QUESTION FA2021 Bhd is a food production company that has been in operation for several years. The following is the trial balance of FA2021 Bhd as at 31 December 2020: Cr (RM) Dr (RM) 54,000 1,550,000 750,000 510,000 375,000 75,000 145,000 92,500 400,000 250,000 75,560 Inventories on 31 December 2020 Land Building Plant Office equipment Accumulated depreciation on 1 January 2020 -Building -Plant -Equipment Biological assets Franchise Accounts receivable Accounts payable Bank Revenues Cost of sales Administrative expenses Selling and distribution expenses Finance costs Interim dividend paid Tax paid Ordinary shares 10% Debentures Retained earnings Asset revaluation reserve on 1 January 2020 - Land 23,700 49,500 3,895,000 2,334,290 468,400 116,850 42,400 50,000 220,000 2,425,000 320,000 205,000 64,800 7,246,000 7,246,000 Additional information (these transactions have not yet been recorded): 1. Inventories amounting to RM 250,000 had been sold on 30 December 2020 but was still included in the inventories at 31 December 2020. 2. Early in January 2021, Forever Yummy Bhd did a major renovation to its building at a cost of RM 80,000. This has increased the value of the building, however, the renovation cost has been included in the administrative expensest 3. On 31 December 2020, the land was revalued resulting in a surplus of RM 400,000. The land revalued for the first time on 31 December 2017. 4. Despite the economic downturn and COVID-19 situations, Forever Yummy Bhd still managed to make considerable amount of profit. In a board meeting June 2020, the board of directors of Forever Yummy Bhd decided to recognised goodwill of RM300,000 as they believed that the goodwill of the company was what contributed to the increased performance of the company I 5. The franchise was acquired on 2 January 2020 for RM250,000. It is renewable every 10 years and the company intends to renew it indefinitely. The recoverable amount as at 31 December 2020 was RM200,000 6. Forever Yummy Bhd acquired a building for RM 350,000 on 4 January 2020. Legal and other directly attributable expenses amounted to RM10,000. The building is rented out at market rental of RM4,000 per month. The fair value of the building on 31 December 2020 was RM400,000. This transaction has not been recorded in the books yet. 7. A legal action brought against the company concerning a delivery during June 2018, of defective products to a customer. The company's legal advisor estimated that an out of court settlement could be achieved at a cost of RM300,000. 8. On 31 December 2020, the fair value less cost to sell of the biological asset was RM500,000. 9. Forever Yummy Bhd acquired a special equipment for RM150,000 on 1 January 2015 and appropriately assessed its useful life at 30 years from the date of acquisition with a residual value of RM10,000. The entity decided that the straight-line method is the most appropriate method on which to depreciate the equipment In 2020 the entity undertook revaluation of its equipment. As a result, at 31 December 2020 the entity assessed the useful life of the special equipment at 20 years from the date of acquisition with a residual value of nil. It also assessed a fair value for the yacht as at 31 December 2020 at RM 80.000. It continued to believe that the straight-line method the most appropriate method of depreciation for the equipment. 10. Tax charged for the year was RM 250.000 11. On 11 December 2020 a fire destroyed one of the Forever Yummy Bhd's warehouse. The loss suffered by the company is valued at RM 200,000. An insurance claim is agreed on 10 January 2021. The company remains a going concern. 12. On 1 February 2021, Forever Yummy Bhd announced that they planned to expand their business and acquire a small resort at a cost of RM 400,000. No payment has been made yet. 13. On 8 March 2021 Forever Yummy Bhd proposed a final dividend of RM 120,000 due to profit earned in the year ended 31 December 2020. 14. On 23 February 2021, the lawyer of Forever Yummy Bhd told the Board of Directors that there are high chances that company may win a RM 100,000 lawsuit with the competitor company for copying their patent. The competitor will be liable to pay for the amount the claim. However, the competitor has a right to appeal the jury decision to a higher court and has indicated its intention to do so. 15. On 31 March 2021 Forever Yummy Bhd's financial statements for the year ended 31 December 2020 were authorized for issue. 16. Forever Yummy Bhd adopted the following policy: 1. Fair value model to account for its investment property. 1. Building will be depreciated on a straight-line basis over the useful life of 10 years and plant and equipment over 5 years. 