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FAR410 TUTORIAL CHAPTER 2

The document outlines the tutorial for Financial Accounting and Reporting 1 (FAR410), focusing on the Conceptual Framework for Financial Reporting. It includes questions related to the definition, purpose, and objectives of financial reporting, as well as practical scenarios involving financial transactions and their implications under the Malaysian Accounting Standard Board's framework. Additionally, it addresses qualitative characteristics of financial information and the recognition of assets and income.

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5 views3 pages

FAR410 TUTORIAL CHAPTER 2

The document outlines the tutorial for Financial Accounting and Reporting 1 (FAR410), focusing on the Conceptual Framework for Financial Reporting. It includes questions related to the definition, purpose, and objectives of financial reporting, as well as practical scenarios involving financial transactions and their implications under the Malaysian Accounting Standard Board's framework. Additionally, it addresses qualitative characteristics of financial information and the recognition of assets and income.

Uploaded by

Xd Alep
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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FINANCIAL ACCOUNTING AND REPORTING 1 (FAR410)

Tutorial Chapter 2 – The Conceptual Framework for Financial Reporting

QUESTION 1

Introduction
1. Define accounting framework. (pg. 39)
2. State the reasons for developing an accounting framework. (pg 39)
3. State the purpose of Conceptual Framework for Financial Reporting. (pg. 40)
4. State the scope of Conceptual Framework for Financial Reporting. (pg. 40)

Chapter 1
5. State the objectives of financial reporting. (pg.41)
6. State and explain the objectives chosen in the Conceptual Framework for Financial
Reporting. (pg. 42)
7. State the limitations of general purpose financial reporting.(pg. 42)
8. Explain the information provided by general purpose financial reports. (pg. 43)

Chapter 3
9. Explain the qualitative characteristics of useful financial information. (pg. 45 – 50)
10. Explain the cost constraint on useful financial reporting.

Chapter 4
11. State the underlying assumption in the conceptual Framework. (pg.51)
12. Identify and explain the elements directly related to the measurement of financial
position. (pg. 52)
13. Identify and explain the elements used as a measure of performance. (pg.55)
14. State two criteria when an item that meets the definition of an element should be
recognized in the financial statements. (pg. 56)
15. Explain briefly four different measurement bases being employed to different degrees
and in varying circumstances in financial statements. (pg. 58)
16. Identify and explain the two concepts of capital in the Conceptual Framework. (pg. 58 –
59)

1
QUESTION 2

Excellent Bhd manufactures energy drinks and the drinks are marketed in Peninsular Malaysia.
On 1 January 2010, the company acquired a machine of RM800,000 in order to produce the
drinks.

Excellent Bhd approaches Chill Plastics Sdn Bhd, a bottle manufacturer, to supply bottle to the
company. However, as Chill Plastics Sdn Bhd examined the financial statements of Excellent
Bhd, they found out that Excellent Bhd has large amount of trade payables. Therefore, the
directors of Chill Plastics Sdn Bhd decided not to supply the bottles to Excellent Bhd.

At the end of 2012, the company has sold the energy drinks amounted to RM1,080,000.

Required:

a) Explain whether the machine purchased on 1 January 2010 is an asset of Excellent Bhd.
(4 marks)

b) Briefly explain the two fundamental qualitative characteristics of financial statements.


(4 marks)

c) Determine whether information on the trade payables of Excellent Bhd is relevant


information to Chill Plastics Sdn. Bhd.
(2 marks)

d) Define income in accordance with Malaysian Accounting Standard Board’s (MASB)


Conceptual Framework for Financial Reporting.
(3 marks)

e) Identify if the sales of energy drinks amounted to RM1,080,000 is a revenue or a gain of


Excellent Bhd.
(2 marks)

(Total: 15 marks)

2
QUESTION 3

I. The Conceptual Framework for Financial Reporting was issued by the Malaysian
Accounting Standard Board (MASB) in November 2011. This Conceptual Framework sets
out the concepts that underlie the preparation and presentation of financial statements for
various users. The users are as follows:
a. Malaysian Accounting Standard Board (MASB)
b. Preparers of financial Statements
c. Auditors
d. Users of financial statements (Investors)

Required:

Briefly explain how the Malaysian Accounting Standard Board (MASB) Conceptual
Framework can help each of the users above.

(4 marks)

II. Resource Service Bhd is a company providing services in legal, secretarial and
corporate matters. On 15 February 2014, Resource Service Bhd has performed
secretarial services for Mega Bhd. Total fees charged to Mega Bhd was RM11,250. The
services performed were completed in February 2014. The payment of RM5,000 was
received on 1 March 2014 and the remainder in the following month. On 31 March 2014,
in order to enhance services provided by the business, the company acquired ten
computers for executive officers use. The computer costs RM8,000 each.

Required:

a. Identify whether the fee is an income or gain. Justify your answer with reference to
Malaysian Accounting Standard Board (MASB) Conceptual Framework.
(2 marks)

b. Determine whether revenue is recognized in February or March 2014. Justify your


answer with reference to Malaysian Accounting Standard Board (MASB) Conceptual
Framework.
(3 marks)

c. Explain whether the purchase of the computers will affect the financial performance of
the business.
(2 marks)

d. Identify whether the computer acquired is an asset of Resource Service Bhd. Justify
your answer with reference to Malaysian Accounting Standard Board (MASB)
Conceptual Framework.
(4 marks)
(Total: 15 marks)

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