AC/DEC 2018/

PUBLISHED FINANCIAL STATEMENT

Tutorial

QUESTION 1

Adel Bhd, a company engaged in the manufacturing of equipment for producing textiles for
distribution in the local market. The following trial balance extracted from the company's
book at the end of the financial year ended 30 June 2018.

Debit Credit
RM'OOO RM'OOO
Ordinary shares capital 95,000
Retained earnings as at 1 July 2017 20,460
8% bank loan - received on 1 Julv 2017 5,500
5% debentures - issued on 1 January 2018 9,000
Revenue 182,000
Cost of sales 88,780
Tax paid 4,600
Dividend income 3,000
Other income 2,300
Sellino and distribution expenses 14,500
Administrative expenses 26,180
Bank loan interest paid 440
Other expenses 1,600
Fair value loss in investment properties 200
Lono term investments 30,000
Investment properties at valuation 5,800
Property, plant and equipment as at 1 July 2017:
Land 40,000
Buildino at cost 50,000
Plant and equipment 25,000
Motor vehicles 4,000
Accumulated depreciation as at 1 July 2017:
Buildino 3,000
Plant and equipment 7,500
Motor vehicles 1,600
Inventories 32,350
Trade receivables and payables 10,650 11,040
Other payables 1,500
Tax payable as at 1 July 2017 1,100
Cash and bank balances 5,700
Interim dividend 3,200
343,000 343,000

© Hak Cipta Universiti Teknologi MARA

 AC/DEC 2018/

Additional information:

1. The building was first revalued on 1 July 2017 and the fair value of the building on
this date was RM52,000,000. The remaining useful life of the building as at that date
was 25 years. The company adopts the revaluation model for its building and wishes
to make an annual transfer to retained earnings to reflect the realisation of the
revaluation reserve. On the same date, the board of directors also revalued the
company's land at RM37,000,000. These adjustments had not been recorded in the
books.

Plant and equipment and motor vehicles are to be depreciated at 10% and 20% per
annum respectively using the straight line method based on monthly basis.
Depreciation charges were all charged to administrative expenses.

2. Other payables include provisions for future losses of RM800,000, accumulated

since July 2014. Adel Bhd anticipated that the company would be suffering financial
losses in 2020. The company provided RM200,000 annually to face the possible
situation.

3. On 2 February 2018, Adel Bhd received a claim from one of its customers, Teja
Enterprise in respect of a faulty equipment supplied to business on 20 December
2017. Adel Bhd's legal advisers were of the opinion that there was 80% chance that
the claim would be settled at RM800,000.

4. On 28 June 2018, Adel Bhd discovered that the payment of RM300,000 to purchase
a customer list from Diyana Marketing Services was included as administrative
expense. That purchase was on 1 March 2018 and the capitalised intangibles are
being amortised over 5 years.

5. The tax expense estimated for the current year was RM5,000,000.

Required:

Prepare the following financial statements for publication in accordance with Companies Act
2016, MFRS 101 Presentation of Financial Statements and other relevant Malaysian
Financial Reporting Standards:

a. Statement of Profit or Loss and Other Comprehensive Income for the year ended 30
June 2018.
(10 marks)

b. Statement of Changes in Equity for the year ended 30 June 2018.

(4 marks)

c. Statement of Financial Position as at 30 June 2018.

(A note on Property, Plant and Equipment is also required).
(16 marks)
(Total: 30 marks)

© Hak Clpta Universiti Teknologi MARA

QUESTION 2

Roskalas Bhd is involved in the dairy product industry. The company has a dairy farm located in
Betong that covers part of the raw material supply. The financial statement of the company was
to be approved by the directors on 1 September 2022.The following is the draft trial balance for
the financial year ended 30 June 2022:

Debit Credit
RM'000 RM'000
Cost of sales 89,200
Selling and distribution costs 16,000
Administrative expenses 14,500
Interest on bank loan 2,400
Inventory as at 30 June 2022 7,800
Accounts receivable 32,000
Sales 151,000
Other income 7,150
Ordinary share dividend 12,000
Redeemable preference share dividend 4,000
Land at valuation 70,000
Buildings at cost 100,000
Plant and equipment at cost 96,000
Accumulated depreciation as at 1 July 2021:
Building 20,000
Plant and equipment 41,000
Investment property 43,400
Ordinary share capital 110,000
Retained earnings 25,500
5% redeemable preference shares 80,000
8% bank loan 30,000
Accounts payable 27,600
Asset revaluation reserve 14,000
Provision for damage claim 1,000
Accrued expenses 5,600
Dividend payable 4,000
Tax paid 13,600
Bank 15,950
516,850 516,850

Additional information:

1. The company’s policy on depreciation for the property, plant and equipment is as follows:
i. Building is depreciated on a straight-line method over 50 years with no residual value,
on monthly basis.
 ii. Plant and equipment are depreciated on a reducing balance method at 10% per
annum, on yearly basis.
iii. Land is not depreciated.

On 1 July 2021, the buildings were revalued for the first time to the fair value of RM85,000,000
and this has not been incorporated in the books on 30 June 2022. The remaining useful life
for the current year was 40 years.

During the year, a piece of equipment was disposed of at a loss of RM150,000. The cost of
the equipment was RM6,000,000 and its net carrying amount was RM3,300,000. Only the
sales proceed of the equipment was recorded and included as other income.

2. In early July 2022, a short circuit occurred in the cold storage and caused a power outage.
The incident damaged some of the inventories where only half of the inventories can be
salvaged and sold.

3. The investment property was revalued at a gain of RM500,000 in the year ended 30 June
2021. It was discovered that the amount was included in the asset revaluation reserve
account. It is the policy of the company to initially measure its investment property at cost and
the fair value model in its subsequent measurement.

4. During the year, a customer sued the company, claiming damages of RM1,000,000 for selling
faulty products. The provision for the damage claim was already recorded by the company.
However, on 10 August 2022, the court ordered the company to pay RM700,000 to the
customer.

5. Roskalas Bhd declared an additional ordinary share dividend of RM3,000,000 on 5 July 2022.
The amount was included as part of the current year’s dividend.

6. The estimated income tax expense for the year was RM13,000,000.

Required:

Prepare the following financial statements of Roskalas Bhd in accordance with MFRS 101
Presentation of Financial Statements and other relevant Malaysian Financial Reporting
Standards:

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

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

(4 marks)

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

(A note on property, plant and equipment is also required).
(16 marks)
(Total: 30 marks)