Question 2

Companies cannot as a general rule reduce the capital of the business. However there may be a class of capital which can be redeemed. Explain the accounting treatment necessary in a redemption of share capital. Illustrate your answer with your own numerical example.

A company has a share capital of RM1,000,000 fully paid. However it has made losses and now has a retained loss of RM600,000. Explain why you would consider that a capital reduction scheme would be appropriate, and briefly explain the process of undertaking such a scheme.

A listed company has made a profit after tax of RM1,500,000 in the year ended 31 December 2016. It has 10,000,000 ordinary shares in issue. It also has 2,000,000 10% preference shares in issue. Calculate the earnings per share for the year ended 31 December 2016.

Joint ventures are a common way of doing business nowadays. Explain what a joint venture is, and state what is the required accounting treatment where a 50:50 joint venture exists. Briefly explain why you have chosen this accounting treatment

PART B

Discuss the usefulness of applying the accounting measurement using fair value as opposed to historical cost.

Discuss some of the limitations of financial statements and suggest ways to overcome them.

Discuss some of the implications of Efficient Securities Markets (ESM) for financial reporting in the eyes of various groups of stakeholders

Discuss the rationales for some companies to adopt environmental accounting as part of their accounting system.