Total consideration RM

Cost of investment paid by holding 277,000

Minority interest 66500
293,500
Net asset acquired
Ordinary share capital 95000
Retained profit- preacquisition 11500
Fair value adjustment 4000
102500
Goodwill 191,000

Total consideration RM
Cost of investment paid by holding
Minority interest

Net asset acquired

Ordinary share capital
Retained profit- preacquisition
Fair value adjustment

Goodwill

Total consideration RM
Cost of investment paid by holding
Minority interest

Net asset acquired

Ordinary share capital
Retained profit- preacquisition
Fair value adjustment

Goodwill
 1 RM'000
Cost of material use 5,000
Services of consultants used in the project 2,000
fee to register a trade design 50
amortisation of patent used in the project 100
Salaries of scientists and technicians 400
Depereciation of equipment used 300

Cost of development project shall be capitalised 7,850

Notes
Training cost- Although well trained staff adds value to a business, MFRS
138 prohibits the capitalisation of training cost. This is because an entity
has insufficient control over the expected future economic benefits
arising from staff training, in other words staff are free to leave and work
for someone else. Training is part of the general cost of developing a
business as a whole.

1 RM'000
Cost of material use 5,000
Services of consultants used in the project 2,000
fee to register a trade design 50
amortisation of patent used in the project 100
Salaries of scientists and technicians 400
Depereciation of equipment used 300

Cost of development project shall be capitalised 7,850

Question 2
The standard does not permit re-instatement of development costs that
have been previously recognised as an expense, even when the criteria
for asset recognition are met in a subsequent period. Therefore for the
current year, the amount of development costs that should be capitalised
is RM20 million. The RM10 million written off in the prior year should not
be re-instated.

Question 3
The development costs of a project recognised as an asset should not
exceed the amount that is likely to be recovered from related future
economic benefit after deducting further development costs, related
production costs and selling and administrative costs directly incurred in
the marketing the product.
The net recoverable amount therefore sets the upper limit in which
development costs of a project should not be capitalised. The portion of
development costs in excess of the net recoverable amount should be
charge as an expenses immediately.

Question 6
Amortisation= Depreciation (straight- line bases)
MFRS 138 Intangible Assets require that 'an entity shall assess whether
the useful life of an intangible asset is finite (limited life) or indefinite
and, if finite, the length of, or number of production or similar units
constituting that useful life'.

1 RM'mil
Cost of development project shall be capitalised 80
Amortisation at end of 2014 (16)
Carrying amount at end of 2014 (NBV) 64

Amount capitalised in 2015 20

Amortisation at end of 2015 (21)
Carrying amount at end of 2015 63

Question
Year 2011 2012 2013 2014 2015 Year
Development costs Development costs
10 20 20 30 20
(RM'mil) (RM'mil)

Statement of financial position

Year 2011 2012 2013 2014 2015
Development costs
10 30 50 64 63
(RM'mil)
2011 to 2013 is accumulation of asset
Start from 2014 and 2015 add in asset value and deduct depreciation

Question 10
2,012 2,013 2,014 2,015
RM'000 RM'000 RM'000 RM'000
1) Salaries of scientists and technicians 4,100 5,000 2,000 1,500
2) Cost of materials used 5,500 4,000 2,000 1,000
3) Services of consultants used in the project 3,000 400 500 500
4) Fee to register a trade design 700 0 0 0
Construction and testing cost of prototypes and
5) 2,800 1,000 1,000 1,000
model

6) Depreciation of equipment used in development 500 500 500 500

process
a) Total development cost incurred 16,600 10,900 6,000 4,500

b) Capitalised development cost No Yes Yes Yes

 c) RM'000
Amount capitalised up to end of 2013 10,900
Amortisation at end of 2013 (1,090)
Carrying amount at end of 2013 9,810

Amount capitalised in 2014 6,000

Amortisation at end of 2014 (1,757)
Carrying amount at end of 2014 14,053

Amount capitalised in 2015 4,500

Amortisation at end of 2015 (2,319)
Carrying amount at end of 2015 16,234

Cost of development project shall be capitalised 56,331

Statement Profit and Loss

2012 2013 2014 2015
Operating expenses RM RM RM RM
Amortisation of development Operating expenses
0 1,090 1,757 2,319
cost Amortisation of development
Development 16,600 0 0 0 cost
Development
Statement of financial position
2012 2013 2014 2015
Non- current assets RM RM RM RM
Intangible assets- Non- current assets
0 9,810 14,053 16,234
development cost Intangible assets-
development cost

Question 10
2,016 2,017 2,018 2,019
RM'000 RM'000 RM'000 RM'000
1)
2)
3) RESEARCH CPST
4)

