COURSE: DIPLOMA IN ACCOUNTING

SUBJECT: FINANCIAL ACCOUNTING & REPORTING

I NEED ANSWER FOR A, B AND C

QUESTION 3 Anggun Trading is a business selling fabric to local area in Terengganu. The business sells its product by cash and credit basis with credit term 5/10 net 30 . Below are the transactions pertaining to the sale of its products. 1 April 2014 Anggun Trading received an order from one of its regular customers, Lailasari Business worth RM 30,000 . 4 April 2014 Lailasari Business received the fabric and signed the invoice which was sent by Anggun Trading. 5 April 2014 Lailasari Business returned the poor quality fabric to Anggun Trading worth RM1,000. 12 April 2014 Lailasari Business settled the amount due to Anggun Trading. Required: a. Explain when Anggun Trading can recognise the receivable of Lailasari Business in its book. (2 marks) ii. Explain the amount of receivable of Lailasari Business that should be derecognised in the books of Anggun Trading. (3 marks) b. According to Para 17 MFRS 139, an entity shall derecognize a financial asset when, and only when the entity transfers the financial asset. Explain the derecognition conditions for transfer of financial assets. (5 marks) c. Anggun Trading uses allowance method in estimating uncollectible accounts receivable. The company produced the following aging of accounts at 31 December 2014 . On 1 November 2014, the company received a notice from one of its customers Dark Trading, which had gone into liquidation. Enquiries revealed that nothing is likely to be received from Dark Trading. The amount owned by Dark Trading is RM1,500. This amount has not been taken into account yet. The balance of allowance of impairment on 1 January 2014 is RM4,200. Advice Anggun Trading on the allowance for impairment of account receivable for the year as disclosed in the notes to the account AND amount of Anggun Trading account receivable as at 31 December 2014. (5 marks) (Total: 15 marks) QUESTION 3 Anggun Trading is a business selling fabric to local area in Terengganu. The business sells its product by cash and credit basis with credit term 5/10 net 30 . Below are the transactions pertaining to the sale of its products. 1 April 2014 Anggun Trading received an order from one of its regular customers, Lailasari Business worth RM 30,000 . 4 April 2014 Lailasari Business received the fabric and signed the invoice which was sent by Anggun Trading. 5 April 2014 Lailasari Business returned the poor quality fabric to Anggun Trading worth RM1,000. 12 April 2014 Lailasari Business settled the amount due to Anggun Trading. Required: a. Explain when Anggun Trading can recognise the receivable of Lailasari Business in its book. (2 marks) ii. Explain the amount of receivable of Lailasari Business that should be derecognised in the books of Anggun Trading. (3 marks) b. According to Para 17 MFRS 139, an entity shall derecognize a financial asset when, and only when the entity transfers the financial asset. Explain the derecognition conditions for transfer of financial assets. (5 marks) c. Anggun Trading uses allowance method in estimating uncollectible accounts receivable. The company produced the following aging of accounts at 31 December 2014 . On 1 November 2014, the company received a notice from one of its customers Dark Trading, which had gone into liquidation. Enquiries revealed that nothing is likely to be received from Dark Trading. The amount owned by Dark Trading is RM1,500. This amount has not been taken into account yet. The balance of allowance of impairment on 1 January 2014 is RM4,200. Advice Anggun Trading on the allowance for impairment of account receivable for the year as disclosed in the notes to the account AND amount of Anggun Trading account receivable as at 31 December 2014. (5 marks) (Total: 15 marks)