CONFIDENTIAL 1 TEST1/NOV2017/FAR210

UNIVERSITI TEKNOLOGI MARA

COMMON TEST 1

COURSE : FINANCIAL ACCOUNTING 3

COURSE CODE : FAR 210

EXAMINATION : 18 NOVEMBER 2017

TIME : 1 HOUR 30 MINUTES

INSTRUCTIONS TO CANDIDATES

1. Answer ALL questions in the Answer Booklet. Start each answer on a new page.

2. Do not bring any material into the examination room unless permission is given by
the invigilator.

3. Please check to make sure that this examination pack consists of:

i) the Question Paper

ii) an Answer Booklet – provided by the Faculty/Campus

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

This examination paper consists of 4 printed pages

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CONFIDENTIAL 2 TEST1/NOV2017/FAR210

QUESTION 1:

a. A historical perspective on an overview of Financial Accounting and Reporting in

Malaysia, provide readers with an understanding on the development of financial
reporting in Malaysia. In preparing and presenting financial statements, companies in
Malaysia must comply with requirement set out by some regulatory authorities.

Required:

i. State any FOUR (4) statutory regulations on financial accounting and reporting in
Malaysia.
(2 marks)

ii. Briefly explain any TWO (2) requirements of Companies Act 2016 with regards to
keeping proper accounting and other records.
(2 marks)

b. Explain briefly any THREE (3) functions of Financial Reporting Foundation (FRF).
(3 marks)

c. Up until 2016, there existed a big gap between the IFRSs adopted for application by
non-private entities and the PERSs (extant MASB Standards) applied by private
entities. Briefly explain the problems in relation to PERSs.
(3 marks)
(Total: 10 marks)

QUESTION 2

a. List FOUR (4) scopes covered in the Malaysian Accounting Standards Board’s
(MASB) Conceptual Framework for financial reporting.
(4 marks)

b. Financial information is deemed to be relevant if the information is capable of making

different in user’s decision. State TWO (2) values which must exist in order for financial
information is capable of making difference in user’s decision.
(2 marks)

c. Distinguish between the TWO (2) concepts of capital as identified by the Conceptual
Framework.
(3 marks)

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CONFIDENTIAL 3 TEST1/NOV2017/FAR210

d. On 1 April 2017, Forte Trading sold goods to Complex Trading worth RM3,500 and
delivered the goods on the same day. Complex Trading agreed to settle the payment
on 30 June 2017.

Required:
i. Define income as per MASB Conceptual Framework
(2 marks)

ii. Discuss whether Forte Trading can recognize the goods sold to Complex Trading
as its income on 1 April 2017.
(4 marks)
(Total: 15 marks)

QUESTION 3

On 1 September 2016, Hana Bhd a public listed company based in Shah Alam places an
order for a machine from Indonesia. The machine was delivered on 30 September 2017 and
Hana Bhd takes two weeks to settle the invoice price of RM300,000. She also managed to
get a cash discount of 5% on the purchase price. The following costs are also incurred:

RM
Machine purchase price 300,000
Import duties and taxes 10,000
Administrative cost 25,000
Delivery cost to Port Klang 10,000
Fare cost from Port Klang to Shah Alam 5,000
Start-up and pre-production cost 11,500
Installation and commission costs 10,000
Exchange translation loss of payable 9,500

From the company production forecast shows that the production output will increase 25%
by using this new machine. It is the company policy to use reducing balance method at the
rate 20% on monthly basis to depreciate their non-current asset. Hana Bhd closes its book
on 30 June each year.

Required:

a. Identify whether the machine is an asset of Hana Berhad.

(3 marks)

b. Explain whether the machine is an item of property, plant and equipment in

accordance with MFRS116 Property, plant and equipment.
(4 marks)
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CONFIDENTIAL 4 TEST1/NOV2017/FAR210

c. i. Calculate the initial cost of a machine as at 30 September 2016.

(3 marks)

ii. Prepare journal entry for depreciation expenses on machine for the year ended
30 June 2017.
(4 marks)

d. As at 30 June 2017, Hana Berhad decided to sell their old machine for RM130,000 in
cash. The old machine was bought on 2 July 2014 at a cost of RM250,000 and
depreciates at a rate of 20% on reducing balance method (monthly basis). The
following are the depreciation expense schedule in relation to old machine:

30 June 2015 RM50,000

30 June 2016 RM40,000
30 June 2017 RM32,000

i. State TWO (2) factors affecting the value of the machine.

(2 marks)

ii. Assess whether the company can derecognise the machine.

(4 marks)

iii. Advise the company on the accounting treatment of the disposal of the machine.
(5 marks)
(Total: 25 marks)

END OF QUESTION PAPER

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