Tuna Fish Corporation manufactures tuna, mackerel and sardine into cans, and distributes them to wholesalers. The following information describes the fishes manufactured as inventory as at 30 December 2020: unit) st ing price t to sell (estimate) $t to complete (estimate) Tuna (RM) 4.50 6.50 0.15 0.30 Mackerel (RM) 3.00 4.50 0.15 0.30 Sardine (RM) 2.00 3.00 0.15 0.30 Tuna Fish leases 3 large trucks from Lori Besar Sdn Bhd for delivery of the canned fishes across the state. The lease term is for five years and is non-cancelable. Tuna Fish is to make annual payments of RM10,000 beginning of the year for each truck, beginning 1 January 2018. At the end of the lease term the trucks are to be returned to Lori Besar. The trucks have a fair value of RM130,000 each and estimated useful life of 7 years. The implicit rate of interest is 10%. In 2020, the government has imposed a Restricted Movement Control Order (RMCO) for 2 months (1 April to 31 May 2020) and the production process was halted, and no goods was able to be sent to wholesalers. The trucks were not utilised during this period. Sales were not very encouraging during 2020. In leiu of that, Tuna Fish and Lori Besar have agreed to extend the lease for another year. The new agreement states a new annual lease payment of RM9,900 starting 1 January 2021, utilising similar implicit interest rate at 10%. Note: PVIFA, 10%, 4 years=3.170 PVIFA, 10%, 5 years=3.791 Required: (a) Compute the net realisable value for canned Tuna, Mackerel and Sardine. (3 marks) (b) MFRS 102 Inventories indicates that inventories shall be measured at the lower of cost and net realisable value. What is the justification of the standard on this statement? (4 marks) Determine the carrying value of each item and compute the total inventory value to be reported in the financial statements of Tuna Fish Corporation for the year ended 30 December 2020; if units available at year end are 100,000 units (Tuna), 200,000 units (Mackerel) and 300,000 units (Sardine). (4 marks) (d) What would be the accounting treatment for the trucks in Tuna Fish books? Do you think there exist a Lease as per MFRS 16? Justify your answer. (5 marks) (e) What would be the accounting treatment upon the initial recognition of the Lease? (5 marks) What would be the accounting treatment to subsequently recognise the Lease, i.e., for year 2018 and 2019? (6 marks) (g) At the end of 2020, Tuna Fish and Lori Besar have agreed to extend their Lease agreement. Advise Tuna Fish on the Lease modification as stated in MFRS 16. (3 marks) (Total=30 marks) Tuna Fish Corporation manufactures tuna, mackerel and sardine into cans, and distributes them to wholesalers. The following information describes the fishes manufactured as inventory as at 30 December 2020: unit) st ing price t to sell (estimate) $t to complete (estimate) Tuna (RM) 4.50 6.50 0.15 0.30 Mackerel (RM) 3.00 4.50 0.15 0.30 Sardine (RM) 2.00 3.00 0.15 0.30 Tuna Fish leases 3 large trucks from Lori Besar Sdn Bhd for delivery of the canned fishes across the state. The lease term is for five years and is non-cancelable. Tuna Fish is to make annual payments of RM10,000 beginning of the year for each truck, beginning 1 January 2018. At the end of the lease term the trucks are to be returned to Lori Besar. The trucks have a fair value of RM130,000 each and estimated useful life of 7 years. The implicit rate of interest is 10%. In 2020, the government has imposed a Restricted Movement Control Order (RMCO) for 2 months (1 April to 31 May 2020) and the production process was halted, and no goods was able to be sent to wholesalers. The trucks were not utilised during this period. Sales were not very encouraging during 2020. In leiu of that, Tuna Fish and Lori Besar have agreed to extend the lease for another year. The new agreement states a new annual lease payment of RM9,900 starting 1 January 2021, utilising similar implicit interest rate at 10%. Note: PVIFA, 10%, 4 years=3.170 PVIFA, 10%, 5 years=3.791 Required: (a) Compute the net realisable value for canned Tuna, Mackerel and Sardine. (3 marks) (b) MFRS 102 Inventories indicates that inventories shall be measured at the lower of cost and net realisable value. What is the justification of the standard on this statement? (4 marks) Determine the carrying value of each item and compute the total inventory value to be reported in the financial statements of Tuna Fish Corporation for the year ended 30 December 2020; if units available at year end are 100,000 units (Tuna), 200,000 units (Mackerel) and 300,000 units (Sardine). (4 marks) (d) What would be the accounting treatment for the trucks in Tuna Fish books? Do you think there exist a Lease as per MFRS 16? Justify your answer. (5 marks) (e) What would be the accounting treatment upon the initial recognition of the Lease? (5 marks) What would be the accounting treatment to subsequently recognise the Lease, i.e., for year 2018 and 2019? (6 marks) (g) At the end of 2020, Tuna Fish and Lori Besar have agreed to extend their Lease agreement. Advise Tuna Fish on the Lease modification as stated in MFRS 16. (3 marks) (Total=30 marks)