Munirah Bhd was incorporated in 2015. In order to expand its business operation, Munirah Bhd made the following transactions related to property, plant, and equipment in the year 2021:

1. To construct a new factory, Munirah Bhd purchased a piece of land with a building for RM700,000 (land RM550,000 and building RM150,000). Munirah Bhd paid a real estate broker’s commission of RM28,000, legal fees for title investigation of the land of RM5,000, and the property tax for the land of RM10,000. Shortly after purchasing the land, Munirah Bhd demolished the old building and incurred a total cost of RM20,000. Munirah Bhd received RM4,800 from the selling of the scrap from the old building. An additional cost of RM3,000 was paid to grade the land. After grading the land, Munirah Bhd installed fences around the property at the cost of RM17,000. Then, to construct a new factory, Munirah Bhd paid RM5,200 of the architect’s fees, and the payment to the building contractor was RM200,000. The insurance policy paid by Munirah Bhd was RM10,000, including RM3,500 of insurance after the construction is completed. Munirah Bhd paid an additional RM25,000 for preparing the parking lots and driveways.

2. Munirah Bhd purchased a machine for production in the factory at the total invoice cost of RM120,000 with the term, 2/10, n/60. Munirah Bhd paid within the discount period. The transportation cost incurred was RM5,500, and insurance paid during the transit was RM1,200. Since this machine needs a special foundation, Munirah Bhd built a special platform to place this machine at the cost of RM10,000. After installation, a test run was conducted at the cost of RM1,000. After the machine was ready to be used, Munirah Bhd paid RM8,000 to train the employees and RM6,000 paid for maintenance costs.

3. Munirah Bhd exchanged its old equipment with new equipment to Agma Bhd. The original cost for old equipment was RM100,000, and the accumulated depreciation was RM40,000. The fair value of the old equipment was RM120,000. In addition to the old equipment, Munirah Bhd paid RM30,000 cash to Agma Bhd. The exchange of the equipment has commercial substance.

4. Munirah Bhd started a research and development process to produce a new product model in early 2021 and completed it before the end of the year. The research cost incurred was RM150,000, and the development cost for testing and applying for a license for the new model after achieving the economic viability point was RM250,000.

REQUIRED:

(a) Calculate the costs for land, building, land improvement, machine, and equipment for Munirah Bhd for the year 2021 based on MFRS 116 Property, Plant, and Equipment.

(b) Prepare the journal entry to record the transaction related to the exchange of equipment by Munirah Bhd.

(c) Discuss the accounting treatment for research and development costs incurred by Munirah Bhd based on MFRS 138 Intangible Asset.