CONFIDENTIAL 1 AC/JUL 2021/FAR210

UNIVERSITI TEKNOLOGI MARA

FINAL EXAMINATION

COURSE : FINANCIAL ACCOUNTING 3

COURSE CODE : FAR210
EXAMINATION : JULY 2021
TIME : 3 HOURS

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of five (5) questions.

2. Answer ALL questions. Start each answer on a new page.

3. Answer ALL questions in English.

4. Please submit the Answer online.

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or any of the Chief Invigilator / Invigilators’ instructions. If found otherwise, I can be barred
from taking the assessment or can be brought to the Student Disciplinary Action Board.

( ) I do understand that I can be penalised under Rules 48, Act 174 of the Educational Institutions
(Discipline) Act 1976 as at 1 November 2012 or other enforceable Acts, and can be charged
with a maximum penalty of dismissal from the University if I am found guilty of a disciplinary
offence.

( ) I declare that all answers on this assessment are based on my own work and effort that
depicted to the best level of my knowledge. I do not copy other student’s answer neither
collaborate nor communicate with anyone via any kind of medium communication.

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

This examination paper consists of 8 pages

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QUESTION 1

The following is the trial balance of Rinee Bhd as at 31 December 2020:

DR (RM) CR (RM)
Sales 9,800,900
Cost of sales 5,890,700
Administrative expenses 1,250,650
Distribution expenses 856,460
Directors' fees 758,000
Tax paid 89,000
Interim ordinary dividend 25,000
Bank 659,000
Accounts receivable and payable 76,300 45,870
Ordinary share capital 2,500,000
Retained profit as at 31 December 2019 1,339,840
Assets Revaluation Reserve as at 31 December 2019 65,000
10% Debentures 315,000
Income from investment 54,000
Other income 5,600
Fixed Deposit 40,000
Investment 650,000
Land 2,560,000
Building (cost) 890,000
Plant and machinery (cost) 650,000
Motor vehicle (cost) 415,000
Accumulated depreciation as at 31 December 2019:
Building 325,000
Plant and machinery 260,000
Motor vehicles 345,000
Allowance for impairment of trade receivables as at 31
December 2019 18,900
Inventories (at cost) as at 31 December 2020 265,000
15,075,110 15,075,110

Additional information:

1. Depreciation expenses for the property, plant and equipment are to be provided on
yearly basis as follows:

Building 2% on cost
Plant and machinery 20% on carrying amount
Motor vehicle 10% on cost

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Depreciation on building, plant and equipment are to be treated as administrative

expenses while depreciation on motor vehicle is to be treated as distribution expenses.
Land is not depreciated.

2. An independent valuer revalued the land at RM3,000,000. The directors decided to

incorporate the new value in the books of Rinee Bhd for the year ended 31 December
2020.

3. As at 31 December 2020, the net realisable value for the inventory was RM260,000.

4. The following transactions are to be recorded in the company’s books:

a. On 5 May 2020, the company decided to issue 1,000,000 units of ordinary shares
at RM2.00 per share to finance its new projects. All shares were fully subscribed.
b. Auditor’s fee outstanding amounted to RM35,000.
c. There is an outstanding of debenture interest for the year.

5. Allowance for impairment of trade receivables at the year-end was RM21,250.

6. Taxation expenses for the year was estimated at RM92,000.

Required:

a. Prepare the following financial statements in accordance with the requirement of

Companies Act 2016 and MFRS 101 Presentation of Financial Statement and other
relevant Malaysian Financial Reporting Standards:

i. Statement of Profit or Loss and Other Comprehensive Income for the year ended
31 December 2020.
(8 marks)

ii. Statement of Changes in Equity for the year ended 31 December 2020.

(5 marks)

iii. Statement of Financial Position as at 31 December 2020.

.
(8 marks)
b. Prepare a note on property, plant and equipment.
(6 marks)
(Total: 27 marks)

QUESTION 2

Enoki Bhd specialises in the production of high-quality medical tools and small appliances and
operates in Tasek Industrial Park. Due to the increasing demand for healthcare facilities and
appliances, the company receives high demand for the medical appliances. In order to meet
the increasing demand, the company purchased a specialised equipment on 21 May 2017.

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Details of the cost incurred are as follows:

RM
Purchase price 2,400,000
Import duty 25,200
Engineer fees 12,900
Pre – production testing 9,800
Shipping and transportation cost 11,900

Enoki Bhd received a trade discount of 5% from the purchase price. The specialised
equipment has an estimated useful life of ten years with no residual value and to be
depreciated on a straight-line method, monthly basis. The company closes its accounts on 31
December each year.

On 30 October 2020, due to cost ineffective of maintaining the specialised equipment the
company sold the specialised equipment at RM1,450,500.

Required:

a. Explain briefly whether the specialised equipment is an asset of Enoki Bhd in

accordance with the Malaysian Conceptual Framework for Financial Reporting.
(4 marks)

b. Explain briefly whether the specialised equipment satisfies the definition of property,
plant and equipment in accordance with the MFRS116 Property, Plant and Equipment.
(4 marks)

c. Compute the initial cost of the specialised equipment.

