CONFIDENTIAL 1 AC/JUL 2024/FAR210

UNIVERSITI TEKNOLOGI MARA

FINAL EXAMINATION

COURSE : FINANCIAL ACCOUNTING 3

COURSE CODE : FAR210

EXAMINATION : JULY 2024

TIME : 3 HOURS

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of five (5) 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 SO

This examination paper consists of 8 printed pages
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CONFIDENTIAL 2 AC/JUL 2024/FAR210

QUESTION 1

Auraliya Berhad has been involved in trading business since 2015. Given below the
company’s Trial Balance as at 31 December 2023:

Debit (RM) Credit (RM)

Sales 10,725,000
Cost of sales 5,736,400
Administrative expenses 1,798,800
Distribution expenses 893,000
Interest paid on bank loan 47,500
Investment income 59,800
Ordinary shares capital as at 1 January 2023 10,150,000
6% Preference shares capital as at 1 January 2023 1,200,000
Retained profit as at 1 January 2023 2,287,600
Interim dividend - OSC 118,000
Interim dividend- 6% PSC 36,000
Freehold land at cost 7,995,000
Plant and machinery at cost 3,250,000
Motor vehicles at cost 1,690,000
Fixtures & fittings 975,000
Investment 1,591,000

Accumulated depreciation as at 1 January 2023:

- Plant and machinery 875,000
- Motor vehicles 760,500
- Fixtures & fittings 331,500
Inventories at cost 1,792,000
Accounts receivable 2,159,000
Cash and bank 1,503,900
4% Bank loan 2,300,000
Accounts payables 1,045,000
Allowance for impairment of trade receivable at 1 January
2023 81,200
Tax paid 230,000
29,815,600 29,815,600

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Additional information:

At the end of the year, the following transactions /adjustments were yet to be included in the
company’s financial statements:

1. Land is not depreciated; other non-current assets are depreciated on yearly basis as
follows:

Plant and machinery 10% on cost.

Motor vehicles 20% on cost (treated as distribution cost)
Fixtures & fittings 20% on carrying value.

2. In December 2023, the following transactions occurred on the property, plant and
equipment:

i. New machinery was acquired for RM276,000 by cash.

ii. Land was revalued to RM8,450,000 and directors decided to incorporate this
amount into the accounts for the year.

3. The expected credit loss allowance of trade receivables at the year-end is RM86,360.

4. The following provision are to be made for:

i. Directors also declared a final dividend of 1% on ordinary shares and the balance
of preference dividend.
ii. Bank loan was taken in 2021 and the interest for the year is not yet settled.

5. The net realisable value of the closing inventories at year end was RM1,776,500 while
the taxation expense for the year was estimated at RM202,500.

Required:

a. In accordance with the requirements of the Companies Act 2016, MFRS 101
Presentation of Financial Statements and others relevant Malaysian Financial Reporting
Standards:

i. Prepare the Statement of Profit or Loss and Other Comprehensive Income for the
year ended 31 December 2023.
(8 marks)

ii. Present the Statement of Changes in Equity for the year ended 31 December
2023.
(5 marks)

iii. Determine the Statement of Financial Position as at 31 December 2023.

(7 marks)

b. Prepare a note on property, plant, and equipment.

(5 marks)
(Total: 25 marks)

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QUESTION 2

Tekam Berhad is involved in the production of sport equipment that operates in Dahlia
Business Village. In the current financial year, the company has projected a fifty percent
increase in sales based on the current trend in demand for sport equipment products.

In order to meet this increasing demand, on 2 May 2023 the company has acquired a new
motor vehicle from an oversea supplier specifically to transport the company’s products to the
customer. The followings are the costs involved in relation to the motor vehicle:

Items RM
Purchase price (excluded trade discount) 140,000
Delivery costs 3,000
Installation cost 7,000
Import duty 40,000
General overhead and maintenance 3,500

On acquisition, Tekam Berhad also received a 5% trade discount on purchase price. The
motor vehicle is expected to be used for ten (10) years with straight line depreciation method,
monthly basis.

Required:

a. Briefly explain any THREE (3) of directly attributable costs for initial measurement of
property, plant & equipment (PPE).
(3 marks)

b. Discuss briefly whether the newly acquired motor vehicle satisfies the definition of PPE
in accordance with MFRS 116 Property, Plant and Equipment.
(4 marks)

c. Find the initial cost of the new motor vehicle.

(5 marks)

d. Determine the amount of depreciation for the motor vehicle for the year ended 31
December 2023.
(3 marks)

e. Tekam Berhad has an office building that was acquired on 1 January 2021 for RM3.5
million with 40 years useful life. Depreciation is charged yearly basis using straight line
method. On 31 December 2023, the board of directors has decided to revalue the
building with an estimated fair value of RM3.3 million. The board of directors decided to
incorporate the new value of the building in the company’s financial statements.

Required:

Recommend the accounting treatment on the revaluation of the office building on 31

December 2023.
(5 marks)

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f. During the year 2023, Tekam Berhad had incurred the following costs:

1. Extension costs to a factory building of RM150,000. This extension will provide the
factory building with more space for its operation.
2. Cost of repairing the machine broken down amounted to RM8,000.

