MARA PROFESSIONAL COLLEGE AYER MOLEK

FINANCIAL STATEMENT ANALYSIS

OCTOBER – DECEMBER 2020

ACC 2642

DIA 6B

ASSIGNMENT 2

PREPARED BY:

NAME ID NO

MUHAMMAD NOOR FITRI BIN OMAR MDA19-01-002

MUHAMMAD AMIN NAQIUDDIN BIN AZMAN MDA19-01-011

SAIFUL NIZAM BIN SULAIMANAH MDA19-01-022

AMIRIN ABIDI BIN HAIRUL AZHAR MDA19-01-003

PREPARED FOR:
SURYANTI BINTI YAHAYA
 TABLE OF CONTENT

Number Particular Page

1. Acknowledgement 3

1.0 Presentation of Financial Statement

1.1 Accounting policies
2. 1.2 Accounting Concept 4 – 10
1.3 Accounting basis
1.4 Accounting estimates

2.0 Criteria for Published Financial Statement

2.1 Statement of Financial Position
2.2 Statement of Profit and Loss
3. 11 – 12
2.3 Statement of Changes in Equity
2.4 Statement of Cash Flow
2.5 Notes to Account

3.0 3 MFRS
3,1 MFRS 102
4. 13 – 20
3.2 MFRS 110
3.3 MFRS 137

5. Appendix 21 – 24

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 ACKNOWLEDGEMENT

First and foremost, praises and thanks to the God (Allah), the Almighty, for
His showers of blessings throughout our assignment to complete this
successfully.

We would like to express our deep and sincere gratitude to our lecturer, Puan
Suryanti binti Yahaya for giving us the opportunity to do this assignment and
providing invaluable guidance throughout this assignment. Her dynamism,
vision, sincerity, and motivation have deeply inspired us. She has taught us the
methodology to carry out the assignment and to present the assignment works
as clearly as possible. It was a great privilege and honour to work and study
under her guidance. We are extremely grateful for what she has offered us. We
would also like to thank her for her friendship, empathy, and great sense of
humour.

We are extremely grateful to our parents for their love, prayers, caring and
sacrifices for educating and preparing us for our future. We would like to say
thanks to our classmates and our batch mates. Finally, our thanks go to all the
people who have supported us to complete the assignment work directly or
indirectly.

ASSIGNMENT 2 (ACC 2642) 2

1.0 Presentation of Financial Statement
1.1 Accounting Policies
1.1.1 Definition
Accounting policies are the principles and processes implemented by
a company that are used to prepare and present its financial
statements. And the accounting policies are important because it is
like a guideline to all the company and they can decide whether to be
a conservative or aggressive accounting policies. And these policies
basically used to measure accounting practice such as depreciation
method, and goodwill.

1.1.2 Example
Accounting Policies of Inventory
There is variety of types of accounting policies. One of it is accounting
of inventory, there is 3 valuation of inventory that is First In First Out
(FIFO), Average Cost, and Last In First Out (LIFO). These policies will
determine what method will be used by the company to manage and
controlling the inventories.

1.1.3 Application
a) Fraser and Neave Holding Berhad

In the case of F&N, inventories are revalued at a lower cost

and net realizable value. And it is stated that the cost uses is
the weighted average basis for determining the cost of the
good sold, so they use the average cost method in valuation of
the inventory.

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 b) Spritzer Berhad

For the Spritzer’s company, the inventories are valued at the

lower cost and net realisable value. And determining the cost
of goods sold, it is using the First in First Out (FIFO) method.
FIFO method is when the cost of inventory that is produce or
acquired first is being the first to be sold.

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 1.2 Accounting Concept
1.2.1 Definition
Accounting concept refers to the basic principles and laws and
principles which serve as the basis of recording of business
transactions and preparing accounts. Accounting concept can help an
accountant to recognize the revenue and expenses. It also can assist
with the production of a reliable financial report.

1.2.2 Example
Historical Cost
Assets should be displayed on the balance sheet at the cost of
purchase instead of the present value. In addition, at the date of
acquisition costs, the cost of fixed assets is reported. The investment
made to prepare the asset for its intended use is included in the
acquisition cost.

1.2.3 Application
a) Fraser and Neave Holding Berhad

This basis discusses how the resulting measurements work

and how their reliability and relevance work.

b) Spritzer Berhad

The group and the company's financial statements were

prepared on the basis of historical costs except financial
instruments that at the end of each reporting period are
measured at fair value.