17. Recently, Forever Yummy Bhd management has decided to change its depreciation method on equipment to better reflect the patter of use of its equipment. Required: A. The following requirements relates to the additional information above: i. Based on (1), which accounting standard is applicable and explain the appropriate accounting treatment. Based on (2), prepare journal entries to account for the transaction that has not been recorded for the year ended 31 December 2020. Building (Narrations not required) Based on (2), prepare journal entries to account for the revaluation of the land for the year ended 31 December 2020. (Narrations not required) IV. Based on (3), prepare joumal entries to account for the revaluation of the land and building for the year ended 31 December 2020. (Narrations not required) V. Based on (4), which accounting standard is applicable and explain the appropriate accounting treatment. . Based on (5), which accounting standard is applicable and explain the appropriate accounting treatment VII. Based on (6), which accounting standard is applicable and explain the appropriate accounting treatment. VEI. Based on (8), prepare joumal entries to account for the valuation of biological asset for the year ended 31 December 2020. (Narrations not required) Based on (9), which accounting standard is applicable and explain the appropriate accounting treatment. X Based on (9), prepare journal entries to account for the acquisition of the plant for the year ended 31 December 2019. (Narrations not required) XI. Based on (11), which accounting standard is applicable and explain the appropriate accounting treatment. XII. Based on (12), which accounting standard is applicable and explain the appropriate accounting treatment. Xom. Based on (13), which accounting standard is applicable and explain the appropriate accounting treatment XV. Based on (14), which accounting standard is applicable and explain the appropriate accounting treatment B. Prepare the following financial statements for Forever Yummy Bhd in a form suitable for publication and in compliance with the Companies Act 2016 and the Malaysian Financial Reporting Standards (MFRS): i. Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2020. II. Statement of Changes in Equity for the year ended 31 December 2020. 101. Statement of Financial Position as at 31 December 2020. IV. Notes to the account for property, plant and equipment. C. Compute the following ratios: 1. ii. Profitability ratio - Gross Profit Margin and Net Profit Margin Liquidity ratio - Current Ratio and Quick Ratio QUESTION FA2021 Bhd is a food production company that has been in operation for several years. The following is the trial balance of FA2021 Bhd as at 31 December 2020: Cr (RM) Dr (RM) 54,000 1,550,000 750,000 510,000 375,000 75,000 145,000 92,500 400,000 250,000 75,560 Inventories on 31 December 2020 Land Building Plant Office equipment Accumulated depreciation on 1 January 2020 -Building -Plant -Equipment Biological assets Franchise Accounts receivable Accounts payable Bank Revenues Cost of sales Administrative expenses Selling and distribution expenses Finance costs Interim dividend paid Tax paid Ordinary shares 10% Debentures Retained earnings Asset revaluation reserve on 1 January 2020 - Land 23,700 49,500 3,895,000 2,334,290 468,400 116,850 42,400 50,000 220,000 2,425,000 320,000 205,000 64,800 7,246,000 7,246,000 Additional information (these transactions have not yet been recorded): 1. Inventories amounting to RM 250,000 had been sold on 30 December 2020 but was still included in the inventories at 31 December 2020. 2. Early in January 2021, Forever Yummy Bhd did a major renovation to its building at a cost of RM 80,000. This has increased the value of the building, however, the renovation cost has been included in the administrative expensest 3. On 31 December 2020, the land was revalued resulting in a surplus of RM 400,000. The land revalued for the first time on 31 December 2017. 4. Despite the economic downturn and COVID-19 situations, Forever Yummy Bhd still managed to make considerable amount of profit. In a board meeting June 2020, the board of directors of Forever Yummy Bhd decided to recognised goodwill of RM300,000 as they believed that the goodwill of the company was what contributed to the increased performance of the company I 5. The franchise was acquired on 2 January 2020 for RM250,000. It is renewable every 10 years and the company intends to renew it indefinitely. The recoverable amount as at 31 December 2020 was RM200,000 6. Forever Yummy Bhd acquired a building for RM 350,000 on 4 January 2020. Legal and other directly attributable expenses amounted to RM10,000. The building is rented out at market rental of RM4,000 per month. The fair value of the building on 31 December 2020 was RM400,000. This transaction has not been recorded in the books yet. 7. A legal action brought against the company concerning a delivery during June 2018, of defective products to a customer. The company's legal advisor estimated that an out of court settlement could be achieved at a cost of RM300,000. 