Solution Far410 Dec - 2019 - 1 - PDF

FAR410 - DEC 2019
FAR410 SUGGESTED SOLUTION
QUESTION 1
a.
PROPOINT BHD
Statement of Profit or Loss and Other Comprehensive Income
for the year ended 30 June 2019
RM’000
Revenue 324,000
(-)Cost of sales (139,250,000+16,500,000) (155,750)
Gross profit 168,250
(-) Admin. expenses (82,849) W1
(-) Selling expenses (38,220) W1
(-) Finance cost (1,050) W1
(-) Loss on disposal of motor vehicle (100)
42,990
(+) Investment income (8,800,000+2,400,000) 11,200
Net profit before tax 57,231
(-) Taxation (6,380)
Net profit after tax 50,851
Other comprehensive income:

Surplus on revaluation 1,000
Total comprehensive income 51,851
WORKINGS:
W1
Admin. Exp S & Dist. Exp Finance Cost

RM’000 RM’000 RM’000
Balance b/d 27,650 21,470
Advertising 8,730
Salary and wages 14,240
Directors remuneration 23,300
(13,500+9,800)
Deb. Interest (7%x15,000) 1,050
Depn-Building (W3) 10,039
Depn-P&M (W3) 5,880
Depn-MV (W3) 8,020
Allowance for doubtful debt (W2) 540
Audit fee 1,200
82,849 38,220 1,050
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FAR410 - DEC 2019
W2
Trade Receivables
Balance b/d 6,670 Bank 20
Allowance for doubtful debt 40
Balance c/d 6,610
6,670 6,670
Allowance for doubtful debt

Trade receivables 40
Balance c/d 500 SOPL 540
540 540
W3
Depn MV (45,000,000 – 1,000,000) – (4,500,000 – 600,000) X 20% = 8,020,000
Depn building (188,000,000+12,780,000) x 5% = 10,039,000
Depn P&M (58,800,000) x 10% = 5,880,000
b.
PROPOINT BHD
Statement of Changes Equity for the year ended 30 June 2019
OSC PSC ARR RE
RM’000 RM’000 RM’000 RM’000
Bal b/d 320,170 125,000 - 135,800
Surplus on Revaluation 1,000
NP for the year 50,851
Ord Dividend (8,880)
Pref Dividend (10,000)
320,170 125,000 1,000 167,771
c.
PROPOINT BHD
Statement of Financial Position as at 30 June 2019
NON-CURRENT ASSETS RM’000 RM’000
Property Plant Equipment 519,501

Investment 67,680
CURRENT ASSETS
Inventories (48,700-16,500) 32,200
Trade receivables (6,610-500) 6,110
Tax recoverable(7,880-6,380) 1,500
Bank (28,700+300+20-12,780) 16,240
Invst. income accrued 2,400
58,450
645,631
EQUITY
2
FAR410 - DEC 2019
Share Capital 445,170

Retained earnings 167,771
Reserves 1,000
NON-CURRENT LIABILITIES
7% Debentures 15,000
CURRENT LIABILITIES
Trade Payables 6,890
Accrual – directors remuneration 9,800
16,690
645,631
d. Notes to the accounts
Property, plant and equipment

