Adjustment for Far270 Assignment

MFRS137

• On 1 May 2023, a customer filed a legal suit of RM 250,000 against Sejahtera Bhd due to defective
products due to not meeting the specific quality standard. As at 31 December 2023, the case was
still ongoing and the next trial will be held next year. The company’s legal advisors however are
of the opinion that it was probable that the customer would win the case.
• The company sued its subsidiary supplier on 9 November 2023 for RM 600,000 damages for
unreliable specification of material which has resulted in fragile products. As at 31 December
2023, a judgement was given in favor of the company. The company lawyers were of the opinion
that it was virtually certain that the company would receive compensation.

Journal entries :

RM RM
1/5/2023 Dr. SOPL – Legal charges 250,000
Cr. Provision for legal charges 250,000
9/11/2023 Dr. Contingent Assets 600,000
Cr. SOPL – Legal case 600,000
MFRS 15

Adjustment for MFRS 15

• On 5 February 2023, the company enters into a non-cancelable contract with a customer to
transfer a product. The contract stated that the customer agreed to pay the contract price in
advance of RM 1,000,000 on 18 March 2023 and the company will transfer the product on 30
April 2023. The cost of goods transferred is RM 120,000. The customer, however, does not pay
until 27 March 2023.
• The company has a contract with a new customer to deliver the products and provide a 5-day
training course in learning the operating of the product on 5 Mei 2023 with the contract price
agreed at RM 1,350,000. It was stipulated in the contract that the payment of the product will
occur one (1) week after all of the sales staff is able to know how to operate the product. Each
performance obligation has been assessed to be separate with individual standalone values. The
product's selling price is determined to be RM 1,500,000 and the 5-day training course is valued
at RM 450 per day. The company delivered the product on 30 Mei 2023 while the training is
conducted on 5 Jun 2023.
1. Journal for contract on 5 February 2023

RM RM
18/2/2023 Dr. Account Receivable 1,000,000
Cr. Contract Liability 1,000,000
27/3/2023 Dr. Bank 1,000,000
Cr. Account Receivable 1,000,000
30/4/2023 Dr. Contract Liability 1,000,000
Cr. Sales Revenue 1,000,000
Dr. COGS 120,000
Cr. Inventory 120,000
 2. Journal for the contract on 5 Mei 2023

Transaction Price =RM 1,350,000

RM RM
30/5/2023 Dr. Contract Asset 1,347,978
Cr. Sales Revenue 1,347,978
([1,500,000/1,502,250] x 1,350,000
= Rm1,347,978.03)
5/6/2023 Dr. Account Receivable 1,350,000
Cr. Contract Asset 1,347,978
Cr. Sales Revenue 2,022
([2,250/1,502,250] x 1,350,000 =
RM2,021.97)
12/6/2023 Dr. Cash 1,350,000
Cr. Account Receivable 1,350,000