QUESTION 1

On 1 January 2004, Lamir Bhd purchased a large property for RM20 million and immediately began to lease the property to Epsilon on an operating lease. Annual rentals were RM2 million. On 31 December 2018, the fair value of the property was RM26 million. Under the terms of the lease, Epsilon was able to cancel the lease by giving six months' notice in writing to Lamir Bhd. Epsilon gave this notice on 31 December 2018 and vacated the property on 30 June 2019. On 30 June 2019, the fair value of the property was RM29 million. On 1 July 2019, Lamir Bhd immediately began to convert the property into ten separate flats of equal size which Lamir Bhd intended to sell in the ordinary course of its business. Lamir Bhd spent a total of RM6 million on this conversion project between 3o June 2019 and 31 December 2019. The project was incomplete at 31 December 2019 and the directors of Lamir Bhd estimate that they need to spend a further RM4 million to complete the project, after which each flat could be sold for RM5 million. Lamir Bhd uses the fair value model to measure property whenever permitted by International Financial Reporting Standards.

Explain with reference to the appropriate financial reporting standard and show (where possible by quantifying amounts) how the question would be reported in the financial statements of Lamir Bhd for the year ended 31 December 2019.

QUESTION 2

On 1 November 2018, Lamir Bhd purchased a machine from a supplier located in a country whose local currency is the groat. The agreed purchase price was 600,000 groats, payable on 31 January 2019. The asset was modified to suit Lamir Bhd's purposes at a cost of RM30,000 during November 2018 and brought into use on 1 December 2018. The directors of Lamir Bhd estimated that the useful economic life of the machine from date of first use was five years.

Relevant exchange rates were as follows:

1 November 2018 2.5 groats to RM1

1 December 2018 2.4 groats to RM1

31 December 2018 2.0 groats to RM1

31 January 2019 2.1 groats to RM1

Explain with reference to the appropriate financial reporting standard and show (where possible by quantifying amounts) how the question would be reported in the financial statements of Lamir Bhd for the year ended 31 December 2019.