FAR460 – JAN 2023

GROUP ASSIGNMENT B
PUBLISHED FINANCIAL STATEMENTS

INSTRUCTIONS TO STUDENTS

1. This assignment contributes 10% to your on-going assessment (OGA) marks.

2. Both typewritten and handwritten answers are accepted.

3. Please state the name and matric number of each group member on the cover page of
the assignment.

4. This assignment must be submitted not later than 31 Jan 2023

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QUESTION

Aventurine Bhd is a company engaged in supplying spare parts used in the oil and gas
industries. It is currently preparing its financial statements for the year ending 30 June 2022.
Provided below is the company’s trial balance for the year ended 30 June 2022:

RM RM
Land at 1 July 2021 38,000,000
Building at 1 July 2021 20,000,000
Plant and Machinery at 1 July 2021 10,800,000
Investment Property 5,000,000
Investment in Amethyst Bhd 5,000,000
Intangible Assets (at carrying amount) 1 July 2021
Licence Fee 2,000,000
Main Frame Computer Database 1,880,000
Accumulated depreciation: 1 July 2022
Building 4,000,000
Plant and Machinery 3,720,000
Revenue 60,467,000
Cost of sales 22,380,000
Inventories 4,540,000
Administrative expenses 6,820,000
Directors’ remuneration 350,000
Selling & distribution cost 3,630,000
Maintenance cost 500,000
Rental income 2,330,000
Investment income 1,332,000
Finance expenses 532,000
Tax paid 3,600,000
Trade receivables and payables 5,840,000 3,055,000
Allowance for impairment of trade receivables 292,000
Ordinary share capital 28,000,000
Retained earnings as at 1 July 2021 48,412,000
Interim dividend for ordinary shares 880,000
Cash at bank 30,506,000
Long-term loan 10,650,000

162,258,000 162,258,000

Additional information:

1. RM500,000 worth of goods that were delivered by Aventurine Bhd to an account

receivable, was already included in the amount of revenue as per trial balance, and a
corresponding increase in trade receivables as Aventurine Bhd has not collected any
payment for the goods delivered to the account receivable. During the financial year
end, only 70% of the goods were sold by the account receivable to the third parties. No
adjustment has been made in the books of the company. The closing inventory value
as per the trial balance was correctly recorded.

2. During the current year, the land was revalued resulting in a deficit of RM700,000. The

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 building was revalued to RM18,000,000 on 1 July 2021. The remaining useful life of
the
building was 40 years as at 1 July 2021 and depreciated on a straight-line basis.
Meanwhile, the plant and machinery were depreciated at 10% using the reducing
balance method.

Land as at 1 July 2021

Carrying amount = RM 38,000,000
FV<CA : Deficit on revaluation = RM700,000

Dr SOPL:Deficit 700,000
Cr Land 700,000

Building as at 1 July 2021

1/7/2021 – Carrying Amount = RM 20,000,000 – RM4,000,000
= RM16,000,000
FV = RM18,000,000
FV<CA : surplus on revaluation = RM2,000,000

Revaluation cost as at 1/7/2021 =RM18,000,000

Accumulated depreciation as at 30/6/2022
Rm18,000,000/40 years =(RM450,000)
Carrying amount as at 30/6/2022 = RM17,550,000

Plant and Machinery

Initial cost as at 1/7/2021 =RM 10,800,000 – RM3,720,000

=RM 7,080,000
Depreciation charge as at 30/6/2022
RM 7,800,000 X 10% = RM708,000
Carrying amount as at 30/6/2022 =RM 6,372,000

3. No adjustment has been made for the property, plant and equipment for the year
ended 30 June 2022. It is the policy of Aventurine Bhd to adopt revaluation model to
measure its land and building, whereas the plant and machinery were measured
using the cost model.

4. The company adopts the fair value model to account for its investment property. On 30
June 2022, the fair value of the property was RM6,000,000.

Investment Property as at 30/6/2022 =RM5,000,000.

FV as at 30/6/2022 =RM6,000,000
FV>CA: Gain on change in FV = RM1,000,000.

Dr Investment Property 1,000,000

Cr SOPL 1,000,000

5. A payment for credit purchase to a supplier totalling RM180,000 in May 2022 was
mistakenly accounted as maintenance cost. This error was discovered during the
current
year.

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 This is current year error. The current year error should be accounted as Year End
Adjustment and its should be adjusted prospectively. The creditors accounts should be
reduced by RM180,000. The SOPL- maintenance expenses should be reduced by
RM180,000.

6. During the year ending 30 June 2021, a worker of Aventurine Bhd had initiated a legal
action claiming a compensation of RM200,000 for a serious hand injury suffered while
operating a machine at the workplace. The company’s lawyer advised that it is
probable for the company to lose the case due to the company’s non-compliance of
the safety regulation.

This prior year errors. The adjustment must be done retrospectively. The amount of
RM200,000 should be reduced in opening balance of retained earnings.

7. The Main Frame Computer Database has indefinite life. On 1 July 2021 the
recoverable amount of the Main Frame Computer Database was RM600,000 and
afterwards to have a finite life of 3 years. On 1 July 2021, Licence fee has a
remaining finite life of 5 years. These transactions have not been recorded in the
books of Aventurine Bhd.

Initial Cost of Main Frame Computer Database as at 1/7/2021 = RM1,880,000

Recoverable amount as at 1/7/2021 = (RM600,000)
Carrying amount as at 1/7/2021 = RM1,280,000
Accumulated Depreciation as at 30/6/2022
(1,280,000/3 years X 1 year) = (RM426,666.67)
Carrying amount as at 30/6/2022 =RM853,333.33

Initial cost of License Fee as at 1/7/2021 = RM 2,000,000

Accumulated Depreciation as at 30/6/2022
(RM2,000,000/5 years X 1 year) = (RM400,000)
Carrying amount as at 30/6/2022 = RM1,600,000

8. As its initial step for diversifying its business into agricultural sector, Aventurine Bhd
has acquired a herd of cattle for RM1,500,000 on 30 June 2022. This transaction was
not recorded in the books of accounts.

9. The tax charged for the year was determined to be RM4,000,000. Final ordinary
dividend was proposed to be RM220,000.

Tax Paid = RM3,600,000

Tax Charged = (RM4,000,000)
Tax Recoverable = - RM400,000

Required:

Prepare the following financial statements in a form suitable for publication, in compliance
with the Companies Act 2016 and in relation to the relevant Malaysian Financial Reporting
Standards (MFRS):

a. Statement of Profit or Loss and Other Comprehensive Income for the year ended 30
June 2022.

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 (15 marks)

b. Statement of Changes in Equity for the year ended 30 June 2022.

(5 marks)

c. Statement of Financial Position as at 31 30 June 2022.

(22 marks)

d. The notes to account to show the movement of property, plant & equipment
(8 marks)
(Total: 50 marks)

END OF QUESTION PAPER