QUESTION 2

1. Tea Plantation Berhad reports that the principal activities of the company include grows tea bushes, harvest the tea leaves and produces tea. Tea Plantation Berhad exports its tea products to Singapore, Brunei and Thailand.

REQUIRED:

Explain whether the activities reported by Tea Plantation Berhad are within the scope of IAS 41 Agriculture. If the activities are not within the scope of IAS 41, explain which standards are applicable. Also explain how the tea bushes and tea leaves are measured in the financial statements. (12 marks)

(b) During the year the board of directors of Lucky Berhad are considering to form a defined benefit pension scheme for the employees. However, the board are uncertain on how to deal with the pension scheme in the financial statements because of the significance of the potential increase in the charge to the statement of comprehensive income relating to the pension scheme.

REQUIRED:

As accountant of the company, outline the differences between a defined benefit and a defined contribution pension scheme. Give advices to the board of directors on the appropriate accounting treatment to account for the defined benefit scheme including the measurement of the pension expense and the liability in statement of financial position at year-end in accordance with IAS 19 Employee Benefits.

(13 marks)

(Total: 25 marks)