this answer already slove for A
| Note on Property Plant and Equipment |
| Gross Block | Land | Building | Plant and Machinery |
| As at 1 July 2019 | 25,000,000 | 7,000,000 | 4,819,000 |
| Revaluation | 500,000 | 200,000 | - |
| Addition | - | - | 780,000 |
| Deletion | - | (3,000,000) | (420,000) |
| Impairment | | | |
| As at 30 June 2020 | 25,500,000 | 4,200,000 | 5,179,000 |
| | | | |
| | | | |
| Accumulated Depreciation | | | |
| As at 1 July 2019 | - | 700,000 | 550,000 |
| Addition | - | 360,000 | 517,900 |
| Deletion | - | (440,000) | (126,000) |
| Impairment charge | - | - | (12,000) |
| As at 30 June 2020 | - | 620,000 | 929,900 |
| | | | |
| Net Block | | | |
| As at 1 July 2019 | 25,000,000 | 6,300,000 | 4,269,000 |
| As at 30 June 2020 | 25,500,000 | 3,580,000 | 4,249,100 |
Note: Transfer of Investment Property assumed on 30 June 2020.
| Impairment charge- | |
| cost of purchase | 500,000 |
| Life | 10 yrs |
| Depreciation per year | 50,000 |
| Acc. Depreciation on 1 July 2019 | 250,000 |
| Carrying net value | 250,000 |
| NRV | 130,000 |
| Impairment | 120,000 |
| Depreciation on bulding transferred to Investment Property- | |
| Cost of purchase | 2,200,000 |
| Life | 30 years |
| Depreciation per year | 73,333 |
| Acc. Depreciation on 1 July 2019 | 366,667 |
| Depreciation for 2020 | 73,333 |
| Depreciation for the year on Plant and Machinery | |
| Opning block | 4,819,000 |
| Add: purchase | 780,000 |
| Less: deletion | (420,000) |
| Closing | 5,179,000 |
| Life | 10 years |
| Depreciation for the year | 517,900 |
Required : ( now you need to slove this 2 question )
- For each items (vi) to (xi), discuss briefly the accounting treatment / calculation in accordance to Malaysia Financial Reporting Standards (MFRS). Quote the relevant MFRS.
- Prepare the Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2020.
BAC306/03 Dorae Mon Bhd is involved in the manufacturing, packaging and marketing of electronic products in Sungai Buloh, Selangor. Below is the trial balance of Doraemon Bhd for the year ended 30 June 2020: Debit (RM'000) Credit (RM'000) 279,000 188,300 20,000 41,200 1,500 824 880 25,000 7,000 4,819 700 550 Revenue Cost of Sale Interim Dividend paid Administrative expenses Distribution expenses Finance Cost Income Tax payable Freehold land at valuation as at 1 July 2019 Building at cost as at 1 July 2019 Plant and machinery at cost as at 1 July 2019 Accumulated depreciation as at 1 July 2019 Building Plant and machinery Investment property at fair value as at 1 July 2019 Development cost Investment Ordinary share capital Retained earnings as at 1 July 2019 Asset revaluation reserve as at 1 July 2019 5% Debentures Trade receivables and payables Deferred tax Cash and bank Inventories Income taxes paid Total 2,738 77,000 10,000 100,000 12,511 18,000 20,000 5,500 3,380 6,700 48,000 6,440 1.000 440.521 440.521 Additional information: 0 The company decided to adopt the revaluation model for building and the fair value on 1 July 2019 is RM7, 200,000. The remaining useful life of the building as at that date is 20 years. The fair value of the land as at 30 June 2020 is RM25, 500,000. Both revaluations have yet to be recorded in the accounts as at year end. In addition, the company wishes to make annual transfers to retained earnings for any revaluation surplus made as the asset is being used and depreciated. 0 A new equipment costing RM780, 000 was purchased on 1 July 2019 to replace the old machinery that was purchased on 1 July 2016 at a cost of RM420, 000. The old equipment was disposed for RM200, 000. None of these transactions have been recorded in the accounts at year end. Plant and machinery are depreciated over their useful life of 10 years. All depreciation charges are included in administrative expenses. The policy of the company is to depreciate all its assets using the straight line method, giving full year's depreciation in the year of purchase and none in the year of disposal. 2 BAC306/03 (IV) A plant that was purchased on 1 July 2014 at a cost of RM500,000 had a reduction in production capacity since September 2019. This had caused several breakdowns during the production process. The board of directors therefore decided to provide impairment on the plant as at year end. The fair value of the plant as at 30 June 2020 is RM150, 000. If the plant is to be disposed, a dismantling cost of RM20,000 is required. The impairment charge has yet to be recorded in the accounts. Plant and machinery are depreciated over their useful life of 10 years. All depreciation and impairment charges are included in administrative expenses. V) Company acquired a freehold building costing RM2, 200,000 on 1 July 2015. The building is fully rented out to various organizations, thus qualifies to be accounted for as an investment property under MFRS140 Investment Property. The estimated life of the building is 30 years. As at 30 June 2020 the fair value of the building is RM3,000,000. The company adopts the fair value model in its measurement of investment property subsequent to initial recognition. The revaluation has