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 1.3 Accounting Basis
1.3.1 Definition
The basis of accounting relates to how the recording of revenues and
expenses will be treated the financial statements of a business. There
are two method that are likely to be mentioned when it comes to
accounting basis :
i) Cash basis of accounting
Under this basis of accounting, a business recognizes revenue
when cash is received, and expenses when bills are paid.
ii) Accrual basis of accounting
Under this basis of accounting, a business recognizes revenue
when earned and expenses when are consumed. Since the
accrual must be recorded as regular intervals, this approach
requires a greater accounting knowledge.
1.3.2 Example
i) The salaries will be recorded as accrual if it will be paid on the
following month.
ii) The interest receive will only be recorded after it is received,
even if it is already over its mature date.
iii) The receivable accounts will be treated as accrual until it
successfully collected.
iv) When a company have a due on its utility bills, such as
electricity or internet, it also will be treated as accrual for its
unpaid amount.

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 1.3.3 Application
Since the business wants their financial statements to be audited, it
must use the accrual basis of accounting, since the auditor will not
pass judgement on financial statements prepared using any other
basis of accounting.
a) Fraser and Neave Holding Berhad

The interest will be stated as accrued until it will be

successfully collected even though naturally it is already been
our revenue.

b) Spritzer Berhad

The interest income will be treated as accrued since it will be

received in the future, hence it will be accrued until received
successfully.

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 1.4 Accounting Estimates
1.4.1 Definition
It is a tool for calculating certain accounting products that do not have
an effective quantification method and are instead estimated based on
judgement and information gained from previous experience.
1.4.2 Example
i) Depreciation Method and Useful Life they use straight-line method
for depreciation and considers the useful life in the range of three to
ten years.
ii) The inventories valued based on FIFO method and stated at lower
cost or market value. Periodically, redundant inventory is accessed,
and inventory write-downs are done to the net realisable value.
iii) Goodwill has an indefinite useful life. Goodwill impairment review is
done annually to access any changes in goodwill

1.4.3 Application
a) Fraser and Neave Holding Berhad

The application is that the company use is two method of

Depreciation which is based on cost for the asset that is less
its residual value and straight-line basis for the based on the
estimated useful lives for each component of an item of
property, plant and equipment from the date they are available
for use.

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 b) Spritzer Berhad

The application is that the company use reducing balance

method for the depreciation because of the estimated for the
useful lives.

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2.0 Criteria for Published Financial Statement.
2.1 Statement of Financial Position
The criteria or items that should be in the statement of financial position is :
(a) property, plant, and equipment
(b) intangible assets
(c) financial assets excluding investments, trade and other receivable, cash and
cash equivalents
(d) investments
(e) inventories
(f) trade and other receivables
(g) cash and cash equivalents
(h) trade and other payables
(i) tax liabilities and tax assets
(j) provisions
(k) non-current interest-bearing liabilities
(l) minority interest
(m) issued capital and reserves.
(n) headings and sub-totals should be presented statement of financial position
when a MASB Standard requires it, or when such presentation is necessary to
present fairly the enterprise’s financial position.

2.2 Statement of comprehensive Income

The income statement should include line items which present the following
amounts:
a) revenue
b) the results of operating activities
c) finance costs
d) share of profits and losses of associates and joint ventures
e) tax expense
f) profit or loss from ordinary activities
g) extraordinary items
h) minority interest and
i) net profit or loss for the period.
Additional line items, headings and sub-totals should be presented on the face of
the income statement when required by a MASB Standard or when such
presentation is necessary to present fairly the enterprise’s financial performance

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 2.3 Statement of Changes in Equity
• The net profit or loss for the period.
• Each item of income and expenses, gain or loss which, as required by other
Standards, is recognised directly in equity, and the total of these items.
• The cumulative effect of changes in accounting policy and the correction of
fundamental errors dealt with under MASB 3, Net Profit or Loss for the Period,
Fundamental Errors and Changes in Accounting Policies.

Additional components:

 Capital transaction with owners and distributions to owners.

 The balance of accumulated profit or loss in the beginning of the period and at
the balance sheet date, and the movements for the period.
 A reconciliation between the carrying amount of each class of equity capital,
share premium, and reserve at the beginning and at the end period,
separately disclosing each movement.

2.4 Statement of Cash Flow

 It states that cash flow information is useful in providing users of financial
statements with a basis to assess the ability of the enterprise to generate
cash.
 cash equivalents and the needs of the enterprise to utilise those cash flows.
 Statement of Cash Flows presents the movement in cash and cash
equivalents over the period.
 All cash flows are classified under operating, investing, and financing
activities.

