TUTORIAL MFRS 101 PRESENTATION FINANCIAL STATEMENT

QUESTION 2

Setinggi Bhd, a public listed manufacturing company, has been in operation since 2001. The following trial balance
has been extracted from its main office which is based in Klang.

Setinggi Bhd
Trial Balance as at 31 December 2014
Debit Credit
RM’000 RM’000
Sales 514,005
Cost of sales 204,755
Selling and distribution costs 40,830
Administration costs 72,800
Finance cost 2,620
Other income 3,380
Gain due to change in fair value of investment properties 2,200
Taxation paid 6,570
Trade payables 28,780
Tax recoverable – 1 Jan 2014 1,660
Trade receivables 59,700
Inventories 37,820
Bank 25,900
Freehold land at valuation – 1 Jan 2014 17,800
Investment properties at fair value 17,530
Intangible assets 15,600
Biological assets 73,340
Other non-current assets – 1 Jan 2014 126,800
Ordinary shares capital 98,900
Retained profit – 1 Jan 2014 45,710
Asset revaluation reserve 750
8% CIMB loan – received 1 July 2014 10,000

703,725 703,725

Additional information:

1. Details of other non-current assets at 1 January 2014 are as follows:

Cost Accumulated Depreciation Carrying Amount

RM’000 RM’000 RM’000
Buildings 88,000 13,700 74,300
Machinery 68,000 22,300 45,700
Motor vehicles 10,000 3,200 6,800
166,000 39,200 126,800

Non-current assets are depreciated using the straight-line method on a yearly basis. The estimated useful life
of buildings, machinery and motor vehicles are 40 years, 20 years and 10 years respectively. Depreciation
for machinery is treated as part of cost of sales, whereas depreciation for buildings and motor vehicles are
treated as part of administration costs.

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 2. On 1 January 2014, Setinggi Bhd decided to sell one of the motor vehicles costing
RM1,500,000. The motor vehicle was sold at a loss of RM60,000 and its net carrying amount
was RM640,000. The sales proceed has been recorded and included as part of the other
income.

3. Intangible assets represent brands and customer list that were all purchased on 1 January
2011. However, advertising expenditures amounting to RM1,600,000 incurred in March 2014
was wrongly included in the intangible assets account. The capitalised intangibles are being
amortised over five years and the amount has been treated as administrative costs.

4. On 1 September 2014, a former employee of Setinggi Bhd sued the company in respect of
wrongful dismissal. The claims for compensation amounted to RM2,000,000 and the
company incurred legal costs amounting to RM200,000.The response from Setinggi Bhd's
legal advisor indicates that the claim is probable.

5. Tax expense estimated for the current year was RM10,000,000.

Required:

Prepare the following statements in compliance with the Companies Act 1965 and relevant Malaysian Financial
Reporting Standards:

a. Statement of Profit or Loss and Other Comprehensive Income for the year ended 31
December 2014.
(Statement of Changes in Equity for the year ended 31 December 2014 and a note on
property, plant and equipment are also required).
(20 marks)

b. Statement of Financial Position as at 31 December 2014.

(10 marks)
(Total: 30 marks)

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QUESTION 3

Al Munawwaroh Bhd, a listed company based in Sepang, produces car accessories and is
strictly following the Islamic Manufacturing Process (IMP) guidelines in its production
process. It has the following trial balance as at 31 December 2015.

Al Munawwaroh Bhd
Trial Balance as at 31 December 2015

RM RM
Land and building at cost (cost of land RM3,000,000) 6,090,000
Accumulated depreciation - building at 1 January 2015 1,090,000
Machinery at cost 1,500,000
Accumulated depreciation - machinery at 1 January 2015 450,000
Investment property 2,750,000
Biological assets 380,000
Inventories 95,000
Receivables 490,000
Bank 4,830,000
Ordinary share capital at RM1 each 5,500,000
Retained earnings 2,537,000
Dividend paid 1,500,000
Reserves 1,500,000
10% Debentures 2,500,000
Payables 1,511,000
Sales 9,679,000
Cost of sales 3,473,000
Administrative expenses 2,830,000
Selling and distribution expenses 542,000
Finance expenses 287,000
24,767,000 24,767,000

Additional information:

1. Al Munawwaroh adopts the revaluation model for its land and building. On 2 January 2015,
the directors of Al Munawwaroh decided that the land was revalued to RM4,400,000 and the
building was revalued to RM2,400,000 with an expected remaining useful life of 30 years.
The straight-line depreciation policy on building will continue.

It is the policy of the company to measure its machinery and equipment using the cost model and to
depreciate on a straight-line method over a 10-year period.

2. Since 2010, Al Munawwaroh has entered into a contract to supply its products to a particular
government agency. The rising material costs in 2013 have made the contract price to be
lower than the costs of production. Al Munawwaroh has two more years to supply the product
at the contract price, which the directors have estimated, will result in the company incurring
losses of RM350,000. Al Munawwaroh has no option to exit the contract.

3. On 4 January 2015, Al Munawwaroh purchased a patent from Al Toyib at a cost of

RM400,000 (inclusive of 10% legal and other attributable costs associated with the filing of
the patent). The economic benefits are expected to be received indefinitely from the use of the
patent. This transaction has not been recorded yet.

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 4. Al Munawwaroh purchased laboratory equipment costing RM850,000 on 1
July 2015. The equipment, with an estimated life of 10 years and no residual
value, was used in a variety of research projects. The cost of the equipment
was treated as part of the cost of sales since it was as part of the research
projects. Depreciation on the equipment has not been provided for.

5. The current year estimated taxation was RM2,170,000 and interest on

debentures for the year had not been paid.

Required:

Prepare, 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 31 December 2015.
(10 marks)

b. Statement of Changes in Equity for the year ended 31 December 2015.

(4 marks)

c. Statement of Financial Position as at 31 December 2015.

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