Question 5 Draft comparative balance sheets of Alpha Sdn Bhd as at 31 December 2019 and 2018 are as following:- 2018 RM'000 Statement of Financial Position As At 31 December 2019 RM'000 Assets Non-current assets Property, plant and equipment 21,120 Intangible assets (note ii) 1,500 Investment properties (note iii) 4,200 16,000 4,200 4,600 2,200 1,600 Current assets Inventories Trade receivables Tax recoverable Bank Total assets 1,700 1,840 150 420 31,040 28,490 15,000 2,400 6,680 12,500 2,100 7,300 Equity and liabilities Equity Share capital (note iv) Revaluation reserve Retained earnings Non-current liabilities 6% Loan notes (note v) Deferred tax Current liabilities Trade payables 4,700 820 4,700 630 1,350 1,080 180 Bank overdraft Tax payable Total equity and liabilities 90 31,040 28,490 Draft income statement for the year ended 31 December 2019 RM '000 Sales 23,220 Less: Cost of sales (10,520) Gross profit 12,700 Gain on change in fair value of investment properties (note iii) 900 Distribution cost (1,600) Administrative expenses (note i) & (note ii) (7,690) Finance costs (240) Profit before tax 4,070 Income tax expenses (1,230) Profit for the year 2,840 The following information is available: (1) An equipment with a carrying value of RM4,230,000 was sold during the year for RM3,850,000. Depreciation for all property, plant and equipment for the year was RM2,460,000. (ii) The intangible asset refers to a brand which was acquired few years ago. Alpha determined the brand to have an indefinite useful life. An impairment test carried out on 1 January 2019 revealed that the brand suffered an impairment loss of RM1,200,000. The remaining useful life of the brand was two years. There was no addition or disposal of intangible assets during the year. (ii) Alpha adopts the fair value model in the subsequent measurement of its investment properties in accordance with MFRS 140 Investment Property. During the year, it sold one of its investment properties for RM1,800,000. No purchases were made during the year. (iv) There was an issue of shares for cash on 1 October 2019. There were no bonus issues of shares during the year. (v) The 6% loan notes were issued five years ago. There was no issue or redemption of the loan notes during the year. Required:- Prepare the cash flow statement for Alpha for the year ending 31 December 2019 using the direct method. [24 marks] (b) Show the reconciliation of profit before tax to net cash flow from operating activities. [6 marks] (a) Question 5 Draft comparative balance sheets of Alpha Sdn Bhd as at 31 December 2019 and 2018 are as following:- 2018 RM'000 Statement of Financial Position As At 31 December 2019 RM'000 Assets Non-current assets Property, plant and equipment 21,120 Intangible assets (note ii) 1,500 Investment properties (note iii) 4,200 16,000 4,200 4,600 2,200 1,600 Current assets Inventories Trade receivables Tax recoverable Bank Total assets 1,700 1,840 150 420 31,040 28,490 15,000 2,400 6,680 12,500 2,100 7,300 Equity and liabilities Equity Share capital (note iv) Revaluation reserve Retained earnings Non-current liabilities 6% Loan notes (note v) Deferred tax Current liabilities Trade payables 4,700 820 4,700 630 1,350 1,080 180 Bank overdraft Tax payable Total equity and liabilities 90 31,040 28,490 Draft income statement for the year ended 31 December 2019 RM '000 Sales 23,220 Less: Cost of sales (10,520) Gross profit 12,700 Gain on change in fair value of investment properties (note iii) 900 Distribution cost (1,600) Administrative expenses (note i) & (note ii) (7,690) Finance costs (240) Profit before tax 4,070 Income tax expenses (1,230) Profit for the year 2,840 The following information is available: (1) An equipment with a carrying value of RM4,230,000 was sold during the year for RM3,850,000. Depreciation for all property, plant and equipment for the year was RM2,460,000. (ii) The intangible asset refers to a brand which was acquired few years ago. Alpha determined the brand to have an indefinite useful life. An impairment test carried out on 1 January 2019 revealed that the brand suffered an impairment loss of RM1,200,000. The remaining useful life of the brand was two years. There was no addition or disposal of intangible assets during the year. (ii) Alpha adopts the fair value model in the subsequent measurement of its investment properties in accordance with MFRS 140 Investment Property. During the year, it sold one of its investment properties for RM1,800,000. No purchases were made during the year. (iv) There was an issue of shares for cash on 1 October 2019. There were no bonus issues of shares during the year. (v) The 6% loan notes were issued five years ago. There was no issue or redemption of the loan notes during the year. Required:- Prepare the cash flow statement for Alpha for the year ending 31 December 2019 using the direct method. [24 marks] (b) Show the reconciliation of profit before tax to net cash flow from operating activities. [6 marks] (a)