FAR560_3.PDF - CONFIDENTIAL ACIJUL 2017IFAR560 UNIVERSITI...

Info icon This preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 4
Image of page 5

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: CONFIDENTIAL ACIJUL 2017IFAR560 UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION COURSE : FINANCIAL ACCOUNTING AND REPORTING 4 COURSE CODE : FAR560 EXAMINATION : JULY2017 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 6 printed pages © Hak Cipta Universiti Teknologi MARA CONFIDENTIAL CONFIDENTIAL 2 ACIJUL 2017IFAR560 QUESTION 1 Rayyan Tin Mining Berhad is in the business of tin mining in Temangan, Machang, Kelantan since 2012. The company prepares its financial statements following the Malaysian Financial Reporting Standards (MFRS). Its financial year ends on 31 December. The following information is available regarding the tin mining activities: 1. The tin mining right was acquired from the government in January 2012 at a price of RM5 million for the duration of 10 years. 2. The professional fee of RM800,000 was incurred to carry out the topographical and geological test on the selected area in Temangan, Machang, Kelantan. 3. Other than the cost of tin mining right and professional fees, the following costs were also incurred after the results of the studies revealed that commercial exploitation of the mineral deposit was feasible: _—-EIII 2012 Construction of . uarters for workers 100 000 Construction of tin mill Construction of railwa s Acquisition of equipment used in the exploration and - evaluation chase useful life— 10 ears 100,000 Rental of three units of machineries for RM50,000 per - ear for each machine 150,000 Salaries, wages and other employee benefits, per year - 100,000 4. ' The exploration and evaluation phase continued and was completed at the end of 2014. The production phase commenced on 1 January 2015 where the company started its tin mining activities. 5. At the end of 2016, the tin prices dropped due to the dilution of Malaysian currency and the recoverable amount for exploration and evaluation costs was RM6,200,000. 6. The intangible assets are amortised over the production period. 7. The company used the successful effort method in accounting for its exploration and evaluation costs. This method capitalised the initial costs of the exploration and evaluation phase and written off the costs when the exploration proves to be abortive and abandoned. Required: a. i. Define impairment loss. (2 marks) ii. Identify three (3) indicators of impairment loss. (3 marks) © Hak Cipta Universiti Teknologi MARA CONFIDENTIAL CONFIDENTIAL 3 ACIJUL 2017IFAR560 b. i. Calculate the total exploration and evaluation costs as at 31 December 2014 using the successful effort method. (10 marks) ii. Calculate the followings: a. The impairment loss for the year ended 31 December 2016. b. The carrying value of the exploration and evaluation costs as at 31 December 2017. (5 marks) c. As an accountant of Rayyan Tin Mining Berhad, you are of the opinion that the full cost method is better than the successful effort method. In order to convince the directors of the company, discuss briefly about the full cost method and provide some arguments for and against this method. (5 marks) (Total: 25 marks) QUESTION 2 As of 1 January 2016, Malaysia Agriculture Berhad has 50 new born calf. On 31 December 2016, 30 two year old calf were purchased for RM54,000. Sales of 20 one year old calf were RM300,000. Feeding and other operating expenses for the year amounted to RM40,000. The following information on the fair value less cost to sell are relevant for the year ended 31 December 2016. RM Fair value of a day old calf at 1 January 2016 1,000 Fair value of a day old calf at 31 December 2016 1,300 Fair value of 1 year old calf at 1 January 2016 1,200 Fair value of 1 year old calf at 31 December 2016 1,500 Required: a. i. Analyse the amount that shall be recognised in the Statement of Financial Position as at 31 December 2016. (5 marks) ii. Prepare a Statement of Profit or Loss for the year ended 31 December 2016. (5 marks) b. As chief financial officer of Malaysian Agriculture Berhad, you are required to discuss the term biological transformation of a biological asset. In your discussion, you must also include the two (2) outcomes of a biological transformation. (5 marks) © Hak Cipta Universiti Teknologi MARA CONFIDENTIAL CONFIDENTIAL ACIJ UL 2017/FAR560 bearer and consumable (5 marks) (Total: 20 marks) c. Advise your accounts officer on the differences between biological asset and also provide examples for each category. QUESTION 3 Honey Bhd acquired 1,200,000 Ordinary shares and 200,000 Preference shares of Sweet Bhd on 1 January 2015 when the retained profit and share premium of Sweet Bhd were RM450,000 and RM100,000 respectively. Given below are the