SOLUTION 1

a. Euphoria Bhd
Statement of Profit or Loss and Other Comprehensive Income for the year
ended 30 June 2021
Note RM’000
Revenue (60,467k – 150k) 60,317
Cost of sales (22,380k + 910k) (23,290)
Gross Profit 37,027
Administrative expenses (W1) (9,728) 10
Selling & distribution costs (3,630)
Profit from operation 23,669
Finance expenses (532)
Rental income 2,330
Investment income 1,332
Gain on FV of investment property (6,000k – 5,000k) 1,000
Profit before tax 27,799
Income tax expense (4,000)
Profit for the year 23,799
Other Comprehensive Income
Surplus on revaluation – Building (18,000k – 16,000k) 2,000
Total Comprehensive Income for the year 25,799

mana dtg 16,000,000?

W1: Administrative expenses
As per trial balance
Directors’ remuneration 350 Maintenance costs 500
Deficit on revaluation - Land 700
Depreciation – Building (18,000k/40y) 450
Depreciation – P&M [(10,800K- 3,720k)] x 0.1] 708
Damages cost 200
9,728
b.
Euphoria Bhd
Statement of Changes in Equity for the year ended 30 June 2021
Asset
Ordinary Retained
revaluation Total
Shares Earnings
reserve
RM’000 RM’000 RM’000 RM’000
Balance at 1 July 2020 28,000 - 48,412 76,412
(+) Prior year error 180 180
Restated balance 48,592
Surplus on revaluation 2,000 2,000
Profit for the year 23,799 23,799
Dividend OSC (880) (880)
Balance at 30 June 2021 28,000 2,000 71,511 101,511
c
.
Euphoria Bhd
Statement of Financial Position as at 30 June 2021
Note RM’000
Non-current assets
Property, plant & equipment 1 61,222
Investment property (5,000k + 1,000k) 6,000
Investment 8,880

Current assets
Inventories (4,540k – 910k) 3,630
Trade receivables (5,840k – 150k) 5,690
Less: AFITR (292)
Cash at bank 30,506
TOTAL ASSETS 115,636

Equity 28,000
73,511

Total Equity 101,511

Non-current liabilities 10,650

Long term loan
 Current liabilities
Trade payables (3,055k – 180k) 2,875
Provision for damages 200
Tax payable (4,000k – 3,600k) TOTAL 400
EQUITY & LIABILITIES 115,636

d. Notes to the financial statements

i. Property, Plant and Equipment

Plant &
Land Building machinery Total
RM’000 RM’000 RM’000 RM’000

Cost:
Balance at 1 July 2020 38,000√ 20,000
10,800 (700)√
Balance at 1 July 2020 - 4,000
2,000√ 3,720
Elimination of AD (4(4
,000)√
,000)√
Charge for the year -
37,300 450 √
18,000 708 √
10,800
Balance at 30 June 2021 0 450 4,428

Carrying value 37,300 17,550 6,372 61,222

Deficit on revaluation
Surplus on revaluation Elimination of AD
Balance at 30 June 2021

Accum. depreciation:

ii. Capital Commitment

On 15 September 2021, Euphoria Bhd entered into a contract with Dynamite Bhd to
purchase a new high-tech machine at a cost of RM500,000.
SOLUTION 2

A.

i. Yes

ii. No
B.

i. 31 December 2020

Dr Investment property RM710,000

Cr Gain on FV-SOPL RM710,000

31 December 2021

Dr Loss on FV-SOPL RM1,000,000

Cr Investment property RM1,000,000

i
. On 1 January 2020, Tropika Indah Bhd should recognize the whole building
amounted to RM39,290,000 as the investment property under MFRS140 even
though the company occupied the last floor for its local show rooms and exhibition
center. This is because the owner-occupied property portion cannot be sold
separately and insignificant (less than 10%). On 31 December 2020, Tropika Indah
Bhd should recognize fair value gain of RM710,000 in SOPL due to adopting FV
model for subsequent measurement of investment property. No depreciation is to
be provided. Working:
(RM35,500,000-710,000) + (RM4,500,000) = RM39,290,000

C.

The shop lot premise is accounted as MFRS140 Investment Property when was acquired
on 1 January 2018. On 1 January 2021, there was a transfer from IP to PPE due to change
in use. The deemed cost of the PPE will be measured at fair value of RM5,000,000. The
difference of RM1,800,000 shall be accounted as gain in the statement of profit or loss for
the year ended 31 December 2021.

