at the beginning of 2015 and at the end of 2015 should be changed to 2019 instead of 2015.
Soalan/Question 1 Mega Jaya Berhad has made several accounting changes to improve the matching of expense with revenue. The accounting period for the company ends on 31 December. The accounting records for the year 2018 have not been adjusted or closed Among the changes are the following: Factory equipment which has been purchased at a cost of RM150,000 (estimated useful ife 10 years, residual value RM18,000) has been depreciated using the sum-of-the-year- digit method (SYD). Early this year (which is the oighth year according to the equipment's useful life), the company has decided to change to straight-line method, with no change in residual value or estimated useful life b) A patent that has been acquired at a cost of RM185,000 is being amortized over its legal life of 20 years. At the beginning of 2015 (which is the sixth year according to the patent's legal life) taking into consideration the current economic scenario, the company has decided that the economic benefits that are expected from the use of the patent would not last longer than 13 years from date of acquisition of the patent. A machine with a ten-year life which was purchased on 1 January 2017 for RM590,200 has not been depreciated. The expected salvage value is RM15,200 and it was decided by the board of directors that all items of Property, Plant and Equipment should be depreciated using a straight-line method. For each of the above situations, identily the type of accounting change that was involved and clearly explain how it should be accounted for in accordance with MFRS 108 Accounting Policies, Changes in Accounting Estimates and Errors. (4 markah/marks) ii) Prepare the appropriate journal entries to record the change and the required adjustment entries at the end of 2015 for each of the above scenarios. Show all computations and disregard income tax considerations. If no journal entry is required in a particular scenario, provide your explanation (14 markah/marks) Soalan/Question 1 Mega Jaya Berhad has made several accounting changes to improve the matching of expense with revenue. The accounting period for the company ends on 31 December. The accounting records for the year 2018 have not been adjusted or closed Among the changes are the following: Factory equipment which has been purchased at a cost of RM150,000 (estimated useful ife 10 years, residual value RM18,000) has been depreciated using the sum-of-the-year- digit method (SYD). Early this year (which is the oighth year according to the equipment's useful life), the company has decided to change to straight-line method, with no change in residual value or estimated useful life b) A patent that has been acquired at a cost of RM185,000 is being amortized over its legal life of 20 years. At the beginning of 2015 (which is the sixth year according to the patent's legal life) taking into consideration the current economic scenario, the company has decided that the economic benefits that are expected from the use of the patent would not last longer than 13 years from date of acquisition of the patent. A machine with a ten-year life which was purchased on 1 January 2017 for RM590,200 has not been depreciated. The expected salvage value is RM15,200 and it was decided by the board of directors that all items of Property, Plant and Equipment should be depreciated using a straight-line method. For each of the above situations, identily the type of accounting change that was involved and clearly explain how it should be accounted for in accordance with MFRS 108 Accounting Policies, Changes in Accounting Estimates and Errors. (4 markah/marks) ii) Prepare the appropriate journal entries to record the change and the required adjustment entries at the end of 2015 for each of the above scenarios. Show all computations and disregard income tax considerations. If no journal entry is required in a particular scenario, provide your explanation (14 markah/marks)
