QUESTION 1 Carnation Bhd has been involved in the business of designing and providing high technology systems for electrical appliances. The following balances were extracted from the books of Carnation Bhd as at 31 October 2020. Debit Credit RM RM Ordinary shares (200,000,000 units) 200,000,000 5% preference shares (equity) 30,000,000 General reserve 5,000,000 Asset Revaluation Reserve (ARR) 6,900,000 Retained profits (1 November 2019) 44,415,000 7% debentures 8,000,000 Trade payables 16,400,000 Trade receivables 13,920,000 Land (1 November 2019) 35,000,000 Buildings (1 November 2019) 71,400,000 Plants (at cost) 60,000,000 Technical Equipment (at cost) 5,000,000 Machine (at cost) 5,000,000 Accumulated depreciation (1 November 2019): Buildings 14,000,000 Plants 3,400,000 Technical Equipment 1,500,000 Machine 1,500,000 Accumulated Impairment Loss Machine (1 November 2019) 385,000 Inventory 11,000,000 Bank 110,790,000 Sales 195,700,000 Cost of sales 68,280,000 Administration expenses 27,500,000 Selling and distribution expenses 11,500,000 Finance expenses 360,000 Patent and trademark 48,000,000 Directors' remuneration 7,000,000 Tax Paid 16,000,0003. On 1 April 2020, Carnation Bhd acquired a new technical equipment costing BND700,000 to support its business operation. New technical equipment can be used for 10 years. Half of the payment has been made by Carnation Bhd at the acquisition date and another half will be paid later on 31 December 2020. No recording was made. The rate of exchange are as follows: Date RM BND 1 April 2020 3.30 1 31 October 2020 3.10 31 December 2020 3.20 1 4. In need for immediate cash, Carnation Bhd sells one of the plants on 31 October 2020 to Hyacinth Financing Bhd, a finance entity for a cash consideration of RM400,000. The plant has a carrying amount of RM350,000 (cost:RM450,000). Carnation Bhd immediately leases back the plant for a non-cancellable lease period of 20 years. Carnation Bhd has to commit for RM23,000 annually, payable in arrears. The incremental borrowing cost of Carnation Bhd on transfer date is 3%. The present value of the lease payments for similar asset is RM380,000. The estimated economic life of plants are 20 years. 5. In 2020, the production capacity of the machine increases due to intervention in production process. Therefore, the company estimated on 31 October 2020 the fair value less cost to sell was RM3, 100,000 and value in use of RM3,000,000. The machine is measured using cost model. The machine was acquired on 1 November 2016 with a useful life of 10 years.Patent and trademark were acquired on 1 January 2020. The cost of patent was RM30,000,000. Useful lite oi patent and trademark were 10 years and 3 years. However. trademark has a limited contract agreement of 5 years. Intangible assets are measured using cost model and amortised over period of ownership. Amortization has not been recorded for the year. On 1 January 2020. Carnation Bhd acquired a building and immediately rented it out to third party. 1% of the rental income is for ancillary senr'ices. The building was acquired and paid at cost oi RM10,000,000. The building can be used for 50 years. As at 31 October 2020 the fair value of building was RM10.300.000. Investment property is measured using iair value model. No recording has been made for the year. During the year. Carnation Bhd expand its business activities into agriculture activity. On 1 November 2019. the company acquired and paid for 100 cows at fair value of RM1.200 per cow. The cost to sell on this date was RM100 per cow. On 31 October 2020. the fair value of cows was RM130,000. At the same date. the cost to sell for each cow was RM105. No cows were sold during the year. No recording was made for this transaction. 9. During the year, a customer sued the company because he claimed the company provided a faulty service. According to the company's lawyer, it is probable that the customer will win the court case. The damages that the company will incur is estimated at RM430,000. 10. During the year ended 31 October 2020. the management discovered that payments made to other payable totaling RM500,000 had been wrongly recorded debited to trade receivables. Further investigation revealed that the wrong recording was made in January 2019. Correct record was made for bank account. 11 . Non-current asset held for sale has a fair value of RM3,500,000 as at 31 October 2020. 12. Finance expense in trial balance is related to interest on debenture paid tor the year. 13. The tax charge for the year is estimated at RM13,000,000 14. Depreciation for non-current asset is calculated based on period of ownership. Plants, technical equipment and machine are measured using cost model. Required: A. The following requirements relates to the additional information above. Relate your answers to the relevant Malaysian Financial Reporting Standards. . I. .. II. Based on {1). prepare relevant journal entries for land and building tor the year ended 31 October2020. (10 marks) Based on (2). explain the accounting treatment for technical equipment the year ended 31 October 2020. (6 marks) Based on (3), prepare relevant journal entries for the new technical equipment for the year ended 31 October 2020. (7 marks) iv. vi. vii. Based on (3). prepare relevant journal entries for the new technical equipment for the year ended 31 October 2020. (7 marks} Based on {4), prepare relevant journal entries for the year ended 31 October 2020. (2 marks) Based on {5), prepare relevant journal entries for the year ended 31 October 2020. (5 marks) Based on (6). explain the accounting treatment for patent and trademark the year ended 31 October 2020. (9 marks) Based on (7). explain the accounting treatment for the building for the year ended 31 October 2020. (7 marks} viii. Based on {8). prepare relevant ioumal entries for the year ended 31 October 2020. (4 marks} (Total: 50 marks}