5) 6,000 18,000 26,000 19,700

6) 0 (2,000) 3,300 0

a) Total development cost incurred 6,000 16,000 29,300 19,700

b) Capitalised development cost No NO Yes Yes

c) RM'000
Amount capitalised up to end of 2016
Amortisation at end of 2013
Carrying amount at end of 2013

Amount capitalised in 2017

Amortisation at end of 2014
Carrying amount at end of 2014

Amount capitalised in 2018 29,300

Amortisation at end of 2015 2,930
Carrying amount at end of 2015 26,370

Amount capitalised in 2019 19,700

Amortisation at end of 2015 5,119
Carrying amount at end of 2015 40,951

Cost of development project shall be capitalised 124,370

Operating expenses
Amortisation of development
cost
RESEARCH

Non- current assets

development cost

1 RM'mil
Cost of development project shall be capitalised 51,300
Amortisation at end of 2014 (5,130)
Carrying amount at end of 2014 (NBV) 46,170

Amount capitalised in 2015 19,700

Amortisation at end of 2015 (7,319)
Carrying amount at end of 2015 58,551
2,011 2,012 2,013 2,014 2,015

10 30 50 64 63
 2012 2013 2014 2015
erating expenses RM RM RM RM
ation of development 0 1,090 1,757 2,319
cost
Development 16,600 0 0 0

2012 2013 2014 2015

n- current assets RM RM RM RM
angible assets-
0 9,810 14,053 16,234
velopment cost
 2012 2013 2014 2015
erating expenses RM RM RM RM
ation of development
0 0 2,930 5,119
cost
RESEARCH 8,000 15,000 12,000 11,000

2012 2013 2014 2015

n- current assets RM RM RM RM

velopment cost 6,000 22,000 46,170 58,551

Chapter 3

Question 1
The facility will not be transferred until the backlog of orders is completed:
this demonstrates the facility is not available for immediate sale in its
present condition.

The facility cannot be classified as 'held for sale' at 31 December 2013, it

must be treated in the same way as other items of property, plant and
equipment: it should continue to be depreciated and should not be
separately disclosed.

Question 3
Carrying ammount at 31st December year 9
Comment : value of property held for sales at 31 Dec year 9 is lower of
carrying amount and fair value less cost to sell, ie RM850,000

Question 6
a) Carrying amount at 1st Jan Year 3= RM640 million
Fair value less cost to sales= RM 550 million
Conclusion: value of property held for sales at 1st January Year 3 is lower
of carrying amount and fair value less cost to sell RM550 million.

b) carrying amount ceases to be c;assofoed as je;d fpr sale & adjustment

Carrying amount at 1st Jan Year 3= RM640 mil
Depreciation= cost / useful life= RM 80mil
Less: depreciation for year 3 = Cost-scrap value/useful life)= RM640- RM80
.= RM560 mil

Continue using asset to generate profit

Net cash inflows Discounting factor Present value (RM
Year
(RM Mil) 10% Mil)
9 96-44 = 52 0.909 52*0.909= 47
10 53 0.826 44
11 55 0.751 41
12 55 0.683 38
13 46 0.621 29
14 47 0.564 27
15 47 0.513 24
249 250

Conclusion: Carrying amount of the hotel after it ceases to be classified as

held for sale on 31 DEC Year 3 is RM560 million.

Question 7
1. Carrying amount = Cost - ACCum depreciation
Depreciation straight line method= cost/useful life
RM 750000/10= RM75000
Until 31/12/2012= 2years 9 month
= (RM75000*2) + (RM75000*9/12)
= RM206250
Carrying amount = RM800000- RM 206250= RM 593750
Fair value less cost to sales= RM537500
Conclusion: value of machine held for sales at 31 December 2012 is lower
of carrying amount and fair value less cost to sell is RM537500

b) Continue using asset to generate profit

Net cash inflows Discounting factor Present value (RM
Year
(RM Mil) 12% Mil)
2014 120 0.893 107
2015 80 0.797 64
2016 90 0.712 64
2017 60 0.636 38
2018 50 0.567 28
2019 30 0.507 15
2020 90 0.452 41
357

Carrying amount at 31/12/2013

Carrying amount at 31/12/2012 = RM 593750
Less: Depreciation for the year= RM75000
(Cost- scrap value/ useful life)
= RM 518750

Conclusion: value of machine after Tea Sdn Bhd decided to ceases It to be

classified as assets held for sales on 31 Dec 2013 will be 400,000 which is
lower of carrying amount and fair value less cost to sell

Net cash inflows Discounting factor Present value (RM

Year
(RM Mil) 12% Mil)
20 95 0.893 85
21 75 0.797 60
22 65 0.712 46
23 45 0.636 29
24 35 0.567 20
25 25 0.507 13
26 15 0.452 7
259