(5 marks)

d. Calculate depreciation on the specialised equipment for the year ended 31 December
2017.
(3 marks)

e. Assess whether the company can derecognise the specialised equipment in accordance
with MFRS116 Property, Plant and Equipment.
(5 marks)

f. Recommend the accounting treatment for the disposal of specialized equipment to the
management of Enoki Bhd.
(5 marks)
(Total: 26 marks)

QUESTION 3

Green Glove Bhd is a trading company located at Kota Bharu, Kelantan. The following
transactions were extracted from its book of accounts for the year ended 31 December 2020:

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Date Transactions
1 January 2020 The allowance for impairment of trade receivables amounted to
RM12,000.
10 January 2020 Issued invoice of RM200,000 for goods delivered to Rubber4U Bhd
on credit
15 May 2020 Sold goods worth RM60,000 to Unggul Pharmacy and accepted a 60-
day, 10% note in full payment upon delivery of goods on the same
day.
10 September 2020 Rubber4U Bhd is declared bankrupt. Only 80% of the amount owed
is collected. The company’s director decided to write off the remaining
amount as uncollectible.
31 December 2020 Amount of receivables at the end of the year amounted to
RM750,000.

Required:

a. Identify whether the transactions on 10 January 2020 and 15 May 2020 give rise
to financial assets.
(3 marks)

b. Discuss briefly the two (2) types of receivables that arise on 10 January 2020 and
15 May 2020.
(2 marks)

c. Determine the necessary journal entries to record the above transactions for the
financial year ended 31 December 2020.
(5 marks)

d. Green Glove Bhd produced the following ageing analysis of receivables as at 31

December 2020:

Past due days Amount Expected credit loss rate (%)

outstanding (RM)
Within maturity 350,000 0.5
1 – 30 days 200,000 1
31 – 90 days 80,000 2
91 - 180 days 70,000 10
181 – 365 days 50,000 20
750,000

Green Glove Bhd estimated its expected credit loss rate based on its historical credit
loss experience and adjusted for forward-looking estimates.

Determine the amount of impairment of trade receivables to be recognized in the

Statement of Profit or Loss AND the net realizable of receivables to be disclosed in
the Statement of Financial Position as at 31 December 2020.
(5 marks)
(Total: 15 marks)

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QUESTION 4

Fast & Furious Bhd is a leading company in trading imported cars. The company imported two
sport car models namely SZ and RZ.

On 29 December 2020, due to an increasing demand from the local market, Fast & Furious
Bhd purchased two (2) additional units of sport cars model SZ from the main supplier in
Germany. Fast & Furious Bhd were charged with the normal invoice price and incurred regular
import duties, storage cost, and freight insurance in relation to this purchase. In the sales and
purchase agreement, it included a clause of FOB Destination. The two (2) sport cars model
SZ arrived at Fast & Furious Bhd business premise on 11 January 2021.

Required:

a. Identify whether the purchased of 2 units of sport car models SZ were items of
inventories of Fast & Furious Bhd as at financial year end 31 December 2020 in
accordance with MFRS102 Inventories.

(3 marks)

As at financial year end 31 December 2020, below are the details for the two (2) existing units
of sport cars at Fast & Furious Bhd’s showroom:

SZ (RM) RZ (RM)
Quantity 1 unit 1 unit
Invoiced price 386,900 588,343
Import duties 10,000 25,000
Storage cost 10,000 15,000
Freight insurance 10,100 17,657
Estimated market price 500,000 680,000
Carriage cost to sell 20,000 50,000

Required:

b. State three (3) components of cost of inventories in accordance with MFRS102

Inventories.
(3 marks)

c. Determine the value of the inventory on item-by-item basis as at financial year end 31
December 2020 in accordance with MFRS102 Inventories.
(6 marks)
(Total: 12 marks)

QUESTION 5

The following are the Statement of Financial Position and Statement of Profit or Loss of
Keriangan Bhd:

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Keriangan Bhd
Statement of Financial Position as at 31 December 2020 and 2019
2020 2019
(RM ‘000) (RM ‘000)
Non-current Assets
Property, plant and equipment (carrying value) 683,258 761,472

Current Assets
Inventory 526,592 587,594
Accounts receivable 472,000 400,938
Prepayments 13,714 15,528
Marketable securities 3,044 14,572
Cash and bank 69,512 175,768
TOTAL ASSETS 1,768,120 1,955,872

Equity
Share capital 285,530 285,530
Retained earnings 408,414 349,728
Other reserves 40,000 40,000

Non-current Liabilities
Bank loan 320,000 620,000

Current Liablities
Accounts payable 536,600 464,344
Tax payable 149,024 153,440
Dividend payable 28,552 42,830
TOTAL EQUITY AND LIABILITIES 1,768,120 1,955,872

Keriangan Bhd
Statement of Profit or Loss for the year ended 31 December 2020

RM’000
Revenue 6,791,982
Cost of Sales (6,319,290)
Gross Profit 472,692
Administrative expenses (299,110)
Distribution cost (4,770)
Operating profit 168,812
Finance cost (59,474)
Investment income 6,978
Profit before Tax 116,316
Tax expense (29,078)
Profit after Tax 87,238

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Additional Information:

1. Depreciation charge for the year was RM88,214,000 and the amount was included in
the administrative expenses.
2. Dividend payable of last year was paid this year.
3. Marketable securities were qualified as cash equivalents.
4. Prepayments were related to administrative expenses.

Required:
a. Prepare the Statement of Cash Flows for the year ended 31 December 2020 for
Keriangan Bhd using the DIRECT METHOD in accorance with MFRS107 Statement of
Cash Flows.
(16 marks)

b. Analyse the differences in preparing the Cash Flow Statement using the Direct Method
in contrast to preparing the Cash Flow Statement using the Indirect Method.
(4 marks)
(Total: 20 marks)

END OF QUESTION

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