The following balances relates to The Hulk Bhd as at 31 December 2020 Debit Credit RM000 RM000 Revenue 550,000 Cost of sales 300,000 Administrative 55,000 Distribution costs 62,000 Finance expenses 200 Dividend income 1,120 Non current assets at cost Land 100,000 Building 190,000 Plant and machinery 78,800 Accumulated depreciation at 31 December 2020 Building 25,000 Plant and machinery 36,000 Financial assts 4,200 Inventory 15,000 Trade receivable 19,000 Bank 9,100 Trade payable 12,000 Bank overdraft(unsecured) 6,000 Tax paid 10,000 Ordinary share capital 130,000 10 redeemable preference shares 20,000 Retained Profit 61,180 Deferred tax liability 2,000 843,300 843,300 Additional Information On 1 July 2020, the company issued at market price 10 million shares at RM 2 each The tax paid account related to the tax paid during the year for the current year and under provision of previous year of RM1 million The current years tax expenses was estimated to be RM19 million inclusive of an increase to deferred tax liability of RM 3 million of which RM200,000 was related to available for sale financial assets Financial assets comprise those classified at fair value through profit or loss of RM3 million whose fair value was RM3 5 million, and the balance investment were classified as available for sale whose fair value was RM1 8 million On 1 January 2020, the directors of The Hulk decided land and building should reflect their market values At the date, an independent valuer valued the land at RM150 million and the buildings at RM 250 million and these valuations were accepted by the directors The remaining life of buildings at that was 25 years Plant and machinery is depreciated at 20 per annum using the reducing balance method and time apportioned as appropriate The company is facing a court case on wrongful dismissal of one of its senior employees The lawyers for the company are of the opinion that the company are of the opinion that the company will lose the case and has estimated the compensation to be RM 500,000 and legal costs RM200,000 Dividends on preference shares have not been provided Revenue included sales of RM15 million of maturing inventory to Ahmad on 1 July 2020 The cost of goods at the date of sale was RM10 million and The Hulk has an option to repurchase these goods at any time within three years of the sale at a price of RM15 million plus accrued interest from the date of sales of 10 per annum At 31 December 2020, the option has not been exercised, but it is highly likely that it will be before the date lapses Depreciation is charged to cost of sales and no depreciation has been charged for the year ended 31 December 2020 Required Prepare the statement of comprehensive income for the year ended 31 December 2020 Prepare the statement of financial position as at 31 December 2020 Prepare the Statement of Changes in Equity for year ended 31 December 2020 Prepare Notes to the account as of 31 December 2020

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on May 31, 2021

The following balances relates to The Hulk Bhd as at 31 December 2020.

	Debit	Credit
	RM’000	RM’000
Revenue		550,000
Cost of sales	300,000
Administrative	55,000
Distribution costs	62,000
Finance expenses	200
Dividend income		1,120
Non current assets- at cost
Land	100,000
Building	190,000
Plant and machinery	78,800
Accumulated depreciation at 31 December 2020
Building		25,000
Plant and machinery		36,000
Financial assts	4,200
Inventory	15,000
Trade receivable	19,000
Bank	9,100
Trade payable		12,000
Bank overdraft(unsecured)		6,000
Tax paid	10,000
Ordinary share capital		130,000
10% redeemable preference shares		20,000
Retained Profit		61,180
Deferred tax liability		2,000
	843,300	843,300

Additional Information:

On 1 July 2020, the company issued at market price 10 million shares at RM 2 each.

The tax paid account related to the tax paid during the year for the current year and under provision of previous year of RM1 million. The current year’s tax expenses was estimated to be RM19 million inclusive of an increase to deferred tax liability of RM 3 million of which RM200,000 was related to available for sale financial assets.

Financial assets comprise those classified at fair value through profit or loss of RM3 million whose fair value was RM3.5 million, and the balance investment were classified as available for sale whose fair value was RM1.8 million.

On 1 January 2020, the directors of The Hulk decided land and building should reflect their market values. At the date, an independent valuer valued the land at RM150 million and the buildings at RM 250 million and these valuations were accepted by the directors. The remaining life of buildings at that was 25 years. Plant and machinery is depreciated at 20% per annum using the reducing balance method and time apportioned as appropriate.

The company is facing a court case on wrongful dismissal of one of its senior employees. The lawyers for the company are of the opinion that the company are of the opinion that the company will lose the case and has estimated the compensation to be RM 500,000 and legal costs RM200,000.

Revenue included sales of RM15 million of maturing inventory to Ahmad on 1 July 2020. The cost of goods at the date of sale was RM10 million and The Hulk has an option to repurchase these goods at any time within three years of the sale at a price of RM15 million plus accrued interest from the date of sales of 10% per annum. At 31 December 2020, the option has not been exercised, but it is highly likely that it will be before the date lapses.