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QUESTION 1 i- Pudina Bhd. acquired a franchise from Dahlia Bhd. for RM10 million on 1 January, 2018 to manufacture pudina cookies. Pudina Bhd. estimated
QUESTION 1 i- Pudina Bhd. acquired a franchise from Dahlia Bhd. for RM10 million on 1 January, 2018 to manufacture pudina cookies. Pudina Bhd. estimated the useful life of the franchise to be 10 years. The franchise had a carrying value of RM8 million when it was sold to Pudina Bhd. In order to manufacture and sell the cookies, Pudina Bhd. rented a premise for RM1,600,000 a month. On 1 January, 2018, new equipment and furniture were bought from Dahlia Bhd. for RM14 million and their estimated useful life is 10 years. Additional cost of RM3 million was incurred on the promotion of the product and staff training. Required: Illustrate how Pudina Bhd. should account the intangible asset and its related cost in accordance to the requirements of MFRS138 Intangible Assets. (10 marks) ii- Sunflower Tech Sdn. Bhd. is a manufacturer of computer components. It adopts a 31 December accounting year-end. On 1 January 20x1, the company uses its excess cash to buy a building for investment purposes. The building is rented out to another manufacturer. The building costs RM25,000,000 and is expected to have a useful life of 50 years with no salvage value. The market value of the building is RM27,500,000 as at 31 December 20x1, and RM24,000,000 as at 31 December 20x2. Required: Illustrate the accounting treatment of the building under MFRS 140 Investment Property (assuming Sunflower Tech Sdn Bhd choses fair value model) (15 marks)
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