FAR560_2.PDF - CONFIDENTIAL ACIDEC 2016/FAR560 UNIVERSITI...

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Unformatted text preview: CONFIDENTIAL ACIDEC 2016/FAR560 UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION COURSE : FINANCIAL ACCOUNTING AND REPORTING 4 COURSE CODE : FAR560 EXAMINATION : DECEMBER2016 TIME : 3HOURS INSTRUCTIONS TO CANDIDATES 1. This question paper consists of four (4) questions. 2. Answer ALL questions in the Answer Booklet. Start each answer on a new page. 3. Do not bring any material into the examination room unless permission is given by the invigilator. 4. Please check to make sure that this examination pack consists of: i) the Question Paper ii) an Answer Booklet — provided by the Faculty 5. Answer ALL questions in English. DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO $0 This examination paper consists of 7 printed pages © Hak Cipta Universiti Teknologi MARA CONFIDENTIAL CONFIDENTIAL 2 ACIDEC 2016/FAR560 QUESTION 1 a. Label the following items as either consumable biological assets, bearer biological assets or neither consumable biological assets nor bearer biological assets: i. Sugar canes plantation ii. Chickens reared as broiler chickens iii. Dairy cattle iv. Shepherd dogs in a sheep rearing station v. Wild buffaloes in an oil palm plantation (5 marks) b. Discuss briefly the appropriate accounting treatment for consumable biological plants and bearer biological plants. (5 marks) 0. Hamdani Berhad is a company which involved is in the plantation of teak trees. The teak trees are harvested to produce teak wood for the furniture industry. Given below are the costs incurred over a three year period from 2013 until 2015. _-1m _-EII Ac-uisition of land 3,000,000 ma -EII _ — _ — Ac-wsition of farm tools mm 4,000 6,000 Farm workers’ labour cost 100 000 50,000 200,000 Fertilizers and est control chemicals 150,000 300,000 240,000 Additional notes: i. The farm tools acquisition costs were regarded as period costs. ii. 60% of the cost incurred to construct roads, canals and fences was capitalized under land. iii. The teak trees are harvested after 3 years. Harvesting is expected to start in early 2016. iv. The fair values for the teak trees plantation less point of sales cost are estimated as follows: 31 December 2013 RM1,070,000 31 December 2014 RM2,570,000 31 December 2015 RM4,280,000 © Hak Cipta Universiti Teknologi MARA CONFIDENTIAL CONFIDENTIAL 3 ACIDEC 2016IFAR560 Required: Compute the profit or loss of the company from the agricultural activities for the years ended 31 December 2013, 2014 and 2015. (15 marks) (Total: 25 marks) QUESTION 2 Tamburi Carigali Bhd acquired the assets of Petra Oil Mill Sdn Bhd on 1 January 2011 for RM5,400,000. The tangible assets of Petra Oil Mill Sdn Bhd comprised of 2 mills (Mill One and Mill Two). The carrying value for Mill One and Mill Two on the date of acquisition were RM2,000,000 and RM3,000,000 respectively. These mills are depreciated on a straight line basis over the remaining life of 8 years. In 2013, there was a downturn in economic conditions which have affected most businesses. As at 31 December 2013, the value in use for these mills were estimated to be RM2,800,000 while the market value would be RM2,900,000. The cost to sell the mills were estimated at 4% of their fair values. In 2015, the economic conditions has improved significantly. At 31 December 2015, the net selling price for both mills was RM1,800,000. The value in use for the two mills amounted to RM1,700,000. Required: a. i. Calculate the carrying value as at 31 December 2013 for each mill after recognizing for impairment loss. (5 marks) ii. Calculate the amount of impairment loss to be reversed for each mill as at 31 December 2015. (5 marks) b. The gestation period between discovery and commencement of production is long in the extractive industries. It requires substantial capital expenditures before the deposits and reserves can be extracted. Explain briefly the three (3) phases of operations involve in this industry. (5 marks) c. MFRS 6 Exploration for and Evaluation of Mineral Resources requires that on initial recognition, the exploration and evaluation assets shall be measured at cost. As the Chief Financial officer, you are required to advise the directors of the company on the five (5) types of expenditures that can be included in the initial measurement of exploration and evaluation assets. (5 marks) (Total: 20 marks) © Hak Cipta Universiti Teknologi MARA CONFIDENTIAL CONFIDENTIAL 4 ACIDEC 2016/FAR560 QUESTION 3 Aidil Bhd is a company incorporated in Malaysia since year 2000. Aidil Bhd acquired 70% of the ordinary shares and 30% of the 10% preference shares of Fitri Bhd on 1 January 2014 when the retained profit of Fitri Bhd was RM300,000. On the acquisition date, the land of Fitri Bhd had been revalued to RM1,300,000 (the carrying amount is RM1,000,000) and this value has yet to be incorporated in its account. The following are the Statements of Profit or Loss and Other Comprehensive Income of Aidil Bhd and Fitri Bhd for the year ended 31 December 2015: Statements of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2015 Aidil Bhd Fitri Bhd RM RM Turnover 3,000,000 2,600,000 Cost of sales (600,000) (300,000) Gross profit 2,400,000 2,300,000 Selling and distribution costs (160,000) (100,000) Administrative expenses (690,000) (660,000) Finance costs (160,000) (150,000) Preference dividend from Fitri Bhd 30,000 - Professional service fee income from Aidil Bhd - 4,000 Profit before tax 1,420,000 1,394,000 Taxation (320,000) (474,000) Profit after tax 1,100,000 920,000 Statements of Changes in equity (extract) for the year ended 31 December 2015 Aidil Bhd Fitri Bhd RM RM Retained profit brought forward 1,054,000 840,000 Profit after tax 1 , 100,000 920,000 2,154,000 1,760,000 lnterim preference dividend (80,000) - Interim ordinary dividend (144,000) (60,000) Retained profit carried fon/vard 1,930,000 1,700,000 Additional information: 1. On 31 December 2015, the land of Aidil Bhd had been revalued at a surplus of RM200,000. 