CIA3010 Week 10 Discussions

Q1. The entity purchased and received a vehicle for RM23,500 on 31 January 2020. Delivery costs
are an additional RM500. Payment takes place on the 15 February 2021. The vehicle has a useful life
of 10 years with no estimated residual value.
i. Record the purchase and receipt of the vehicle on 31 January 2020.
ii. Record depreciation expense for January 2020.
iii. Record payment of vehicle on 15 February 2021.
(i) DT PPE – Vehicles 24,000
CT Accounts Payable 24,000

(ii) No depreciation, purchased on 31 January

(iii) DT Accounts Payable 24,000

CT Acc Depreciation 24,000

Q2. Defence Ministry purchased an aircraft which amounts to RM350,000 on 31 January 20X1. Upon
assessment, the engine of the aircraft should be componentized and is valued at RM100,000. The
aircraft is said to have an estimated useful life of 20 years while the engine has a useful life of 40
years.
Record purchase and receipt of the aircraft on 31 January 20X1.
DT PPE – aircraft 250,000
DT PPE – engine 100,000
CT Accounts Payable 350,000

Q3. Record asset under construction.

DT Asset under construction 11,000

CT Accounts payable 11,000
Q4. An entity purchases medical supplies in year 20X1 for RM50,000. Freight charges of RM500 are
included on the invoice. Assuming the entity uses a periodic system, purchases and issues are
recorded directly in the inventory account as they occur.
i. Record the purchase of inventories in year 20X1 (assuming inventories held for consumption).
ii. Record the purchase of inventories in year 20X1 (assuming inventories held for resale).
iii. Record issuance of inventories.
iv. To adjust consumable inventory balance after an inventory count at year end of 20X1,
inventory balance determined to be RM5,000.
v. In the next financial year (20X2), the entity purchases additional inventory held for
consumption, which amounts to RM10,000. Note: The opening balance for 20X2 amounts to
RM5,000.
vi. At the end of 20X2, an inventory count is conducted. The inventory balance is determined to
be RM8,000 . The opening balance carried forward from 20X1 amounts to RM5,000.

Note: This is under periodic inventory system

 Q5. An entity sells information products to an outside party for RM1,500. Record the entries for the
following:
i. The entity delivered information products to an outside party. Payment to be received at a
later date.
DT Accounts Receivable 1,500
CT Non tax revenue – sales of goods 1,500

ii. The entity received RM1,500 for the products delivered at (i).
DT Cash 1,500
CT Accounts Receivable 1,500

Q6. Record the entries for the following scenario:

On 28 November 20X1, Company A submits tax estimate to Inland Revenue Board of Malaysia for
the financial year of 20X2. The income tax estimate amounts to RM150,000. On 10 February 20X2,
Company A remits payment of RM12,500 (RM150,000/12 months). Subsequent to that, Company A
remits monthly payment of RM12,500 on the 10th of each month in 20X2.
i. Remittance of tax instalment payment of RM12,500 on 10 February 20X2 and subsequently
10th of each month in 20X2.
DT Cash 12,500
CT Tax Revenue 12,500

ii. At the end of financial period, Company A’s actual tax payment is RM125,000. Within the
financial period of 20X2, Company a submits form and elects for refund of tax payment. Inland
 Revenue Board of Malaysia proceeds to refund the income tax payment of RM25,000.
(overpayment)
DT Tax Revenue 25,000
CT Provision for tax refund 25,000

iii. What if, at the end of the financial period, Company A’s actual tax payment is RM170,000.
Within the financial period of 20X2, Company A submits form and agrees to make further tax
payment of RM20,000. (underpayment)
DT Tax receivable 20,000
CT Tax revenue 20,000

Q7. As at 15 June, individual A commits a traffic offence and was issued a summon by the traffic
officer. The summon was due for payment immediately amounting to RM100. However, individual A
only remitted summon payment on 1 August. Since the payment is still within the stipulated time
period, no penalties are incurred. Prepare the necessary journal entries.
Recognise when payment is received:
DT Cash 100
CT Non tax revenue – fines and penalties 100

Q8.

i. Record the provision for tax refund at 31 December 20X2 when it is determined that there is a
possibility of tax refund and the amount can be reliably estimated.
DT Tax revenue 400,000
CT Provision for tax refund 400,000

ii. Record the accrual of tax receivables at 31 December 20X2. What is the criteria to be met in
order for the tax receivable to be recorded?

When it is probable inflow of economic benefits relating to financial period 20x2 and the
amount can be reliably estimated.
DT Tax receivable 200,000
CT Tax revenue 200,000