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CONFIDENTIAL 1 AC/APR 2022/FAR270

UNIVERSITI TEKNOLOGI MARA

SUGGESTED ANSWER COMMON TEST

COURSE : FINANCIAL ACCOUNTING 4

COURSE CODE : FAR270
EXAMINATION : APRIL 2022
TIME : 1 HOUR 30 MINUTES

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CONFIDENTIAL 2 AC/TEST APR 2022/FAR270

QUESTION 1
A.
1. Capitalised √
2. Capitalised √
3. Capitalised √
4. Expense off √
5. Expense off √
(5√ x 1 mark = 5 marks)

ii. Initial cost of new computer on 1 July 2021

RM

Computer 7,000√
Custom made software 3,500√
Installation and testing 700√
Transportation cost 200√
Initial costs 11,400√
(5√ x 1 mark = 5 marks)
B.
i. Carrying amount of the machinery at 30 June 2021

RM
Initial cost as at 1 July 2016 2,700,000
(-) Accumulated depreciation (1,350,000)

Carrying amount as at 1 July 2021 1,350,000√

(-) Carrying value of old component (150,000) √√
(300,000 – (300,000 x 10% x 5)
(+) Cost of new component 500,000√
Carrying amount after the replacement as at 1 1,700,000
July 2021
(4√ x 1 = 4 marks)

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CONFIDENTIAL 3 AC/TEST APR 2022/FAR270

ii. Journal entries

RM RM
1 July 2021 Dr Machinery 500,000√
Cr Cash/Bank 500,000√

Dr Accumulated depreciation
150,000√
(300,000 x 10%x 5)
Dr SOPL-Loss 150,000√
Cr Machinery 300,000

(4√ x 1 = 4 marks)

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CONFIDENTIAL 4 AC/TEST APR 2022/FAR270

C.
i. Surplus or deficit building

RM
Carrying amount of building at 1 January 2020 19,330,000√
Accumulated depreciation 1,380,714√√
((19,330,000 / 28) x 2)
Carrying amount at 31 December 2021 17,949,286
FV at 31 December 2021 22,000,000√
Surplus on revaluation 4,050,714
(4√ x ½ mark = 2 marks)

ii. Accounting treatment for land

On 31 December 2021, there is a surplus√ on revaluation of RM2,200,000√

(RM5000,000 – RM2,800,000). Since there was a deficit√ of RM200,000√ during the
initial revaluation, only RM2,000,000√ of the surplus will be transferred to the Asset
Revaluation Reserve√. The balance (RM200,000) is off set in the statement of profit or
loss√. The carrying amount of the land for 31 December 2021 is RM5,000,000√.
(8 √ x ½ mark = 4 marks)

iii. Journal entries

RM R
M
31 Dec 2021 Dr Land√ 2,200,000√
Cr Asset revaluation reserve- Land√ 2,000,000
SOPL√ 200,000

Dr Building √ 4,050,714√
Cr Asset revaluation reserve- 4,050,714
Building√

Dr Depreciation – Building √ 690,357√

(19,330,000 / 28)
Cr Accumulated Depreciation - 690,357
Building√

Dr Accumulated depreciation- Building√ 1,380,714

((19,330,000 / 28) x 2)
Cr Building√ 1,380,714

(12 √ x ½ mark = 6 marks)

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CONFIDENTIAL 5 AC/TEST APR 2022/FAR270

C.

Cost/valuation Land Building Motor

vehicle
Balance at 1 January 2021 1,000,000 3,000,000 -
Addition 150,000√
Disposal (1,000,000) √ (1,200,000)√
Balance at 31 December 0 1,800,000 150,000
2021

Accumulated depreciation
Balance at 1 January 2021 750,000
-
Charge for the year (62.5 + 52.5) 115,000 √√ ((150 – 15) / 10)
13,500√√
Disposal (300 +25) (325,000)√√
Balance at 31 December - 540,000 13,500
2021

Carrying amount as at 31 0√ 1,260,000 136,500

December 2021
(10√ x ½ mark = 5 marks)
(Total: 35 marks)

W1 – working on current depreciation charge

RM3,000,000 x 5% x 5/12 = RM62,500
RM1,800,000 x 5% x 7/12 = RM52,500

W2 - Working on accumulated depreciation for disposed asset:

RM1,200,000 x 5% x 5 years = RM300,000

RM1,200,000 x 5% x 5/12 = RM25,000

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CONFIDENTIAL 6 AC/TEST APR 2022/FAR270

QUESTION 2

A.
i. Non-investment Property√
ii. Non-investment Property Investment Property √ (Bonus mark)
iii. Investment Property√
iv. Investment Property√
v. Non-investment Property√
(5√ x 1 mark=5 marks)

B.

a.
LongTong Bhd
Statement of Profit or Loss (extract) for the year ended 31 December 2021
Other income
Fair Value Gain of Investment Property 2,000,000√
Expenses
Depreciation Property, Plant and Equipment 250,000√
(RM10,000,000/20 years X 6/12)

Statement of Financial Position (extract) as at 31 December 2021

Non-Current Asset
Property, Plant and Equipment 12,000,000√

Equity
Asset Revaluation Reserve √ 2,250,000√
(RM12,000,000-[RM10,000,000-RM250,000])
(5√ X 1 mark=5 marks)

b. Explain the accounting treatment in relation to the above as at 1 July 2021 and as at
31 December 2021.

On 1 July 2021, the building will be classified as MFRS116 building as there was a change in use
from rented out property to owner-occupied property. The accounting treatment in accordance with
MFRS140 Investment Property is to measure the owner-occupied property at its deemedcost
of fair value RM 10,000,000√ on the date of transfer. RM2,000,000√ (RM10,000,000-RM8,000,000)
being the difference of fair value at the date of transfer and prior year fair value is recognised as
gain in fair value√ of investment property in the statement of profit or loss. The building is then
depreciated over the remaining useful life of 20 years. The depreciation of the building for the year
ended 31 December 2021 is RM250,000√ (RM10,000,000/20 x 6/12).

On 31 December 2021, there is revaluation of MFRS116 Building. There is surplus on revaluation

of MFRS116 of RM2,250,000 since the fair value is RM12,000,000 at its carrying amount is
RM9,750,000. This surplus on revaluation is credited to the asset revaluation reserve√.
(5 marks)

END OF SOLUTION PAPER

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