to provide information with the qualitative characteristic that makes it useful. (e) Explain how Mr Siful should account for the stolen event amount to RM19,200. (f) Explain how Mr Siful should account for the sued made by the customer. (g) Assume that you are a part of the team; prepare statement of profit or loss and other comprehensive income (combined statement format) and statement of financial position for X Bhd for the year ended 31 December 2014. You are suggested to follow a format from a recent statement of profit or loss and other comprehensive income and statement of financial position of any Malaysian listed company. 4 (h) Calculate three ratios required by Mr. Siful based on the information provided in the respective paragraph. (i) Assume that you are Mr Samad, explain to Mr Siful the error made by the account assistant to prepare the journal entries for the acquisition of fixed assets in item no 1,2 and 3, and suggest the correct entries. (j) Help Mr Siful to identify the fixed assets to be recognized for acquisition item no 4 and determine its costs. GOOD LUCK 5 COMPREHENSIVE CASE 1 BKAR1013 Financial Accounting and Reporting 1 Conceptual Framework, Presentation of Financial Statements & Property, Plant & Equipment A161 2016/2017 Submission date: 9 October 2016 While Mr Siful conducts a friendly meeting with his friend Mr Samad, they start talking about preparing financial statements in according to conceptual framework and MFRS standards. Sifool still doubt about the purpose and the importance for such conceptual framework and has kind of confusion between the characteristics of fundamental quality and ingredient of fundamental quality. Mr Siful is a new appointed accountant in Herhiza Bhd that located in Jitra, Kedah. Mr Siful is responsible to prepare the company's financial statements, and he is under pressure to be in the safe-side by providing a financial statement that prepared in accordance to standards required by MASB. Mr Samad is a chartered accountant and has a well-known office. While they are talking in this meeting, Mr Siful remembered some events that he had a bad experience with them such as stolen money from company's night safe amount of RM 19,200 and dealing with a case that one customer sued company for negligence even though company win the case. Mr Siful faces difficulties to record these different events. A few days later, Mr Siful has a meeting with his team, providing them anonymous company financial data for the year ended 2014. He asked each member of the team to prepare a statement of profit or loss and other comprehensive income based on a format of any Malaysian listed company. 1 X Bhd Trial balance 31 December 2014 Debit RM Rent revenue Purchase discounts Salaries and wages payable Sales revenue Accumulated depreciation-equipment Cash Accounts receivable Sales discounts Accumulated depreciation-buildings Selling expenses Administrative expenses Share capital-ordinary Income tax expense Cash dividends Allowances for doubtful accounts Sales returns and allowances Notes payable Inventory Supplies Freight-in Land Provision for retirement benefits Gain on sale of land Buildings Accounts payable Equipment Revaluation of land and buildings Retained earnings Purchases Total Credit RM 18,000 11,000 15,000 1,500,000 28,000 270,700 222,000 14,500 18,600 232,000 99,000 350,000 53,900 45,000 7,000 17,500 51,000 89,000 64,000 20,000 170,000 100,000 25,000 198,000 71,000 140,000 23,000 260,000 842,000 2,477,600 Inventory in 31/12/2014 is RM 69,000 10% of the notes payable will due in June 2015. 2 2,477,600 Provision for retirement benefits of RM15,000 need to be settled in August 2015. Mr Siful also want to evaluate X Bhd's ability to efficiently issue credit to its customers and collect account receivable from them in a timely manner. Additional information is provided as follows: for year 2014, the beginning accounts receivable balance was RM75,000. Based on this information, Mr. Siful asked his staff to calculate company's accounts receivable turnover. Whilst for liquidity analysis, Mr. Siful requires his team to calculate current cash debt coverage ratio in order to measure the relationship between net cash provided by operating activities and the average current liabilities of the company. Suppose X Bhd generated RM105,000 cash from operations during the last year, and the average current liabilities is RM 92,000. Mr Siful also asks the team to evaluate the company's ability to generate income using profit margin ratio. Mr Siful also reviews the journal entries made by the account assistant for the acquisition of fixed assets as follows: 1. Land, buildings and equipment were acquired from a bankrupt company, Hazam Sdn. Bhd. for a lump-sum price of RM680,000. On acquisition date, the book value and market value of Hazam Sdn Bhd's assets were as follows: Book value RM Land Buildings Equipment 200,000 230,000 300,000 Market value RM 150,000 350,000 300,000 To be conservative, the account assistant chooses to take the lower of the two values for each asset acquired as journalized below: Dr Land Buildings Equipment Cr Cash 150,000 230,000 300,000 680,000 2. An office equipment is purchased for RM20,000, terms 2/10, n/30. No journal entry is made until it paid for the acquisition. The entry was: Dr Equipment Cr Cash Purchase discount 20,000 19,600 400 3. The company recently acquired a machine in exchange for 30,000 ordinary shares of RM1 par. The market value of the machine is RM180,000. The shares were actively traded on the Bursa Malaysia at RM6.50 on the date of exchange. The company also paid RM1,200for freight and RM3,000 for installation. The entry was: Dr Machine Expenses 195,000 4,200 3 Cr Share capital Share premium Cash 30,000 165,000 4,200 4. The company incurred the following cost in relation to the construction of a new factory and the introduction of its products to the local market. RM'000 Site preparation costs 240 Materials used 1,500 Labour costs 3,190 Payment to city council for approval of 12 factory construction Safety fence around the construction site 15 External driveways, parking bays and safety lighting 150 Removing of safety fence 10 New fence surrounding the factory 200 Payment for opening ceremony 50 END OF CASE CASE INSTRUCTIONS (a) If you were Mr. Samad, help your friend Mr. Siful to explain the purpose of a conceptual framework. (b) Identify the importance of conceptual framework. (c) Describe briefly the following characteristics of useful accounting information. State whether each of the characteristic is fundamental quality or ingredient to fundamental quality. i. Relevance ii. Faithful representation iii. Understandability iv. Comparability v. Neutrality (d) Identify the main constraint that limits company to provide information with the qualitative characteristic that makes it useful. (e) Explain how Mr Siful should account for the stolen event amount to RM19,200. (f) Explain how Mr Siful should account for the sued made by the customer. (g) Assume that you are a part of the team; prepare statement of profit or loss and other comprehensive income (combined statement format) and statement of financial position for X Bhd for the year ended 31 December 2014. You are suggested to follow a format from a recent statement of profit or loss and other comprehensive income and statement of financial position of any Malaysian listed company. 4 (h) Calculate three ratios required by Mr. Siful based on the information provided in the respective paragraph. (i) Assume that you are Mr Samad, explain to Mr Siful the error made by the account assistant to prepare the journal entries for the acquisition of fixed assets in item no 1,2 and 3, and suggest the correct entries. (j) Help Mr Siful to identify the fixed assets to be recognized for acquisition item no 4 and determine its costs. GOOD LUCK 5