Gazel Tech Bhd is a manufacturing company specialising in computer and technical

services. The accounting department of the company is preparing the financial statements

for the year ended 31 December 2018 which will be authorised for issue on 31 March 2019.

The trial balance of the company based on the unadjusted account balances is shown

below:

Gazel Tech Bhd

Trial balance as at 31 December 2018

Debit

RM

Credit

RM

Revenue 13,494,000

Cost of sales 6,500,000

Distribution costs 1,111,500

Administrative costs 2,074,800

Investment income 390,000

Allowance for impairment of trade receivables 180,700

Accumulated depreciation of plant and equipment as at 1

January 2018

3,640,000

Accumulated depreciation of building as at 1 January 2018 325,000

Accounts payable 1,833,000

Ordinary shares 10,400,000

Retained earnings, 1 January 2018 2,243,800

6% Loan from MMB Bank (taken on 30 June 2018) 650,000

Tax paid 910,000

Inventories, 31 December 2018 2,444,000

Building 1,300,000

Freehold land 3,104,400

Plant and equipment 9,100,000

Investment property 1,716,000

Patents 884,000

Accounts receivable 1,873,300

Long term investment 819,000

Cash & bank balances 1,306,500

Interests on loan from MMB Bank 13,000

33,156,500 33,156,500

Additional information:

1. Information relating to the company's non-current assets during the year is as

follows:

i. On 31 December 2018, the freehold land was revalued to RM3,510,000.

ii. A land was acquired on 1 April 2018 for undetermined future used for

RM715,000. The fair value of the land as at 31 December 2018 was

RM845,000.

iii. A motor vehicle was acquired on 1 March 2018 for RM390,000.

iv. Gazel Tech Bhd bought a high-tech equipment from a United Stated

company on 1 July 2018 for USD 156,000 and paid for it on 30 September

2018. The related exchange rates were as follows:

1 July 2018 USD 1=RM 3.20

30 September 2018 USD 1=RM 3.50

31 December 2018 USD 1=RM 3.40

No entries have been made for the acquisition of the above equipment.

2. Gazel Tech Bhd depreciates its non-current assets as follows:

Building 40 years, Straight line

Plant & Machinery 10% on cost

Motor vehicle 10 years, Straight line

Depreciation expenses are charged to administrative expenses and on monthly

basis. The depreciation charges for the year ended 31 December 2018 have not

been made. The investment properties are measured on the fair value model.

3. Information relating to the company's intangible assets is as follows:

i. A copyright was acquired at an initial cost of RM380,000 on 1 July 2018 and

is to be amortised over a period of 10 years.

ii. The patent has an indefinite useful life.

iii. It is the policy of the company to adopt cost model on the subsequent measurement of its intangible asset.

4. Gazel Tech Bhd sells computers that include a warranty to make repair or replace

any defect in its computers for 120 days. Based on experience, it is probable that

there will be some claims under the warranties. Gazel Tech Bhd estimates that

such returns usually amount to RM5,200 annually.

5. During the year ended 31 December 2018 a lawsuit as per mentioned by the company's lawyer involved a staff who has sued the company amounting to RM650,000 for failure to provide a safe working environment causing him to lose

his right hand. The company's lawyer stated that the company will be held liable.

6. On 1 February 2019, the company entered into a contract with Super Bhd to

purchase of building located at Kota Kinabalu area for RM10,000,000.

7. During the year, an employee of the company who has been dismissed for

improper conduct has sued the company for unfair dismissal. The company's lawyer is of the opinion that it is unlikely that the employee will win the case.

8. One of the Gazel Tech Bhd's customer who owed the company RM11,700 was

declared bankrupt on 1 January 2019. None of the amount is expected to be

recovered.

9. While preparing the final account for 31 December 2018, the accounts clerk

discovered that an amount of RM130,000 payment for credit purchases for year

ended 2015 has been wrongly accounted as interest on loan.

10. The revenue figure above excludes a credit sale amounting RM78,000 (cost

RM39,000) on 1 December 2018 but the delivery was delayed until early January

2019 due to special request from a customer as he is still renovating its building.

11. On 1 January 2018, Gazel Tech Bhd signed a contract with a customer to sell a

computer as well as a 12-month technical support for RM840,000. Gazel Tech Bhd

delivered 100 units computers and transferred its legal title to the customer on 30 January 2018. The customer paid the full amount on the same date. The

standalone price of the computer and the technical support for each computer are

RM8,000 and RM1,000 respectively. This entry has been omitted from the

business books for the year ended 31 December 2018.

12. The following information also available as at the financial year end:

i. The tax expense for the year is estimated to be RM650,000.

ii. The net realisable value of the closing inventory was RM2,340,000.

iii. The interest on loan for November and December 2018 still owing.

Required:

Prepare the following statements for the company in compliance with the Companies Act 2016 (amended) and the relevant financial reporting standards:

a. Statement of Profit or Loss and Other Comprehensive Income for the year ended

31 December 2018;

b. Statement of Financial Position as at 31 December 2018;

c. Statement of Changes in Equity for the year ended 31 December 2018;

d. The Notes to the Financial Statements for property, plant and equipment and nonadjusting event after reporting period (if any).