BKAR 3033 FINANCIAL ACCOUNTING AND REPORTING III

COMPREHENSIVE CASE 1 (7%)

A172
Due date: 7 March 2018

Siti Subaidah is a newly recruited Audit Assistant in one of the local medium sized audit firm in
Changlun, Kedah. Siti Subaidah was awarded with a first-class honours accounting degree from
University Utara Malaysia. In university, Siti was an active undergraduate with good track of
record in academic excellence and curriculum activities. She was a well-known undergraduate
among the academic and other undergraduates in the university.

On the first day of work, the Audit Manager Ms. Catherine has assigned a task to Siti Subaidah
and four other newly recruited graduates to analyze the property plant and equipment (PPE) in
accordance with MFRS 116 Property, Plant and Equipment and MFRS 136 Impairment of
Assets on different measurement bases. The audit firm normally assign a report writing task to
examine on the general understanding of financial accounting standards for the newly recruited
audit staff during their 14 days orientation week. For this time, the audit manager had chosen the
PPE topic. Ms. Catherine urged the fresh graduates jointly to prepare one report by analyzing in
detail the two financial reporting standards by referring to the annual reports available in Bursa
Malaysia website. The task requires them to focus on TWO (2) sectors that are construction and
industrial production. Ms Catherine has assigned Siti to lead the team and she also emphasized
that all the members of the team to contribute equally for the given task. Siti and the other fresh
graduates are well verse that PPE is an asset presented as non-current asset in the Statement of
Financial Position. PPE are tangible, identifiable, and physical which expected to generate an
economic return for the company for more than one year, or one operating cycle (whichever is
longer). The examples of PPE are land, buildings, machinery, office equipment, motor vehicles,
furniture and fittings used in a business. However, they were doubt on the requirement and the
format of the report. The manager has given the task with 14 days dateline for the FIVE (5)
members. The guideline for the case analysis given by Ms Catherine is divided into FIVE (5)
sections. The following is the guideline:

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SECTION A FIRM BACKGROUND
1. The objective of CASE 1 is to examine your understanding on different measurement bases
appropriate for plant, property and equipment (PPE) and impairment in accordance with
MFRS116 and MFRS136.
2. Download year 2016 annual report of two listed firms (one: industrial production sector
and the other one: construction sector) from http://www.bursamalysia.com. Find firms with
impairment of assets.
3. What is the name of the firms?
4. The reason or justification for selecting the firms.
5. Describe the nature of its business.

SECTION B PROPERT, PLANT AND EQUIPMENT ASSETS

6. List and explain types of PPE between the two sectors.
7. To state which sector has more types of PPE and more carrying amount for PPE.
8. Identify and elaborate the depreciation method used by the firms.
9. To describe with justified reason which sector has more depreciation amount and useful
life.
10. Describe the subsequent to initial recognition measurement model applied by the firm.
11. Explain in detail the subsequent measurement model applied by the two firms in
accordance with MFRS 116 Property, Plant and Equipment.
12. To determine whether any difference in using the subsequent measurement model between
the two sectors. If the two firms used the same subsequent measurement model. An
additional reading is necessary to provide a justified reason for the use of same subsequent
measurement model.

SECTION C IMPAIRMENT OF ASSETS

13. To explain (a) definition, (b) necessity of impairment, (c) recognition, (d) measurement
and (e) disclosure of impairment for PPE in accordance with MFRS136 Impairment of
Assets.
14. Report the impairment loss for the two sectors.

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15. Based on your assumption, analyze, compare and explain the impairment loss incurred by
the two firms.

SECTION D CONCLUSION
16. For the conclusion, write your understanding based on the findings for the two firms in
accordance with MFRS 116 Property, Plant and Equipment and MFRS 136
Impairment of Assets on different measurement bases. (For Section D write within 300
to 350 words).

SECTION E FORMAT
17. Line spacing: 2 & Font: Arial (size 12)
18. Tape Binding
19. To state the members name on the cover page of the report.
20. To include References at end of the report

Citations of the work in the paper should be by the name of the author(s) followed by the year of
publication using American Psychological Association (APA) style 5th edition and carefully
checked for completeness, accuracy and consistency. Please consult the Publication Manual ISBN
1-55798-790-4 or http://www.apastyle.org/elecref.html for further style guidelines. Some of the
examples:

Journal article:
Stuart, F. I. (2006). Designing and executing memorable service experiences: Lights, camera,
experiment, integrate, action! Business Horizons, 49(2), 149-159.
Ketchen, D., & Hult, G. T. (2007). Bridging organization theory and supply chain
management: The case of best value supply chains. Journal of Operations
Management, 25(2), 573-580.
Book:
Miller, D., & Le Breton-Miller, I. (2005). Managing for the long run: Lessons
in competitive advantage from great family businesses. Boston: Harvard
Business School Press.
Cialdini, R. B. (2001). Influence: Science and practice (4th ed.). Boston: Allyn & Bacon.

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Edited collection:
Pfeffer, J. (1998). Understanding organizations: Concepts and controversies. In D. Gilbert, S.
Fiske, & G. Lindzey (Eds.), Handbook of social psychology (pp. 733-777).
New York: McGraw-Hill.
Geis, G. (1982). The heavy electrical equipment anti-trust cases of 1961. In M. D. Ermann &
R. J. Lundman (Eds.), Corporate and governmental deviance (pp. 123-143).
New York: Oxford University Press.
Web: source:
Berry, L. L., & Seltman, K. D. (2007). Building a strong services brand:
Lessons from Mayo Clinic. Business Horizons, 50(3), 199-209. Retrieved May
10, 2007, from http://www.sciencedirect.com.
Lewis, P. H. (2007). How Apple kept its iPhone secrets. Retrieved January 31, 2008, from
http://money.cnn.com/2007/01/10/commentary/lewis_fortune_iphone.fortune/
index.htm