Statement of Profit or Loss and Other Comprehensive Income of Honey Bhd and Sweet Bhd for the year ended 31 December 2016. Statements of Profit or Loss and Other Comprehensive Income for the Year ended 31 December 2016 Turnover Cost of sales Gross crofit Investment income Selling and distribution flilenses 1,500,000 1,125,000 65,500 Administrative expenses (80,000 Financial ex-enses 20 000 Profit before taxation 970 ,500 Additional information: 1. Hone Bhd 375,000 300 000 Taxation (294,300) (228,000) Profit for the ear 676,200 m __ Ordinar dividend oaid 160,000 60,000 Preference dividend aid _ 17,500 Retained orofit as at 1 Januar 2016 1,250,650 985,350 Sweet Bhd -EI- 1,200,000 The issued share capital of Honey Bhd consists of RM2,000,000 Ordinary shares of RM1 each whereas Sweet Bhd comprises RM1,500,000 Ordinary shares of RM1 each and RM500,000 7% Preference shares of RM1 each. 2. On 1 January 2015, the machinery of Sweet Bhd which had a carrying value of RM105,000 was revalued to RM125,000. The remaining useful life of the machinery was five (5) years. Sweet Bhd did not incorporate the changes in fair value in its accounts. 3. During the year, Sweet Bhd sold goods costing RM80,000 to Honey Bhd for RM100,000 which were invoiced at 25% on selling price. remained unsold as at 31 December 2016. © Hak Cipta Universiti Teknologi MARA A quarter of the goods CONFIDENTIAL CONFIDENTIAL 5 ACIJUL 2017IFAR560 4. Sweet Bhd sold a motor vehicle to Honey Bhd at a selling price of RM60,000 in December 2016. The motor vehicle was purchased four (4) years ago at a cost of RM90,000 with an estimated useful life of nine (9) years. 5. Part of the investment income of Honey Bhd represents 4% of ordinary dividend from Sweet Bhd for the year. Sweet Bhd had declared and paid the dividend before the yearend. 6. Sweet Bhd appointed one of the Director of Honey Bhd as a consultant who is responsible in giving advice on administrative matters. Sweet Bhd recorded the annual fees of RM8,000 under administrative expenses. 7. The goodwill on acquisition of Sweet Bhd is RM30,000. At the end of the year, there is an indication of 20% impairment of goodwill. 8. Before the year end, Sweet Bhd had declared final dividend for its preference shares. The preference shares of Sweet Bhd is non—redeemable. 9. It is the policy of the group to value the non-controlling interest of its subsidiary at proportionate of its net asset. 10. Profits are deemed to accrue evenly throughout the year unless stated othenNise. Required: a. Explain briefly the conditions when a company can become a subsidiary in accordance with the Companies Act 1965. (5 marks) b. Prepare the Consolidated Statement of Profit or Loss and Other Comprehensive Income for Honey Bhd Group for the year ended 31 December 2016. (20 marks) 0. Prepare the Consolidated Statement of Changes in Equity (extract) for the year ended 31 December 2016 for both group’s retained profit and non—controlling interest. (10 marks) (Total: 35 marks) QUESTION 4 A. Newbie Bhd prepares quarterly interim report and its financial year ends on 31 December each year. The following transactions took place during the year ended 31 December 2015: 1. Newbie Bhd purchased inventories at a total cost of RM2 million during the first quarter of the year. The net realizable values at 31 March 2015 and 30 September 2015 were RM1.8 million and RM2.1 million respectively. © Hak Cipta Universiti Teknologi MARA CONFIDENTIAL CONFIDENTIAL 6 ACIJUL 2017IFAR560 2. In February 2015, Newbie Bhd planned a major maintenance of machinery that was expected to occur in April 2015 at an estimated cost of RMO.5 million. Required: a. Discuss the value of inventories that should be recognized in the interim report of Newbie Bhd for the first quarter and the third quarter of 2015. (5 marks) b. Advise the company’s accountant on the accounting treatment of RMO.5 million major maintenance of machinery in accordance with MFRS 134 Interim Financial Reporting for the year ended 31 December 2015. (5 marks) B. GlobalVC Bhd is a conglomerate company which has four separate business segments. The information below is available for each of the four segments: RM RM mm- Automotive 12,000,000 (2,000,000) Supermarkets 7,000,000 4 000 000 10,000,000 3,000,000 2,000 000 5,000,000 40,000,000 13,000,000 70,000,000 Required: a. Explain briefly any two (2) of the quantitative threshold (10% test) to determine the company’s reportable segments under MFRS 8 Operating segments. (5 marks) b. Determine the reportable segments for GlobalVC Bhd assuming the company uses the total profit or loss as a basis. Show suitable computations to support your answer. (5 marks) (Totals: 20 marks) END OF QUESTION PAPER (0 Hak Cipta Universiti Teknologi MARA CONFIDENTIAL ...
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern