Convincing Features
Assignment Type
Subject
Uploaded by Malaysia Assignment Help
Date
A. The MASB Conceptual Framework for Financial Reporting establishes the concepts that underlie the preparation and presentation of financial statements for external users.
Required:
Explain the objective of general-purpose financial reporting as outlined by the MASB Conceptual Framework. (3 marks)
B. A company called Markisa Store Bhd sells stationery for offices and schools. Sekolah Menengah Kebangsaan Datuk Samsul (SMKDS) purchased stationery worth RM5,000 on credit from Markisa Store Bhd on 31 July 2024. On 1 August 2024, the stationery was delivered to the school. The school consented to pay on 1 August 2024, and 1 September 2024, in two installments of RM2,500 each. The payments were made by the school on 1 August and 1 September 2024 respectively. To improve the supply of stationery to its customers, Markisa Store Bhd purchased another delivery van at RM50,000.
Required:
(a) Based on the Conceptual Framework, should the sales made to SMKDS be recognized as an income to Markisa Store Bhd? (2 marks)
(b) In accordance with the MASB Conceptual Framework, when should Markisa Store Bhd recognize revenue from the sale of stationery? Explain your answer. (3 marks)
(c) Identify the qualitative characteristic that Markisa Store Bhd should consider when determining the timing of recognizing the sale of stationery and the purchase of the van. (4 marks)
(d) Discuss how the purchase of the delivery van should be treated in the financial statements of Markisa Store Bhd, in line with the MASB Conceptual Framework. (3 marks)
(Total: 15 marks)
On 1 January 2020, Desire Technology Bhd purchased a two-storey building in Jementah at a cost of RM4,000,000. The first floor is used to manufacture its products and the second floor is used for office purpose. The estimated useful life of the building is 40 years.
On 15 June 2020, Desire Technology Bhd purchased a specialised machinery that would reform its production processes and enhance overall efficiency. The specialised machinery, valued at RM3,000,000, was expected to have a useful life of 10 years. By 2024, it became evident that technological advancements had outpaced the capabilities of Desire Technology Bhd’s specialised machinery. On 31 January 2024, Desire Technology Bhd decided to sell off the specialised machinery at RM1,500,000.
It is the company policy to depreciate its property, plant, and equipment using the straight-line method on a yearly basis. Depreciation is charged in full in the year of purchase and none in the year of disposal.
The company closes its accounts on 31 December each year.
Required:
a. Determine what information about that entity’s building would a potential investor find useful? Why do you think that information would be useful? (2 marks)
b. Explain whether the building is an asset according to the Conceptual Framework. (4 marks)
c. Discuss whether the specialised machinery is an item of Property, Plant and Equipment in accordance with MFRS 116. (4 marks)
d. Discuss the relevant accounting treatment for any gain or loss on derecognition of the specialised machinery. (4 marks)
e. Prepare journal entries relating to the specialised machinery for the year ended 31 December 2020, 2021 and 2024. (8 marks)
(Total: 22 marks)
Forward Bhd is a trading company located at Kulai, Johor. The following transactions were extracted from its book of accounts for the year ended 31 December 2024:
| Date | Transactions |
|---|---|
| 1 January 2024 | The allowance for impairment of trade receivables amounted to RM36,000. |
| 10 January 2024 | Issued invoice of RM600,000 for goods delivered to Brilliant Bhd on credit |
| 15 May 2024 | Sold goods worth RM180,000 to Boko Pharmacy and accepted a 60-day, 10% note in full payment upon delivery of goods on the same day. |
| 10 September 2024 | Brilliant Bhd is declared bankrupt. Only 80% of the amount owed is collected. The company’s director decided to write off the remaining amount as uncollectible. |
| 31 December 2024 | Amount of receivables at the end of the year amounted to RM750,000. |
Forward Bhd produced the following ageing analysis of receivables as at 31 December 2024:
| Past due days | Amount outstanding (RM) | Expected credit loss rate (%) |
|---|---|---|
| Within maturity | 1,050,000 | 0.6 |
| 1 – 30 days | 600,000 | 1.1 |
| 31 – 90 days | 240,000 | 2.2 |
| 91 – 180 days | 210,000 | 11 |
| 181 – 365 days | 150,000 | 25 |
| Total | 2,250,000 |
Required:
i. Determine whether the account receivable is a current asset. (3 marks)
ii. Prepare the necessary journal entries to record the transactions on 10 January 2024, 15 May 2024 and 10 September 2024. (5 marks)
iii. Determine the amount of impairment of trade receivables to be recognized in the Statement of Profit or Loss AND the net realizable of receivables to be disclosed in the Statement of Financial Position as at 31 December 2022. (5 marks)
(Total: 13 marks)
(Overall marks: 50 marks)