2.5 Notes to account

 Present information on the basis of preparation for the preparation of the
selected and implemented financial statements and relevant accounting
procedures for important transactions and events.
 Disclose the information required by MASB Standards that is not presented
elsewhere in the financial statements.
 Provide additional information which is not presented on the face of the
financial statements but that is necessary for a fair presentation.
2.6

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3.0 3 MFRS
3.1 MFRS 102 : Inventories
3.1.1 Scope

The Malaysian Financial Reporting Standard (MFRS) 102 scope is

applying to all inventories. It is excluded that deleted by International
Accounting Standard Board (IASB), the financial instruments, and
biological assets that related to the agricultural activity and the
agricultural produce that is at the point of harvest.

In the exception of inventory that biological asset that related to the

agricultural activity, this Malaysia Financial Reporting Standard
(MFRS) 102 also does not apply in the measurement of inventories
that held by the producer of agricultural produce, agricultural activity,
and mineral product. It because those inventories are measured
according by their practice in their industries that is using the net
realisable value.

In this standard, the actual meaning of inventory is assets that held for
sale in the ordinary course of business, process of production for sale,
and form of materials that is to be consumed in the production
process.

3.1.2 Measurement
i) Cost of inventories
 All expenses, conversion costs and other costs incurred in
taking inventories to their current location and condition
shall form the cost of inventories.
 Method how to calculate, cost of inventory:

ii) Cost of Purchase

 Costs for the procurement of inventories include purchase
price, import duties and other taxes and transport, storage
and other costs directly related to the acquisition of
finished goods, materials, and services

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 iii) Cost of conversation
 Stock conversion costs include costs directly related to the
manufacturing units, such as direct labour. They also
involve the systematic allocation of fixed and variable
output overheads for the conversion of materials into
finished goods.

3.1.3 Recognition
i) The carrying amount of these inventories is recognised as an
expense during the period in which the related revenue is
recognised When inventories are sold.
ii) The number of inventories to be written down to the net and all
inventory losses and realisable value shall be recognised as
an expense for the period during which the decrease or loss
occurs.
iii) The sum to be accepted as a decrease in the amount of
inventory records recognised as expenditure in the period for
which the inventory is reversed resulting from an increase in
net realisable value.
3.1.4 Disclosure
In completing their Financial Statements, the company shall disclose :
i) All the accounting policies used for measuring the inventories,
especially the formula on how to calculate the cost.
ii) The carrying amount of inventories carried at fair value less
cost of sell.
iii) The amount of inventories set to be written as the expenses
during the period.

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 3.1.5 Application & Compliance to MFRS
a) Fraser & Neave Berhad

The application for this companies is that they use

measurement at the lower cost and net realisable and the
method they use to calculate inventories is weighted average
method. They also recognise inventories as expenditure.

b) Spritzer Berhad

The application for this companies is that they use

measurement at the lower cost and net realisable and they
method they use to calculate inventories is First in, first out
(FIFO) method.

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 3.2 MFRS 110 : Events after the Reporting Period
3.2.1 Scope
This Malaysia Financial Reporting Standard (MFRS) 110 are being
applied after the reporting period in the accounting for and disclosure
of events. It means that this standard deals with incident that occur
after the balance sheet date that may impact the current year’s
financial performance.

3.2.2 Measurement
i) The company shall change the sums recognized in its financial
statements during the reporting period in order to represent
adjustment events. However, an organization shall not change
the sums recognized in its financial statements during the
reporting period to reflect non-adjusting events.
ii) For the evidence, if an entity announces dividends to equity
instrument holders after the reporting period (as specified in
MFRS 132 Financial Instruments: Presentation), the entity
shall not accept such dividends as responsibility at the end of
the reporting period.

3.2.3 Recognition
i) An entity shall change the sums recognised in its financial
statements after the reporting period to reflect adjustment
events.
ii) An entity shall not change the sums recognised in its financial
statements during the reporting period to reflect non-adjusting
events.
3.2.4 Disclosure
In completing their Financial Statements, the company shall disclose :
i) The date when the financial statements were authorised for
issue and who gave that authorisation. Furthermore, they also
shall disclose the fact if the owner or others have the authority
to amend the financial statements after it has been issued.
ii) The company shall update disclosures if they receive
information after the reporting period about conditions that
existed at the end of the reporting period.