Required:

Evaluate the accounting treatment for the TWO (2) costs incurred during the year 2023.
(5 marks)
(Total: 25 marks)

QUESTION 3

Invictus Sport Berhad is a distributor of sports equipment and goods in Malaysia. On 21 July
2023, the company has sold goods to LASO Sdn Bhd on credit, 2.5/10, n/30 for RM15,000.
The company also has sold sports equipment worth RM33,000 to Jinggo Sdn Bhd on 27 July
2023 and received 5% promissory notes due in 60 days.

Required:

a. State THREE (3) differences of note receivables as compared to account receivables.

(3 marks)

b. Perform the relevant journal entries for Invictus Sport Berhad in July 2023.
(2 marks)

c. Identify the maturity date of the note receivable of Jinggo Sdn Bhd.
(2 marks)

d. Calculate the maturity value of the above promissory notes (use 360 days as number of
days in a year).
(3 marks)

e. During the financial year ended 31 December 2023, Invictus Sport Berhad has
presented the following aging analysis for the company trade receivables:

No. of days due/overdue Receivables Amount Estimated Credit Loss

(RM) Rate (%)
0 – 30 750,000 0.5
31 – 60 270,000 2
61 – 90 (SPX Ent.) 42,000
10
(Mr. Yong) 5,000
Over 90 days 15,000 30
Total 1,082,000

For the year ended 31 December 2022, the company has recorded the allowance for
impairment of trade receivables of RM12,500. As at 31 December 2023, the company
has also decided to write off the receivable amount of RM5,000 from Mr. Yong as he
was declared bankrupt.
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Required:

Advise the management of Invictus Sport Berhad on the amount to be disclosed in the
statement of profit or loss AND the net realisable value of receivables to be disclosed in
the statement of financial position as at 31 December 2023.
(5 marks)
(Total: 15 marks)

QUESTION 4

Brand Ladies Berhad is in the business of selling woman shoes in Selangor. The financial year
end of Brand Ladies Bhd is on 31 December each year. The business has the following
inventory report as at 31 December 2023:

Group Purchase Total units Import Total Selling Selling Remain

price/unit purchased duties/unit carriage price/unit cost/unit unsold
during the inwards
year

Running RM100 500 5% of RM2,500 RM200 RM50 20 units

sports purchase
shoes price
Fashion RM200 600 5% of RM3,000 RM280 RM60 50 units
casual purchase
shoes price

Required:

a. State TWO (2) examples of situations in which net realisable value is lower than cost.
(2 marks)

b. Identify whether the shoes are inventory of Brand Ladies Berhad in accordance with
MFRS 102 Inventory.
(2 marks)

c. Compute the value of both shoes as at 31 December 2023 for Brand Ladies Berhad by
applying group of similar items valuation.
(6 marks)
(Total: 10 marks)

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QUESTION 5

The draft of the financial statements of Teratai Berhad are as follows:

Teratai Berhad
Statement of Comprehensive Income for the year ended 31 December
2023
RM RM
Revenue 24,000,000
Cost of goods sold (14,400,000)
Gross profit 9,600,000
Gain on sale of plant and machinery 48,000
Decrease in Allowance for Impairment of
Trade Receivables 96,000 144,000
9,744,000
Salaries (2,640,000)
Other operating expenses (including (3,532,800)
depreciation of RM624,000)
Loss on disposal of motor vehicles (240,000)
Interest expenses (96,000) (6,508,800)
Profit before tax 3,235,200
Tax expense (480,000)
Profit after tax 2,755,200
Teratai Berhad
Statement of Financial Position as at 31 December
2023 2022
RM RM
Land and buildings 16,160,000 16,160,000
Plant and machinery 5,500,000 4,800,000
Acc. depreciation - plant and machinery (3,392,000) (3,072,000)
Motor vehicles 16,832,000 15,472,000
Acc. depreciation - motor vehicles (11,344,000) (11,152,000)
Short term investments 3,000,000 1,000,000
Inventories 24,640,000 23,840,000
Trade receivables 18,880,000 16,240,000
Allowance for impairment of trade (240,000) (336,000)
receivables
Bank 25,748,100 20,808,000
95,784,100 83,760,000
Ordinary shares capital 65,681,000 60,080,000
Preference shares capital 14,800,000 14,800,000
Retained earnings 3,946,300 2,256,000
8% Debentures 5,040,000 -
Trade payables 5,404,800 5,664,000
Tax payable - 384,000
Accrued salaries 864,000 480,000
Accrued operating expenses 48,000 96,000
95,784,100 83,760,000

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Additional information:

1. The short-term investments do not qualify as cash and cash equivalent.

2. During the year, RM1,584,000 was received for the disposal of motor vehicles.

3. Plant and machinery costing RM800,000 was sold for cash.

4. For the current year, the depreciation expenses provided for the motor vehicles and the
plant and machinery are RM240,000 and RM384,000, respectively.

5. There were new issues of ordinary shares and 8% Debenture during the year.

6. The interim dividend paid during the year on the ordinary shares is RM1,064,900.

Required:

a. Prepare the Statement of Cash Flows of Teratai Berhad for the year ended 31 December
2023 using direct method in accordance with MFRS 107 Statement of Cash Flows.

(Show all the relevant workings)

(20 marks)

b. Discuss the importance of the Statement of Cash Flows to users of financial statements.
(5 marks)
(Total: 25 marks)

END OF QUESTION PAPER

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