Land Building P&M MV TOTAL
RM’000 RM’000 RM’000 RM’000 RM’000
Cost :
Balance b/d 288,600 188,000 58,800 45,000
Revaluation 1,000 - - -
Acquisition - 12,780 -
Disposal (1,000)
289,600 200,780 58,800 44,000
Accumulated Depn :
Balance b/d - 28,200 17,640 4,500
Charge for the year - 10,039 OF 5,880 OF 8,020 OF
Disposal (600)
Total - 38,239 23,520 11,920
Carrying value 289,600 162,541 35,280 32,080 519,501
(Total: 30 marks)
QUESTION 2
a. Yes, Wawasan Bhd should classify the building as item of PPE because it meets the
definition of PPE as tangible items that are held for use in the production or supply of
goods and services, for rental to others, or for administrative purposes and are expected
to be used during more than one period In this situation, building is held for
administrative purpose and expected useful life more than one year.
b. Elements of cost of the building acquired by Wawasan Bhd includes its purchase price,
legal fees, non-refundable purchase taxes, title fees and survey cost after deducting
rebates .
3
FAR410 - DEC 2019
c. Directly attributable expenditure is any costs directly attributable to bringing the asset to
the location and condition necessary for it to be capable of operating in the manner
intended by management. These include the costs of site preparation, initial delivery
and handling, installation and assembly, and testing of functionality.
d. Initial cost of building as at 3 September 2018:
RM
Purchase price 10,300,000
Rebates (50,000)
Legal fees 10,000
Title fees 5,000
Survey cost to make the purchase 2,500
Total 10,267,500
e. Depreciation expense for building equipment

= (10,267,500 OF x10%) x 5% x 10/12
= RM42,781
Statement of Profit or Loss (extract) for the year ended 30 June 2019
Expenses
Depreciation expense 42,781
f. i. An asset shall be derecognised on disposal, or when no future economic benefits are

expected from its use or disposal. In this situation, Wawasan Bhd must derecognise the
old building on 4 July 2018, when the company sold the building and when the risks and
rewards of ownership of the building had been passed to the purchaser.
ii.The carrying amount of the disposed assets is RM7,800,000(15,000,000-7,200,000) .

Sales proceeds from the disposed assets is RM8,092,000, calculated by RM9,000,000
selling price less RM900,000(10%xRM9,000,000) agent’s commission less RM8,000
legal fees. Since the sales proceeds is more than the carrying amount of the disposed
assets, gain on disposal of building of RM292,000 (RM8,092,000 - RM7,800,000) is
recognized.
On 4 July 2018 Wawasan Bhd must recognises a gain on the disposal of the building of
RM292,000 as income in the Statement of Profit or Loss.
(Total:25 marks)
4
FAR410 - DEC 2019
QUESTION 3
a) The hardware products are items of inventory in accordance with MFRS 102 Inventories
because:
• The hardware products are held for sale in the ordinary course of business.
• The hardware products are not held for use in the supply of goods.
b) The value of the closing inventory of hardware products on 31 December 2017 on a group-
by-group basis:
Group Item Cost NRV Closing Write
inventory down
amount
Ordinary 30xRM197=RM5,910 30xRM150=4,500

Grass
Heavy 15xRM265=RM3,975 15xRM280=RM4,200
Cutter
duty
RM9,885 RM8,700 RM8,700 RM1,185
Ordinary 100xRM46=RM4,600 100xRM40=RM4,000
Hand
saw
duty
RM9,250 RM8,125 RM8,125 RM1,125
Ordinary 18xRM250=RM4,500 18xRM250=RM4,500
Chain
Saw
duty
RM13,200 RM13,693 RM13,200
TOTAL RM30,025 RM2,310
c) The written down amount is RM2,310 will be added to cost of goods sold in the Statement
of Profit or Loss and will be deducted from the closing inventories in the Statement of
Financial Position .
(Total: 12 marks)
5
FAR410 - DEC 2019
QUESTION 4
a. Contract is an agreement between two or more parties that creates enforceable rights
and obligations.
b. Any three (3) criteria of a contract:
1. the contract has been approved by the parties to the contract (in writing, orally, or
in accordance with other customary business practices) and they are committed
to performing their respective obligations;
2. the rights of each party in relation to the goods or services to be transferred can
be identified;
3. the payment terms for the goods or services to be transferred can be identified;
4. the contract has commercial substance; and
5. it is probable that the consideration to which the entity is entitled to, in exchange
for the goods or services will be collected.
(Any 3 x 1 mark = 3 marks)
c. Journal entries:
1 Jan 2019 Dr Contract Asset (700/2140x1800) RM588.79