2. At the end of the year, Aidil Bhd proposed final preference dividend amounted to RM80,000. The preference shares of Aidil Bhd have no fixed rate of dividend and are non-redeemable. © Hak Cipta Universiti Teknologi MARA CONFIDENTIAL CONFIDENTIAL 5 ACIDEC 2016/FAR560 3. During the year, Fitri Bhd sold goods costing RM160,000 for RM200,000 to Aidil Bhd. A quarter of the goods remain unsold by Aidil Bhd. 4. Goodwill on acquisition of Fitri Bhd is RM300,000 and is impaired by 8%. 5. Fitri Bhd had transferred RM40,000 to general reserve. 6. At the end of the year, Fitri Bhd paid preference shares dividends. The preference shares of Fitri Bhd have fixed rate of dividend and are mandatory. 7. It is Aidil Bhd’s policy to value the non-controlling interest of its subsidiary on the date of acquisition at fair value. 8. Profits are deemed to accrue evenly throughout the year unless stated otherwise. 9. The details of the equity for both companies are as follows: Aidil Bhd Fitri Bhd Ordinary shares @ RM1 each 5,000,000 2,500,000 8% Preference shares @ RM1 each 2,000,000 - 10% Preference shares @ RM1 each — 1,000,000 Required: a. MFRS 3 Business Combination defines a business combination as a transaction or other event in which an acquirer obtains control of one or more businesses. Identify five (5) ways of which an acquirer might obtain control of a business or more businesses. (5 marks) b. Prepare Consolidated Statement of Profit or Loss and Other Comprehensive Income of Aidil Bhd and its subsidiary, Fitri Bhd for the year ended 31 December 2015. (20 marks) c. Prepare the Statement of Changes in Equity of Aidil Bhd and its subsidiary, Fitri Bhd for the year ended 31 December 2015. (10 marks) (Total: 35 marks) © Hak Cipta Universiti Teknologi MARA CONFIDENTIAL CONFIDENTIAL 6 ACIDEC 2016/FAR560 QUESTION 4 A. Harsh Bhd is engaged in pharmaceutical manufacturing products. It prepares quarterly interim reports and its financial year ends on 31 December. Harsh Bhd carried out the following transactions in year 2015: i. Incurred research cost of RM300,000 in the first quarter and RM100,000 in the second quarter of 2015. The directors identified that there was a possibility that a product would be developed from the research process in the third quarter. ii. Donated RM200,000 to a charity in the second and third quarter of 2015. The donation was made in equal amounts. iii. Carried out a major maintenance of its factory building in October 2015 at a cost of RM700,000. The maintenance was expected to prolong the life of the building of another 50 years. Required: a. Advise the company on the amount to be reported in the Statement of Profit or Loss and Other Comprehensive Income for the quarters ending on 30 June 2015, 30 September 2015 and 31 December 2015. Provide suitable justification for your answers. (5 marks) b. Compile the above answers in the Statement of Profit or Loss and Other Comprehensive Income and Statement of Financial Position of Harsh Bhd for the year ended 31 December 2015. (5 marks) B. MFRS 8 Operating Segments provides guidelines to the Chief Operating Decision Maker to determine operating segments for segmental reporting. Required: a. i. Explain the term ‘operating segment’. (3 marks) ii. Explain briefly the function of the Chief Operating Decision Maker. (2 marks) © Hak Cipta Universiti Teknologi MARA CONFIDENTIAL CONFIDENTIAL 7 ACIDEC 2016/FAR560 b. INDAY Multinational Bhd operates pre-dominantly in two geographical segments being Malaysia and Indonesia. Others include geographical segments that do not reach the 10% threshold test and hence cannot be reported separately. As at 31 December 2015, you are provided with the following information: RM Malaysia lnter—se-ment Sales 3,265,386 Sec ment Results 696,704 External Sales 4,713,460 Indonesia Se-ment Results Seo ment Assets 277,550 External sales ? Others Inter—sec ment Sales 90,698 881,520 Other additional information: RM Finance costs 145,402 Taxation 47,690 Unallocated assets 5,495 Total external sales 25,915,271 Required: Prepare the segmental report to be disclosed in the notes to the accounts of INDAY Multinational Bhd as at 31 December 2015 showing all relevant information. (5 marks) (Total: 20 marks) END OF QUESTION PAPER © Hak Cipta Universiti Teknologi MARA CONFIDENTIAL ...
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  • Summer '15
  • Generally Accepted Accounting Principles, Cipta Universiti Teknologi, Hak Cipta Universiti Teknologi MARA, Aidil Bhd, Fitri Bhd, Aidil Bhd Fitri Bhd

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