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This paper consists of TWO (2) sections. Answer ALL the questions in SECTION A and
any TWO (2) questions in SECTION B in the answer booklet provided.
Question 1
RM’000 RM’000
Leasehold property – at valuation 1 October 2007 (note i) 50,000
Plant and equipment – at cost (note i) 76,600
Plant and equipment – accumulated depreciation at 1 24,600
October 2007
Capitalized development expenditure – at 1 October 2007 20,000
(note ii)
Development expenditure – accumulated amortization at 1 6,000
October 2007
Closing inventory at 30 September 2008 20,000
Trade receivables 43,100
Bank 1,300
Trade payables and provisions (note iii) 23,800
Revenue (note i) 300,000
Cost of sales 204,000
Distribution costs 14,500
Administrative expenses (note iii) 22,200
Debenture interest paid 800
Interest on bank borrowings 200
Equity dividend paid 6,000
Research and development cost (note ii) 8,600
Equity shares of 25 cents each 50,000
8% redeemable debenture of RM1 each (note iv) 20,000
Retained earnings at 1 October 2007 24,500
Deferred tax (note v) 5,800
Leasehold property revaluation reserve _______ _10,000
466,000 466,000
On 1 October 2007 an item of plant was disposed of for RM2.5 million cash. The
proceeds have been treated as sales revenue by Candel. The plant is still included
in the above trial balance figures at its cost of RM8 million and accumulated
depreciation of RM4 million (to the date of disposal)
All plant is depreciated at 20% per annum using the reducing balance method.
Depreciation and amortization of all non-current assets is charged to cost of sales.
Required:
(a) Prepare the statement of comprehensive income for the year ended 30
September 2008
(12 marks)
(b) Prepare the statement of changes in equity for the year ended 30 September
2008
(3 marks)
(c) Prepare the statement of financial position as at 30 September 2008
(10 marks)
(Total 25 marks)
ACC3201 (F) / Page 3 of 7
Question 2
Part A
The definition of a liability forms an important element of the Malaysian Financial Reporting
Standards (MFRS) framework for the preparation and presentation of financial statements
which, in turn, forms the basis for MFRS 137 Provision, Contingent Liabilities and
Contingent Assets.
Required:
(6 marks)
Part B
Hours RM
Manufacturer’s base price 1,050,000
Trade discount (applying to base price only) 20%
Early settlement discount taken (on the payable amount of the
base cost only) 5%
Freight charges 30,000
Electrical installation cost 28,000
Staff training in use of machine 40,000
Pre-production testing 22,000
Purchase of a three-year maintenance contract 60,000
Estimated residual value 20,000
Estimated life in machine hours 6,000
Hours used – year ended 30 September 20x6 1,200
- year ended 30 September 20x7 1,800
- year ended 30 September 20x8 (see below) 850
On 1 October 20x7 Dearing decided to upgrade the machine by adding new components at a
cost of RM200,000. This upgrade led to a reduction in the production time per unit of the
goods being manufactured using the machine. The upgrade also increased the estimated
remaining life of the machine at 1 October 20x7 to 4,500 machine hours and its estimated
residual value was revised to RM40,000.
Required:
Prepare extracts from the income statement and statement of financial position for the above
machine for each of the three years to 30 September 20x8.
ACC3201 (F) / Page 4 of 7
(19 marks)
(Total 25 marks)
Question 3
On 1 January x0, Miplex acquired Steamdays, a company that operates a scenic railway along
the coast of a popular tourist area. The summarized statement of financial position at fair
value of Steamdays on 1 January x0, reflecting the terms of the acquisition is shown below:
RM’000
Goodwill 200
Operating licence 1,200
Property - train station and land 300
Rail track and coaches 300
Two steam engines 1,000
Purchase consideration 3,000
The operating licence is for ten years. It was renewed on 1 January x0 by the transport
authority and is stated at the cost of its renewal. The carrying amounts of the property, rail
track and coaches are based on their cost. The engines are valued at their net selling prices.
On 1 February x0, the boiler of one of the steam engines exploded, completely destroying
the whole engine. Fortunately no one was injured but the engine was beyond repair. Due to
its age, a replacement could not be obtained. Because of the reduced passenger capacity, the
estimated value in use of the whole of the business after the accident was assessed at RM2
million.
