BBFA2303

TAKE HOME EXAMINATION

MAY 2021 SEMESTER

BBFA2303
INTERMEDIATE FINANCIAL ACCOUNTING II

MATRICULATION NO :
IDENTITY CARD NO. :

1
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PART A

QUESTION 2

a) Carrying amount of a machinery is:

Goodwill RM75,000
Development costs RM150,000
Machinery RM300,000
RM525,000
Recoverable amount RM330,000
Impairment loss RM195,000

Goodwill is written down by RM75,000, and the balance of the impairment loss,
namely RM120,000 is written off across the other relevant:

Carrying Proportion Allocation of Net Carrying

amount Loss amount
Development 150,000 150/450 40,000 110,000
costs
Machinery 300,000 300/450 80,000 220,000
450,000 120,000 330,000

Carrying amount of the machinery after the impairment loss has been allocated =
RM330,000

b) (i) The carrying amount of the machine is RM60,750.

(ii) An equivalent new machine would cost RM90,000. The machine could be sold in
its current condition for a gross amount of RM45,000.
(iii)Dismantling costs would amount toRM2,000.
(iv) In its current condition, the machine could operate for three more years which
gives it a value in use of RM38,685.

PART B

2
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QUESTION 1

Cost of business 600,000

combination

Fair value net assets:

Land and building 220,000
Plant and Machinery 110,000
Inventories 25,000
Trade Receivables 30,000
(385,000)
Goodwill 215,000

Adjustment to goodwill:
Fair Value Adjustment:
Land and Building (20,000)
(220,000-200,000)
Plant and Machinery (10,000)
(110,000-100,000)
Goodwill 185,000

QUESTION 2