TUTORIAL 1: MFRS116 (DUE DATE: 7 APRIL 2022 BEFORE 5PM) QUESTION 4 A. Perotiga Bhd is a company involved in automotive industry located in Southern Malaysia since 1998. Perotiga Bhd plans to expand its business by having another factory building in Northern Malaysia and the company has already identified Kuala Nerang as the location for its latest branch. Besides factory building, the company needs to have new office building to run the business at Kuala Nerang. Perotiga Bhd acquired the office building but the factory building needs to be constructed because it requires specific features. Perotiga Bhd acquired the office building on 1 July 2018 and commenced the construction of the factory building on 1 January 2018. The construction would be completed and it is ready to be used on 1 December 2018. The following are the costs incurred to acquire the office building and to construct the factory building. Items Factory building RM Office building RM 36,000,000 250,000 470,000 360,000 200,000 400,000 500,000 8,000,000 Purchase price Legal fees Consultancy fees paid to Smart Click Sdn Bhd General administrative cost per year Maintenance cost per year Construction cost: Material cost Labour cost Contractor's fee Installation and technical cost 9,000,000 4,500,000 12,000,000 2,500,000 900,000 Perotiga Bhd received 5% trade discount for the office budling. The consultancy fees paid to Smart Click Sdn Bhd consists of consultation to Perotiga Bhd for the acquisition of the office building amounting to RM470,000 and also consultation on the training of new factory workers which amounted to RM400,000. The material cost included the excessive wastage of material of RM800,000 whilst the labour cost has already excluded the idle capacity of RM100,000. The useful life of both office building and factory building is 50 years. Required: i. Identify the initial cost of the office building and the factory building in Kuala Nerang on 1 July 2018 and 1 December 2018, respectively. (10 marks) TUTORIAL 1: MFRS116 (DUE DATE: 7 APRIL 2022 BEFORE 5PM) QUESTION 4 A. Perotiga Bhd is a company involved in automotive industry located in Southern Malaysia since 1998. Perotiga Bhd plans to expand its business by having another factory building in Northern Malaysia and the company has already identified Kuala Nerang as the location for its latest branch. Besides factory building, the company needs to have new office building to run the business at Kuala Nerang. Perotiga Bhd acquired the office building but the factory building needs to be constructed because it requires specific features. Perotiga Bhd acquired the office building on 1 July 2018 and commenced the construction of the factory building on 1 January 2018. The construction would be completed and it is ready to be used on 1 December 2018. The following are the costs incurred to acquire the office building and to construct the factory building. Items Factory building RM Office building RM 36,000,000 250,000 470,000 360,000 200,000 400,000 500,000 8,000,000 Purchase price Legal fees Consultancy fees paid to Smart Click Sdn Bhd General administrative cost per year Maintenance cost per year Construction cost: Material cost Labour cost Contractor's fee Installation and technical cost 9,000,000 4,500,000 12,000,000 2,500,000 900,000 Perotiga Bhd received 5% trade discount for the office budling. The consultancy fees paid to Smart Click Sdn Bhd consists of consultation to Perotiga Bhd for the acquisition of the office building amounting to RM470,000 and also consultation on the training of new factory workers which amounted to RM400,000. The material cost included the excessive wastage of material of RM800,000 whilst the labour cost has already excluded the idle capacity of RM100,000. The useful life of both office building and factory building is 50 years. Required: i. Identify the initial cost of the office building and the factory building in Kuala Nerang on 1 July 2018 and 1 December 2018, respectively. (10 marks)