SOLUTION 3
 a. The criteria that determine the promises to transfer goods or services as performance
obligations are:

• a good or service (or bundle of goods or services) that is distinct; or

• a series of distinct goods or services that are substantially the same and that
have the same pattern of transfer to the customer.

b.

(i) Step 1: Identify the contract with a customer

The contract between Zendaya Bhd and Affron Sdn Bhd which was finalized on 8
August 2020 satisfies the MFRS 15 requirements for a contract.

Step 2: Identify the performance obligations in the contract The

performance obligations in the contract are:
1) Design work
2) Delivery of equipment 3) Maintenance service

Step 3: Determine the transaction price

The transaction price agreed was RM7,500,000.

Step 4: Allocate the transaction price to the identified performance obligations

The transaction price is allocated as follows:

Performance Stand-alone Allocated transaction price

obligation selling (RM)
price(RM)
Design work 1,500,000 1,500,000/8,000,000 x 7,500,000= 1,406,250

Equipment: 5,500,000 5,500,000/8,000,000 x 7,500,000 = 5,156,250

Manufacturing work
Maintenance 1,000,000 1,000,000/8,000,000 x 7,500,000= 937,500
service
8,000,000 7,500,000

Step 5: Recognise revenue (sales) when the entity satisfies the performance
obligation
 The recognition of revenue from design work should be recognized on 21 September
2020 as the performance obligation for the design work was satisfied. On 8 December
2020, manufacturing work was completed and the customer obtains control of the
special equipment upon delivery. Finally, the maintenance work is recognized on 31 May
2021 upon completion of the agreed upon performance obligation.

(ii) The allocation of the total transaction price to performance obligations is done by
1. Determining the stand-alone selling price of the distinct good or service
underlying each performance obligation; and
2. Allocating the transaction price to each of the performance obligations,
in the same proportion as the stand-alone selling prices.

c.
Date Dr(RM) Cr(RM)
14/2/2021 Accounts Receivable 300,000
Contract liability 300,000

1/3/2021 Bank 300,000

Accounts Receivable 300,000

1/4/2021 Contract liability 300,000

Accounts Receivable 400,000
Sales Revenue 700,000

SOLUTION 4

A. a. TWO (2) conditions that are considered as changes in

accounting policy.

i. Is required by an MFRS (mandatory change).

ii. Results in the financial statements providing reliable and more relevant
information about the effects of transactions on financial statements
(discretionary change/voluntary change).

b. TWO (2) situations that specify changes in accounting estimates.

i. Revision of remaining useful life of equipment from 10 years to 8 years. iii.

Change of depreciation method of machinery from straight line to reducing
balance.
 B. a. i. Change in accounting estimate ii. An error
iii. Change in accounting policy

b
. i. The change depreciation method from straight-line to reducing balance method which
affects the depreciation charge should be adjusted prospectively. The change will affect
the period of change (current year 2021) and future periods (if the change affects future
years). The current year depreciation shall be RM100,000 (RM400,000x25%)
recognized as expense in SOPL.

ii. On 30 June 2021, there is a prior period error because overstated in carrying
amount of plant account in the current year due to depreciation not provided
previous year and it should be accounted retrospectively. The retained
earnings are decreased by RM14,000 and Accumulated depreciation on
plant is increased by RM14,000. (6 x 1 mark = 6 marks)

c. Restated opening balance of the retained earnings as at 1 July 2020.

As at 1 July 2020 150,000
Prior year adjustment-under depreciation (14,000)
Restated opening balance as at 1July 2020 136,000of

SOLUTION 5

A.
Identify whether a provision should be recognised:

i. No provision – contingent liability

ii. Provision iii. Provision iv. Provision

B.
a. Accounting treatment:

i. The company need to recognise a provision on the legal suit claimed by the
staff as there is present obligation arising from past event (staff filed legal
suit due to damage experience y the staff while on duty). There will be a
probable outflow of resources and the amount can be measured reliably.

ii. This event should be disclosed as contingent asset because there is a high
possibility (not virtually certain) that the company will win the case. It is
measured reliably; however, the timing of receipt of the compensation is
uncertain.

iii. There is a legal obligation as a result from past event. Even though a reliable
estimate can be made, it is not probable that there will be an outflow of
resources since no legal action has yet been charged against the company.
Thus, a contingent liability should be disclosed in the notes to the financial
statements.
 b.
i. Statement of Profit or Loss for the year ended 31 December 2021 (extract)

RM
Expenses:
Damages cost 800,000

ii. Statement of Financial Position as at 31 December 2021 (extract)

RM
Non-Current Liability
Provision for damages 800,000