Cr Sales Revenue RM588.79
31 Jan 2019 Dr Bank/Account Receivable RM150

Cr Service Revenue (1211.21/12) RM100.93
Cr Contract Asset (588.79/12) RM49.07
(Total: 12 marks)
6
FAR410 - DEC 2019
QUESTION 5
Greyland Bhd
Statement of Cash Flows for the year ended 30 June 2019
CASH FLOWS FROM OPERATING ACTIVITIES RM’000 RM’000
Net profit after tax 3,134
Adjustments:
Dividend income (320)
Tax expense 1,000
Interest expense 130
Depreciation on property, plant and equipment 260
Loss on disposal of investments 30
Gain on sale of motor van (54)
Operating profit before working capital changes 4,180
Working capital changes:
Decrease in inventories 180
Decrease in accounts receivables 760
Decrease in accounts payables (100)
Decrease in accrued operating expenses (40)
Cash generated from operations 4,980
Interest paid (170)
Taxes paid (1,420)
Net cash Inflow from operating activities 3,390
CASH FLOWS FROM INVESTING ACTIVITIES

Purchased of PPE (3,260)
Proceeds from disposal of motor van 454
Purchased of long-term investment (350)
Proceeds from sale of long term investment (240,000-30,000) 210
Purchased of intangible assets (1,000)
Investment income 380
Net cash outflow from investing activities (3,566)
CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from the issue of shares 7,000
Proceeds from issue of debentures 400
Repayment of bank loan (640)
Dividend paid (1,474)
Net cash inflow from financing activities 5,286
Net increase in Cash and Cash Equivalents 5,110
Cash and cash equivalents at beginning of year
(270,000+13,000,000-6,640,000) 6,630
Cash and cash equivalents at the end of the year
(340,000+11,400,000) 11,740
7
FAR410 - DEC 2019
Workings:
Interest a/c
RM RM
Bank 170 b/d 200
c/d 160 SOPL 130
Taxation a/c
RM RM
Bank 1,420 b/d – t.payable 180
SOPL 1,000
c/d – t.recoverable 240
PPE a/c
RM RM
b/d 11,400 Disposal 400
ARR 2,400 Depreciation 260
Bank 3,260 c/d 16,400
Disposal a/c - PPE

PPE 400 Bank 454
SOPL-Gain on disposal 54
Investment income a/c

RM RM
b/d 100 Bank 380
SOPL 320 c/d 40
Investment a/c
RM RM
b/d 810 Disposal 240
Bank 350 c/d 920
Retained earnings a/c

RM RM
Dividend 1,474 b/d 4,100
c/d 5,760 NPAT 3,134
(Total: 21 marks)
END OF SOLUTION
8
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FAR410 - DEC 2019

FAR410 SUGGESTED SOLUTION

Other comprehensive income:

Admin. Exp S & Dist. Exp Finance Cost

Allowance for doubtful debt

NON-CURRENT ASSETS RM’000 RM’000

Property Plant Equipment 519,501

Share Capital 445,170

d. Notes to the accounts

Property, plant and equipment

Carrying value 289,600 162,541 35,280 32,080 519,501

d. Initial cost of building as at 3 September 2018:

e. Depreciation expense for building equipment

f. i. An asset shall be derecognised on disposal, or when no future economic benefits are

ii.The carrying amount of the disposed assets is RM7,800,000(15,000,000-7,200,000) .

Ordinary 30xRM197=RM5,910 30xRM150=4,500

b. Any three (3) criteria of a contract:

1 Jan 2019 Dr Contract Asset (700/2140x1800) RM588.79

31 Jan 2019 Dr Bank/Account Receivable RM150

CASH FLOWS FROM INVESTING ACTIVITIES

CASH FLOWS FROM FINANCING ACTIVITIES

Disposal a/c - PPE

Investment income a/c

Retained earnings a/c

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