The estimated useful life of buildings machinery and motor vehicles are 40

The estimated useful life of buildings machinery and

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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. 5
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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) SOLUTION 3 6
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a. Statement of profit or loss and other comprehensive income, statement of changes in equity and note to the financial statement for property plant and equipment. SETINGGI BHD Statement of Profit or Loss and Other Comprehensive Income for year ended 31 December 2014 RM ‘000 Sales 514,005 Cost of sales (204,755 + 3,400) (208,155 ) Gross profit 305,850 Other income (3,380– 580 disposal +2,200 gain) 5,000 Selling & distribution costs (40,830 + 1,600) (42,430) Administrative costs (80,910) Finance cost (2,620 + 400) (3,020) Profit before tax 184,490 Income tax expense (10,000) Profit after tax 174,490 Other comprehensive income: Total comprehensive income 174,490 Admin costs: RM’000 As per trial balance 72,800 Depreciation-Buildings 2,200 Depreciation-Motor vehicles 850 Loss on sale of motor vehicles 60 Amortisation of intangibles 2,800 Legal costs 200 Claims for compensation 2,000 Total 80,910 SETINGGI BHD Statement of Changes in Equity for year ended 31 December 2014 Share Capital Retained Profit ARR Balance as at 1.1.2014 98,900 45,710 750 PAT 174,490 Balance as at 31.12.2014 98,900 220,200 750 Note on Property, Plant and Equipment Cost/Valuation Freehold Building Machinery Motor TOTAL 7
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land RM’000 RM’000 RM’000 vehicles RM’000 Balance as at 1.1.2014 17,800 88,000 68,000 10,000 Disposal (1,500) Balance as at 31.12.2014 17,800 88,000 68,000 8,500 Accum. depreciation Balance as at 1.1.2014 13,700 22,300 3,200 Disposal (860) Charge for the year 2,200 3,400 850 Balance as at 31.12.2014 15,900 25,700 3,190 Carrying Amount 17,800 72,100 42,300 5,310 137,510 b. Statement of financial position SETINGGI BHD Statement of Financial Position as at 31 December 2014 RM’000
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