yet to be incorporated in company's accounts as at year end. However, as at that date the company decided to occupy the building as a second headquarters for operation of the business. As at year end, reclassification of the building has yet to be recorded in the accounts. () On 30 June 2020, the accountant realized that the development cost of RM500, 000 incurred in December 2019 had been expensed off as administrative expenses. He also noted that the development cost will derive future economic benefit to the company and met the criteria for capitalization under MFRS 138 Intangible Assets. (vi) The investment held by company comprises of 2,000,000 ordinary shares in GoodGloves Bhd which is measured at fair value through profit or loss. As at 30 June 2020, the fair value of one unit of GoodGloves Bhd's ordinary shares was RM6.90. This value has yet to be reflected in Doraemon Bhd's financial statements. (vi) On 30 June 2020, the company issued a RM5,000,000 4% bond at a discount reflecting the prevailing cost of capital. This bond is repayable at par on 30 June 2023 with the interest payable at the end of each financial year. The prevailing cost of capital for the duration of the borrowing period is estimated at 6% per annum. The transaction has not been recorded in the books. The present value of RM1 at 4% and 6% are as follows: 3 BAC306/03 Year 1 2 3 4% 0.9615 0.9246 0.8891 6% 0.9434 0.891 0.8396 (6) The Company was under litigation when one of its employee sued the company due to serious injury at work. Hence, a contingent liability was recognized as at year end. However, on 3 July 2020, the case came to court and the judgment was in favour of the employee which required the company to pay RM500,000 for the damage. (x) A class of inventory of company has been valued at RM280,000 when the net realizable value was RM325, 000. On 1 July 2020, the inventory was sold only at RM265, 200 due to the recent product introduced by a competitor. (1) The directors have estimated that the income tax charge for the year ended 30 June 2020 is RM1,033,000, excluding the deferred tax charge. The deferred tax provision as at 30 June 2020 is RM4, 105,000 Required:- (a) Based on information given at (i) to (v), prepare the note on Property, Plant and Equipment [10 marks) (b) For each items (vi) to (xi), discuss briefly the accounting treatment / calculation in accordance to Malaysia Financial Reporting Standards (MFRS). Quote the relevant MFRS. [10 marks] (c) Prepare the Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2020. [10 marks] (d) Prepare the Statement of Financial Position as at 30 June 2020. [20 marks] By using the following Statement of Financial Position as at 30 June 2019, prepare a statement of cash flows for the year to 30 June 2020 in accordance with the requirements of MFRS 107, Statement of Cash Flows, using the indirect method. (Show all relevant workings) [20 marks] 4 BAC306/03 Doraemon Berhad Statement of Financial Position as at 30 June 2019 Non Current Asset RM'000 Property, plant and equipment 35,569 Investment property 2,738 Development cost 66,000 Investment in shares 10,000 Current Asset Trade receivables Bank Inventories Total Assets 4,800 36,464 6.400 161,971 Equity Ordinary shares capital Retained Earnings Revaluation reserves 100,000 12,511 18,000 Non Current Liabilities 5% Debentures Deferred Tax 20,000 3,380 Current Liabilities Trade payables Tax Payables Total Equities and Liabilities 7,200 880 161,971 BAC306/03 Dorae Mon Bhd is involved in the manufacturing, packaging and marketing of electronic products in Sungai Buloh, Selangor. Below is the trial balance of Doraemon Bhd for the year ended 30 June 2020: Debit (RM'000) Credit (RM'000) 279,000 188,300 20,000 41,200 1,500 824 880 25,000 7,000 4,819 700 550 Revenue Cost of Sale Interim Dividend paid Administrative expenses Distribution expenses Finance Cost Income Tax payable Freehold land at valuation as at 1 July 2019 Building at cost as at 1 July 2019 Plant and machinery at cost as at 1 July 2019 Accumulated depreciation as at 1 July 2019 Building Plant and machinery Investment property at fair value as at 1 July 2019 Development cost Investment Ordinary share capital Retained earnings as at 1 July 2019 Asset revaluation reserve as at 1 July 2019 5% Debentures Trade receivables and payables Deferred tax Cash and bank Inventories Income taxes paid Total 2,738 77,000 10,000 100,000 12,511 18,000 20,000 5,500 3,380 6,700 48,000 6,440 1.000 440.521 440.521 Additional information: 0 The company decided to adopt the revaluation model for building and the fair value on 1 July 2019 is RM7, 200,000. The remaining useful life of the building as at that date is 20 years. The fair value of the land as at 30 June 2020 is RM25, 500,000. Both revaluations have yet to be recorded in the accounts as at year end. In addition, the company wishes to make annual transfers to retained earnings for any revaluation surplus made as the asset is being used and depreciated. 