Tunku Puteri Intan Safinaz School of Accountancy

BKAR2023 Financial Accounting and Reporting II

Second Semester 2017/2018

Group M

Online Class On 15 April 2018

Prepared For:

Dr. Hasnah Binti Shaari

Prepared By:

Muhammad Syazwan Bin Zainudin

(256158)

Date of Submission :

22 April 2018
Menara Sejahtera Berhad purchased the following equity investments in Bursa Malaysia on 1
October 2013:

(i) 10,000 shares of Kenari Berhad at RM1.50 per share. Transaction cost incurred was
RM2,500. Menara Sejahtera Berhad intends to sell shares of Kenari Berhad in early 2014
to take advantage of the changes in the share prices.
(ii) 80,000 shares of Perdani Berhad at RM1.80 per share. Transaction cost incurred was
RM5,000. Shares of Perdani Berhad is not for short term trading as Menara Sejahtera
Berhad intends to establish these shares as a long term investment.

Each investment representing less than 20 percent of interest. Menara Sejahtera Berhad received
a cash dividend of RM0.05 per unit of its investment in shares of Perdani Berhad on 20
December 2013. On 31 December 2013 (financial year end), the fair value per share of Kenari
Berhad and Perdani Berhad were RM1.60 and RM2.00 respectively. Menara Sejahtera Berhad
sold all shares of Kenari Berhad at the selling price of RM1.90 per share on 5 March 2014.

REQUIRED:

(a) Prepare journal entries to record the purchase, the fair value adjustment and the selling of
investment in Kenari Berhad.
General Journal
Date Account Title Debit (RM) Credit(RM)
2013
Oct 1 Financial asset at FV through profit or loss (10000 x 1.50) 15,000
Transaction cost 2,500
Cash 17,500
Dec 31 Financial asset at FV through profit or loss (0.1 x 10000) 1,000
Gain on Financial asset at FV through profit or loss 1,000
2014
March 5 Cash (10000 x 1.90) 19,000
Financial asset at FV through profit or loss(1.6x10000) 16,000
Gain on sale of Financial asset at FV through profit or 3,000
loss
(b) Prepare journal entries to record the purchase, the dividend received and the fair value
adjustment for investment in Perdani Berhad.
General Journal
Date Account Title Debit (RM) Credit(RM)
2013
Oct 1 Available for Sale Financial Asset (80000 x 1.80 + 5000) 149,000
Cash 149,000
Dec 20 Cash 4,000
Dividend Revenue (0.05 x 80000) 4,000
Dec 31 Available for Sale Financial Asset (80000 x 2 – 149000) 11,000
Fair Value Reserve 11,000