Passenger numbers after the accident were below expectations even after allowing for the
reduced capacity. A market research report concluded that tourists were not using the railway
because of their fear of a similar accident occurring to the remaining engine. In the light of
this, the value in use of the business was reassessed on 31 March x0 at RM1.8 million. On
this date, Miplex received an offer of RM900,000 in respect of the operating licence (it is
transferable). The realizable value of the other net assets has not changed significantly.
Required:
Calculate the carrying amount of the assets of Steamdays (in Miplex’s financial position) at 1
February x0 and 31 March x0 after recognizing the impairment losses in accordance to
MFRS 136.
(Total 25 marks)
ACC3201 (F) / Page 5 of 7
Question 4
Part A
(i) Identify whether (and when) the “significant risks and rewards” of ownership pass
from seller to buyer in each of the following situations, in accordance to
MFRS118:
(a) A retailer has a “no questions asked” returns policy. Customers may return
goods for any reason within one month of purchase and obtain a full
refund. Experience shows that less than 1% of sales result in such returns
and refunds
(4 marks)
(b) A company sells a machine to a customer and also undertakes to install
the machine on the customer’s premises. The installation will take
approximately three days, after which the customer will inspect the
installed machine and decide whether or not to accept it.
(3 marks)
(ii) On 1 July 2011, Ashford Ltd sells goods worth RM800,000 to Baker plc for
RM500,000. The sales agreement states that Ashford Ltd is entitled to repurchase
the goods on 30 June 2014 for RM500,000 plus compound interest calculated at
10% per annum and it is expected that repurchase will in fact occur.
Taking into account the substance of this transaction, how much revenue should
Ashford Ltd recognize on 1 July 2011?
(6 marks)
Part B
At the beginning of year x1, a company received a 20% grant towards the cost of a new
machinery of RM20 million. The asset has an expected life of five years and a residual value
of zero.
Required:
Show the statement of financial position extracts for the years ended 31 December x1 and x2
using both the deferred income and writing off against asset methods, in accordance to
MFRS120.
(12 marks)
(Total 25 marks)
Question 5
Part A
After the end of the reporting period, prior to authorizing for issue the financial statements of
Tenstar for the year ended 31 March 20x7, the following material information has arisen:
ACC3201 (F) / Page 6 of 7
(i) The notification of the bankruptcy of a customer. The balance of the trade
receivable due from the customer at 31 March 20x7 was RM23,000 and at the
date of the notification it was RM25,000. No payment is expected from the
bankruptcy proceedings.
(4 marks)
(ii) Sales of some items of product W32 were made at a price of RM5.40 each in
April and May 20x7. Sales staffs receive a commission of 15% of the sales price
on this product. At 31 March 20x7 Tenstar had 12,000 units of products W32 in
inventory included at cost of RM6.00 each.
(4 marks)
(iii) Tenstar is being sued by an employee who lost a limb in an accident while at work
on 15 March 20x7. The company is contesting the claim as the employee was not
following the safety procedures that he had been instructed to use. Accordingly
the financial statements include a note of a contigent liability of RM500,000 for
personal injury damages. In a recent decided case where a similar injury was
sustained, a settlement figure of RM750,000 was awarded by the court. Although
the injury was similar the circumstances of the accident in the decided case are
different from those of Tenstar’s case.
(4 marks)
Required:
State and quantify how items (i) to (iii) above should be treated when finalizing the financial
statements of Tenstar for the year ended 31 March 20x7, in accordance to MFRS110.
Part B
Year x3
Started a project to identify the properties of the Neem plant. ByBy intended to come out
with some cash-generating projects. Cost incurred was RM500,000.
Year x4
ByBy identified several products that could be made from the leaves and bark of the Neem
plant. ByBy was keen to develop a “cure all” ointment or cream that would cure all external
injuries and pimples. Cost incurred was RM900,000.
Year x5
ByBy decided to concentrate on the cream making project and continued to develop a sweet-
smelling cream that would be readily accepted by various customers. The project was still in
progress. Market research indicated that the cream was very expensive and the fragrance was
not viewed favourably by the majority of those surveyed. Costs incurred was RM300,000.
Year 6
Further work was done and now the cream was acceptable to customers who were anxiously
waiting for the launch of the product. Cost incurred was RM250,000.
Year 10
ACC3201 (F) / Page 7 of 7
A cream named Magic, entered the market and ByBy expected to be a market leader for the
first two years and to enjoy economic benefits for another three years.
Required:
Discuss briefly the accounting treatment for Year3, Year 4, Year 5, Year 6 and Year 10 in
accordance to MFRS138.
(Total 25 marks)
-THE END-