0 A new equipment costing RM780, 000 was purchased on 1 July 2019 to replace the old machinery that was purchased on 1 July 2016 at a cost of RM420, 000. The old equipment was disposed for RM200, 000. None of these transactions have been recorded in the accounts at year end. Plant and machinery are depreciated over their useful life of 10 years. All depreciation charges are included in administrative expenses. The policy of the company is to depreciate all its assets using the straight line method, giving full year's depreciation in the year of purchase and none in the year of disposal. 2 BAC306/03 (IV) A plant that was purchased on 1 July 2014 at a cost of RM500,000 had a reduction in production capacity since September 2019. This had caused several breakdowns during the production process. The board of directors therefore decided to provide impairment on the plant as at year end. The fair value of the plant as at 30 June 2020 is RM150, 000. If the plant is to be disposed, a dismantling cost of RM20,000 is required. The impairment charge has yet to be recorded in the accounts. Plant and machinery are depreciated over their useful life of 10 years. All depreciation and impairment charges are included in administrative expenses. V) Company acquired a freehold building costing RM2, 200,000 on 1 July 2015. The building is fully rented out to various organizations, thus qualifies to be accounted for as an investment property under MFRS140 Investment Property. The estimated life of the building is 30 years. As at 30 June 2020 the fair value of the building is RM3,000,000. The company adopts the fair value model in its measurement of investment property subsequent to initial recognition. The revaluation has yet to be incorporated in company's accounts as at year end. However, as at that date the company decided to occupy the building as a second headquarters for operation of the business. As at year end, reclassification of the building has yet to be recorded in the accounts. () On 30 June 2020, the accountant realized that the development cost of RM500, 000 incurred in December 2019 had been expensed off as administrative expenses. He also noted that the development cost will derive future economic benefit to the company and met the criteria for capitalization under MFRS 138 Intangible Assets. (vi) The investment held by company comprises of 2,000,000 ordinary shares in GoodGloves Bhd which is measured at fair value through profit or loss. As at 30 June 2020, the fair value of one unit of GoodGloves Bhd's ordinary shares was RM6.90. This value has yet to be reflected in Doraemon Bhd's financial statements. (vi) On 30 June 2020, the company issued a RM5,000,000 4% bond at a discount reflecting the prevailing cost of capital. This bond is repayable at par on 30 June 2023 with the interest payable at the end of each financial year. The prevailing cost of capital for the duration of the borrowing period is estimated at 6% per annum. The transaction has not been recorded in the books. The present value of RM1 at 4% and 6% are as follows: 3 BAC306/03 Year 1 2 3 4% 0.9615 0.9246 0.8891 6% 0.9434 0.891 0.8396 (6) The Company was under litigation when one of its employee sued the company due to serious injury at work. Hence, a contingent liability was recognized as at year end. However, on 3 July 2020, the case came to court and the judgment was in favour of the employee which required the company to pay RM500,000 for the damage. (x) A class of inventory of company has been valued at RM280,000 when the net realizable value was RM325, 000. On 1 July 2020, the inventory was sold only at RM265, 200 due to the recent product introduced by a competitor. (1) The directors have estimated that the income tax charge for the year ended 30 June 2020 is RM1,033,000, excluding the deferred tax charge. The deferred tax provision as at 30 June 2020 is RM4, 105,000 Required:- (a) Based on information given at (i) to (v), prepare the note on Property, Plant and Equipment [10 marks) (b) For each items (vi) to (xi), discuss briefly the accounting treatment / calculation in accordance to Malaysia Financial Reporting Standards (MFRS). Quote the relevant MFRS. [10 marks] (c) Prepare the Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2020. [10 marks] (d) Prepare the Statement of Financial Position as at 30 June 2020. [20 marks] By using the following Statement of Financial Position as at 30 June 2019, prepare a statement of cash flows for the year to 30 June 2020 in accordance with the requirements of MFRS 107, Statement of Cash Flows, using the indirect method. (Show all relevant workings) [20 marks] 4 BAC306/03 Doraemon Berhad Statement of Financial Position as at 30 June 2019 Non Current Asset RM'000 Property, plant and equipment 35,569 Investment property 2,738 Development cost 66,000 Investment in shares 10,000 Current Asset Trade receivables Bank Inventories Total Assets 4,800 36,464 6.400 161,971 Equity Ordinary shares capital Retained Earnings Revaluation reserves 100,000 12,511 18,000 Non Current Liabilities 5% Debentures Deferred Tax 20,000 3,380 Current Liabilities Trade payables Tax Payables Total Equities and Liabilities 7,200 880 161,971
