Freehold land at valuation beginning RM 30,000,000 Asset revaluation reserve RM4,500,000 Trade receivable RM432,000 Tax paid RM888,000 Deferred tax RM 120,000 inventories RM 1,207,000 ADDITIONAL INFORMATION land is revalued every three years and the balance in the asset revaluation reserve is related to the previous years' revaluation Current year revaluation showed a decrease of RM0 5 million in the value of the land and this has not been recorded As at year end, Orchid Bunga Bhd has provided a 10 allowance for doubtful debt to one of its receivables, Komi Bhd for a debt amount of RM45,000 However, on 15 January 2020, Komi Bhd was declared a bankrupt and none of the amount due to the company is recoverable Orchid Bunga Bhd was under litigation when one of its employee sued the company due to serious injury at work Hence, a contingent liability was recognised as at year end However, on 6 January 2020, the case came to court and the judgment was in favour of the employee which required the company to pay RM500,000 for the damage A class of inventory of Orchid Bunga Bhd has been valued at RM280,000 when the net realizable value was RM325,000 On 2 January 2020, the inventory was sold only at RM265,200 due to the recent product introduced by a competitor It is the policy of the company to depreciate its building over 50 years on a yearly basis Equipment is depreciated over 10 years based on period of ownership Depreciation expense is to be included as part of the administrative expenses Included in the total development cost was RM200,000 incurred in relation to research expense during the year ended 31 December 2019 The tax expense for the year was RM250,000 This amount did not include an increase in the deferred tax liability The deferred tax liability was determined to be RM130,000 as at 31 December 2019 The income tax rate is 25 The investment property is measured based on the fair value model The fair value is estimated at RM4,900,000 as at 31 December 2019 WHAT IS THE ACCOUNTING TREATMENT FOR THIS

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jun 27, 2024

Freehold land at valuation beginning RM 30,000,000 Asset revaluation reserve RM4,500,000 Trade receivable RM432,000 Tax paid RM888,000 Deferred tax RM 120,000 inventories RM 1,207,000 ADDITIONAL

Freehold land at valuation beginning RM 30,000,000

Asset revaluation reserve RM4,500,000

Trade receivable RM432,000

Tax paid RM888,000

Deferred tax RM 120,000

inventories RM 1,207,000

ADDITIONAL INFORMATION:

land is revalued every three years and the balance in the asset revaluation reserve is related to the previous years' revaluation. Current year revaluation showed a decrease of RM0.5 million in the value of the land and this has not been recorded.
As at year end, Orchid Bunga Bhd has provided a 10% allowance for doubtful debt to one of its receivables, Komi Bhd for a debt amount of RM45,000. However, on 15 January 2020, Komi Bhd was declared a bankrupt and none of the amount due to the company is recoverable.
Orchid Bunga Bhd was under litigation when one of its employee sued the company due to serious injury at work. Hence, a contingent liability was recognised as at year end. However, on 6 January 2020, the case came to court and the judgment was in favour of the employee which required the company to pay RM500,000 for the damage.
A class of inventory of Orchid Bunga Bhd has been valued at RM280,000 when the net realizable value was RM325,000. On 2 January 2020, the inventory was sold only at RM265,200 due to the recent product introduced by a competitor.
It is the policy of the company to depreciate its building over 50 years on a yearly basis. Equipment is depreciated over 10 years based on period of ownership. Depreciation expense is to be included as part of the administrative expenses.
Included in the total development cost was RM200,000 incurred in relation to research expense during the year ended 31 December 2019.
The tax expense for the year was RM250,000. This amount did not include an increase in the deferred tax liability. The deferred tax liability was determined to be RM130,000 as at 31 December 2019. The income tax rate is 25%.
The investment property is measured based on the fair value model. The fair value is estimated at RM4,900,000 as at 31 December 2019.

WHAT IS THE ACCOUNTING TREATMENT FOR THIS