PEPERIKSAAN AKHIR SEMESTER I

SESI 2021/2022
(FINAL EXAMINATION SEMESTER I
2021/2022 SESSION)

KOD KURSUS : SBSC 1103 / SHAC 1103 (PART I)

(COURSE CODE)

NAMA KURSUS : PERAKAUNAN KEWANGAN DAN PELAPORAN 1

(COURSE) (FINANCIAL ACCOUNTING AND REPORTING 1)

PROGRAM : SARJANA MUDA

(PROGRAMME) (BACHELOR DEGREE)

MASA : 1 JAM 45 MINIT

(DURATION) (1 HOUR 45 MINUTES)

TARIKH : FEBRUARI 2022

D
(DATE) (FEBRUARY 2022)

MARKAH
(MARKS)
: 60 (MENYUMBANG 30 PERATUS KEPADA MARKAH
KESELURUHAN)
SE
R
(CONTRIBUTING 30 PERCENT TO THE OVERALL

O
MARKS)

ARAHAN KEPADA CALON:

ND
E
(INSTRUCTION TO CANDIDATES)

Jawab SEMUA soalan.

(Answer ALL questions).

KERTAS PEPERIKSAAN INI TERDIRI DARIPADA 5 MUKA SURAT SAHAJA

(TERMASUK MUKA SURAT INI).
THIS EXAMINATION PAPER CONSISTS OF 5 PAGES ONLY (INCLUDING THIS PAGE).
1. Maju Bhd. opening non-current asset register details on 1 January 2021 include the
following:

Cost Accumulated Useful life

Description Depreciation/ (years)
amortization
RM RM
Freehold land 20,000,000 - -
Freehold buildings 150,000,000 10,000,000 50
Motor vehicles 1,800,000 720,000 5
Plant 5,000,000 3,000,000 -
Franchise 2,000,000 - -
Brand 4,000,000 - -

The following transactions have occurred throughout the year 2021:

(i) Throughout the year, Maju Bhd. incurred regular maintenance costs of
RM48,000 for its motor vehicles. On 1 January 2021, there was major repair
on a plant amounting RM500,000, which increase the efficiency of the plant.
The remaining useful life of the plant is 6 years.
(ii) Maju Bhd. acquired a new freehold building on 1 July 2021 at the cost of
RM49 million. The company also incurred additional costs of RM1 million
that were necessary to prepare the building for its intended use.

(iii) The surplus on revaluation of the freehold land on 31 December 2021 was RM3
million, which RM1 million of the surplus was due to previous deficit. The
company adopt the revaluation model for its freehold land.

(iv) One of the motor vehicles acquired on 1 January 2019 for the cost of
RM200,000 and accumulated depreciation of RM80,000 (as at 1 January 2021)
was disposed on 30 June 2021 for RM60,000.

(v) The franchise is renewable every ten years with minimal cost. Maju Bhd. has
the intention to keep renewing the franchise and all evidence indicates that the
franchise will generate cash flows for an indefinite period.

(vi) Initially, the brand is expected to generate net cash inflows for indefinite
periods of time. However, in 2021 there was indication that the reputation of

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 the brand has decreased drastically and therefore, the ability of the brand to
bring net cash inflows to the company will be limited to another 10 years only.
Maju Bhd. applies straight-line method to amortize its intangible assets.

(vii) The depreciation for property, plant and equipment (PPE) is provided based on
the ownership of the assets during the year. Maju Bhd. applies straight-line
method to depreciate its PPE.

Required:

(a) Discuss the accounting treatment for subsequent costs in (i) above.

(5 marks)

(b) Show the journal entries for the revaluation of freehold land and the disposal
of plant and equipment.

(4 marks)

(c) Discuss the accounting treatment for the brand and franchise.

(8 marks)

(d) Calculate the depreciation for freehold building, motor vehicles and plant.

(4 marks)

(e) Prepare the schedule of the property, plant and equipment (cost and
accumulated depreciation) that will be disclosed in the notes of the accounts on
31 December 2021.

(6 marks)

(f) Prepare the extract of Statement of Profit or Loss and Other Comprehensive
Income for the year ended 31 December 2021.

(4 marks)

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2. (a) Flower Joe Bhd. business activities in Mauritius have caused significant
damages to the environment. Currently, there is no environmental laws in that
country that requires the company to rectify these damages. The cost of the
restoration is RM5 million.
Required:
Discuss the suitable accounting treatment for Flower Joe Bhd. when it has
(i) international reputation of rectifying this kind of environmental damage.
(ii) when it has no records nor made any promise to fix such disaster.
(9 marks)

(b) Discuss the main differences between accounting treatment for contingent
assets and contingent liabilities.
(6 marks)

3. Best Machine Bhd. (BMB) is a manufacturer of industrial machineries. On 1 July

2021, BMB entered a contract with Gagasan Manufacturer Sdn. Bhd. (GMSB) for
the sale of a machine for RM800,000. The contract between BMB and GMSB states
that GMSB is required to pay a non-refundable deposit of RM160,000 at inception of
the contract and entered into a 5-year financing agreement with BMB for the
remaining 80 per cent of the promised consideration. The financing arrangement is
provided on a non-recourse basis, which means that if GMSB defaults, BMB can
repossess the machine, but cannot seek further compensation from GMSB, even if
the collateral does not cover the full value of the amount owed. BMB’s cost of the
machine is RM450,000 and GMSB obtains control of the machine at the contract
inception.

GMSB background
GMSB is a newly set-up company which manufactures and assembles electrical
appliances under the brand name “Gagasan”. GMSB is aware that it will face stiff
competition to enter the market from established electrical appliances brand such as
Samsung, Sony and Sharp. In addition, GMSB has almost no experience in the

4
electrical appliances industry and GMSB intends to pay for the machine from bank
loan which is doubtfully to be approved because of GMSB status as a newly set-up
company. If the bank loan is approved, GMSB will use the bank loan to settle the
financing facilities with BMB. Further investigation on GMSB’s background, BMB
found that GMSB total paid-up capital was RM1,000,000 and has utilized about
RM500,000 cash for capital expenditure. GMSB’s electrical appliances production is
expected to start in the next two months once GMSB completed its manufacturing
facilities.

Required:
Discuss the contract issue and the accounting treatment based on the requirement of
MFRS 15 and show the necessary journal entries.
(14 marks)