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 iii) The company shall disclose all the non-adjusting events after
the reporting period that are material and could influence the
economy decision made by the users make on the basis of the
financial statements. In line to that, the company shall state the
nature of the event and an estimate of its financial effect, or a
statement that such an estimate cannot be made.

3.2.5 Application & Compliance to MFRS

a) Fraser & Neave Berhad

F&N Berhad recognise the expected credit loss after

considering all the possible possibilities. They consider a credit
risk as a credit loss after 12 months it is reported.

b) Spritzer Berhad

Spritzer Berhad also implemented that credit loss will recorder

if the expected credit past 12 months period of collection. It will
be counted starting from the date incurred.

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 3.3 MFRS 137 : Provisions, Contingent Liabilities, and Contingent Assets
3.3.1 Scope
Scope for this MFRS 137 is being applied by all entities in accounting
for provision, contingent liabilities, and contingent assets. There is
also the exception in this standard. The exception is this MFRS does
not apply in the executory contracts unless it is onerous, that deleted
by International Accounting Standard Board (IASB), and those that is
covered in another Malaysia Financial Reporting Standard (MFRS)
137.

This standard also does not apply in the financial instruments that is in
the scope of MFRS 9 including the guarantee. The word provision in
this standard is a liability of uncertain timing or amount. For the
contingent liabilities, it is defined as a potential liability that the
existence will be verified by the unpredict future events that are not
under control of the company. The contingent assets were same as
the contingent liabilities that it is the potential assets that the existence
will be verified by the occurrence or the non-occurrence of the
unpredictable future event that under control of the company.

3.3.2 Measurement
i) Best estimates
 The amount recognised as a requirement is the best
estimation of the cost expected at the close of the reporting
period for the resolution of the present duty. The
performance and financial impact assessments are
calculated by the entity's management decision, augmented
by knowledge with comparable transactions and in some
cases, by reports from outside consultants.
ii) Risks and uncertainties
 In reaching the best estimation of a provision, the risks and
uncertainties which inevitably entail several events and
circumstances would be considered. Risk defines result
uncertainty. The level at which a liability is assessed can be
improved by a risk change

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 iii) Future event
 Future occurrences which will impact the amount needed to
settle the duty shall be expressed in the amount of the
clause, providing that there is ample empirical proof of the
occurrence of such events. In calculating provisions,
predicted future occurrences may be especially relevant.
 For example, believe that the cost of cleaning up a site at
the end of its life will be reduced by future technology
changes.

3.3.3 Recognition
i) A provision shall be recognised when as a consequence of a
past event an entity has a current (legal or constructive)
responsibility.
ii) It is possible that it would require an outflow of capital
embodying economic benefits to settle the obligation and the
amount of the responsibility can be calculated in a consistent
way.
iii) An entity shall not recognise a contingent liability and
contingent asset.
3.3.4 Disclosure
In completing their Financial Statements, the company shall disclose
for every class of provision :
i) The carrying amount at the beginning and end of the period.
ii) Additional provisions made in the period, including increases to
existing provisions.
iii) A brief description of the nature of the contingent liability
contingent liability at the end of the reporting period, if the
possibility of any outflow in settlement is remote,
iv) A brief description of the nature of the contingent assets at the
end of the reporting period, and, where practicable, an
estimate of their financial effect, measured using the principles
set out for provisions in paragraphs 36–52, where an inflow of
economic benefits is probable.

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 3.3.5 Application & Compliance to MFRS
a) Fraser & Neave Berhad

The application is that they recognised the provision for the

result of the past event and for the expected future cash flows
at a pre tax rate that reflects market assessment of the time
value of money.

b) Spritzer Berhad

The application is that they recognised the provision as a

present obligation and result as a past event and they use best
estimates of the consideration required to settle the present
obligation at the end of the reporting period.

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 APPENDIX

1. FNHB Annual Report 2019 (Part 2).pdf

2. SPRITZER_Annual Report 2019 Part 3.pdf

MFRS 102
3. file:///C:/Users/madnorfitri/Documents/FSA/MFRS/BV2018_MFRS%20102.pdf
MFRS 110
4. file:///C:/Users/madnorfitri/Documents/FSA/MFRS/BV2018_MFRS%20110.pdf
MFRS 137
5. file:///C:/Users/madnorfitri/Documents/FSA/MFRS/BV2018_MFRS%20137.pdf

APPLICATION
FRASER AND NEAVE HOLDING BERHAD

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 SPRITZER BERHAD

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