8. On 31 December 2020, the fair value less cost to sell of the biological asset was RM500,000. 9. Forever Yummy Bhd acquired a special equipment for RM150,000 on 1 January 2015 and appropriately assessed its useful life at 30 years from the date of acquisition with a residual value of RM10,000. The entity decided that the straight-line method is the most appropriate method on which to depreciate the equipment In 2020 the entity undertook revaluation of its equipment. As a result, at 31 December 2020 the entity assessed the useful life of the special equipment at 20 years from the date of acquisition with a residual value of nil. It also assessed a fair value for the yacht as at 31 December 2020 at RM 80.000. It continued to believe that the straight-line method the most appropriate method of depreciation for the equipment. 10. Tax charged for the year was RM 250.000 11. On 11 December 2020 a fire destroyed one of the Forever Yummy Bhd's warehouse. The loss suffered by the company is valued at RM 200,000. An insurance claim is agreed on 10 January 2021. The company remains a going concern. 12. On 1 February 2021, Forever Yummy Bhd announced that they planned to expand their business and acquire a small resort at a cost of RM 400,000. No payment has been made yet. 13. On 8 March 2021 Forever Yummy Bhd proposed a final dividend of RM 120,000 due to profit earned in the year ended 31 December 2020. 14. On 23 February 2021, the lawyer of Forever Yummy Bhd told the Board of Directors that there are high chances that company may win a RM 100,000 lawsuit with the competitor company for copying their patent. The competitor will be liable to pay for the amount the claim. However, the competitor has a right to appeal the jury decision to a higher court and has indicated its intention to do so. 15. On 31 March 2021 Forever Yummy Bhd's financial statements for the year ended 31 December 2020 were authorized for issue. 16. Forever Yummy Bhd adopted the following policy: 1. Fair value model to account for its investment property. 1. Building will be depreciated on a straight-line basis over the useful life of 10 years and plant and equipment over 5 years. 17. Recently, Forever Yummy Bhd management has decided to change its depreciation method on equipment to better reflect the patter of use of its equipment. Required: A. The following requirements relates to the additional information above: i. Based on (1), which accounting standard is applicable and explain the appropriate accounting treatment. Based on (2), prepare journal entries to account for the transaction that has not been recorded for the year ended 31 December 2020. Building (Narrations not required) Based on (2), prepare journal entries to account for the revaluation of the land for the year ended 31 December 2020. (Narrations not required) IV. Based on (3), prepare joumal entries to account for the revaluation of the land and building for the year ended 31 December 2020. (Narrations not required) V. Based on (4), which accounting standard is applicable and explain the appropriate accounting treatment. . Based on (5), which accounting standard is applicable and explain the appropriate accounting treatment VII. Based on (6), which accounting standard is applicable and explain the appropriate accounting treatment. VEI. Based on (8), prepare joumal entries to account for the valuation of biological asset for the year ended 31 December 2020. (Narrations not required) Based on (9), which accounting standard is applicable and explain the appropriate accounting treatment. X Based on (9), prepare journal entries to account for the acquisition of the plant for the year ended 31 December 2019. (Narrations not required) XI. Based on (11), which accounting standard is applicable and explain the appropriate accounting treatment. XII. Based on (12), which accounting standard is applicable and explain the appropriate accounting treatment. Xom. Based on (13), which accounting standard is applicable and explain the appropriate accounting treatment XV. Based on (14), which accounting standard is applicable and explain the appropriate accounting treatment B. Prepare the following financial statements for Forever Yummy Bhd in a form suitable for publication and in compliance with the Companies Act 2016 and the Malaysian Financial Reporting Standards (MFRS): i. Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2020. II. Statement of Changes in Equity for the year ended 31 December 2020. 101. Statement of Financial Position as at 31 December 2020. IV. Notes to the account for property, plant and equipment. C. Compute the following ratios: 1. ii. Profitability ratio - Gross Profit Margin and Net Profit Margin Liquidity ratio - Current Ratio and Quick Ratio