Question 4

On 1 December 2018, Koay Chain Bhd (KCB), a publicly listed supermarket chain decided to open a new store at Bandar Gamuha. On 1 January 2019, KCB borrowed RM20 million to finance the construction of the new store. Interest on the loan was fixed at 6.5% per annum.

Construction of the new store commenced on 1 February 2019 and it was completed and ready for use on 30 January 2020, but did not open for trading until 1 March 2020.

During 2019, tradingat KCB's other stores was below expectations, KCB suspended the construction of the new store for two months during July and August 2019. The loan proceeds were temporarily invested for February 2020 and earnedinterest of RM50,000.

KCB deducted investment income of RM50,000 from the total borrowing costs incurred and capitalised the borrowing costs net of investment incomeas part of the cost of the new store.

Required:

Discuss the accounting treatment for the borrowing costs incurred for the period 1 January 2019 to 31 March 2020 in accordance with the IAS 23/ MFRS 123 Borrowing Costs. (Show all relevant workings to support your discussion).

In the preparation of financial statements of Keppa Berhad (Keppa) for the year ended 31 December 2020, Ian, the senior account executive of the company, identified the following material events that took place after the reporting period. The financialstatements were authorised for issue on 16 March 2021.

A customer filed a claim against Keppa for an amount of RM500,000 in high court duringthe year ended 31 December2020. Keppa's lawyersadvise that it is highly probable that Keppa will win the case. Keppa has disclosed this fact in the notes to the financial statements. On 10 March 2021, a judgment was awarded in favor of Keppa's customer by the court. On 13 June 2021, Keppa paid the customeran amount of RM200,000 as a final and full settlement.

On 26 February 2021, Keppa has signed a sales and purchase agreementto acquire a 20-storey building for RM200 million. Keppa paid RM20 million to the developer as a down payment on 26 February 2021 and have arranged to finance the remaining RM180 million 30-year mortgage with a 5% nominal interest rate.

Keppa owns 1 million ordinary shares in ADM Bhd. The fair value of ADM Bhd.'sper share on 31 December 2020 was RM10. Subsequently, on 3 March 2021, ADM Bhd.'s sharedropped significantly to about RM5 per share due to changes in economic policy in March 2021.

The inventories held at the warehouse in Johor were valued at its cost of RM150,000 on 31 December 2020. In January 2021, these inventories were sold for RM100,000.

The Board of Directors passed a resolution on 22 December2020 to discontinue the business operation in the Johor branch in June 2021. On 3 January 2021, Keppa announcedits plan to discontinue its business operation in the Johor branch.

Required:

Determine whether the above events are adjusting or non-adjusting events in accordance with IAS 10/ MFRS 110 Events After The Reporting Period. Explain the impact, if any, on Keppa's financialstatements for the year ended 31 December2020.