BKAR2023 FINANCIAL ACCOUNTING AND REPORTING II (A211)

MINI CASE 1:
PROPERTY, PLANT AND EQUIPMENT

DUE DATE: 26 October 2021, Tuesday

Guidelines for submission:

1) Please answer all questions.

2) Please write your name, matric number, group on the header and page number on the
bottom of your answer document.

3) The mini case is an individual task; however, discussion is allowed, but copying other
student’s answer is forbidden.

4) Your answer should be handwritten and subsequently scanned with a scanner or

mobile scanner apps in a combined PDF file. The scanned document must be clear,
easily readable, and complete. Photo is not allowed.

5) Submit your scanned answer via Online Learning portal → within

the allotted time and period, before 12.00 mid night, 26 October 2021 (MYT). Only one
submission will be accepted.
QUESTION 1

Abdullah, Z. et al (2019), Topic 1, Revision Q2, pg. 45

QUESTION 2

TASCA Bhd is principally engaged as a total logistics solution provider commencement on 1

January 2016 and listed on the Main Market of Bursa Malaysia in the category of
Trading/Services. The company closes its accounts on 31 December every year. Information
about TASCA Bhd’s property, plant, and equipment on 31 December 2019 is summarised in the
table below.

RM

Freehold land 4,000,000

Warehouse 3,000,000

Accumulated depreciation - Warehouse (400,000)

Cardboard box Machinery 450,000

Accumulated depreciation – Machinery (85,000)

Office Equipment 360,000

Accumulated depreciation – Off. (135,000)

Equipment

Additional information:
1) TASCA Bhd incurred the following costs from 1 January 2020 to 31 December 2020 in
relation to the construction of a new office building and the introduction of its services of the
supply chain including warehouse management, order fulfillment, and shipping orders
products to the local market. The company borrowed specific loan of RM400,000 at a 6%
interest rate from Aksari Bank on 1 January 2020. Moreover, the company has an existing
bank loan of RM800,000 at 8% on 1 January 2020.

Construction Period RM

1 January 2020 180,000

5 March 2020 150,000

3 June 2020 120,000

 30 July 2020 105,000

6 October 2020 170,000

31 December 2020 70,000

2) The land and warehouse were revalued to RM4,400,000 and RM2,350,000, respectively on
31 December 2020.

3) On 1 July 2020, TASCA Bhd exchanged the old office equipment and RM150,000 for new
office equipment. The old office equipment was estimated to have a 5-year life. Depreciation
on the old office equipment has been recorded through 31 December 2019. It is estimated
that the fair value of the old office equipment is RM120,000 on 1 July 2020.

4) On 31 December 2019, TASCA Bhd conducted an impairment test for cardboard box
manufacturing machinery and found that there is an indication of impairment. However, the
management anticipates the present value of future net cash flow from cardboard box
manufacturing machinery to be RM341,200 and its fair value to RM343,000. The estimated
selling cost to be 4% of its fair value.

5) TASCA Bhd expecting that the demand for cardboard box manufacturing machinery would
increase in the foreseeable future, the entity did not dispose of its machine. On 31 December
2020, it further estimated the present value of future net cash flow from cardboard box
manufacturing machinery to be RM304,600 and its fair value to RM320,000. The estimated
selling cost to be 4%.

6) The accounting policies related to the depreciation of the assets are as follows:

 Warehouse 6%
 Cardboard Box Machinery 15%
 Office Equipment 20%

REQUIRED:
(Round your answer to the whole number)

(a) Calculate the amount of interest to be capitalised for the financial year 2020 and prepare
the journal entries related to the interest capitalisation.

(b) Prepare the journal entries to record revaluation of land and warehouse for the financial
year 2020.
(c) Prepare the journal entries to record the exchange and depreciation of the office
equipment on 1 July 2020.

(d) Prepare the journal entries to record the impairment and depreciation of the Cardboard
Box Machinery on 31 December 2019 and 31 December 2020.