SS CT DEC 2021

QUESTION 1

A.

i.

1. Capitalised

2. Expense off

3. Capitalised

4. Capitalised

5. Expense off

ii. Initial cost of new machinery on 1 July 2021

RM

Purchase price after discount of 2% 1,715,000

Delivery insurance on shipment 18,000

Overtime payment to 4 engineers for installing the machine at the production facility 40,000

Present value of dismantling cost 37,300

Testing cost 12,100

___________

Initial costs 1,822,400

____________

B.

i. Carrying amount of the machinery at 30 June 2021

RM
Initial cost as at 1 July 2017 1,600,000
(-) Accumulated depreciation (560,000)
(1,600,000/10 years x 3.5 years)
Carrying amount as at 1 January 2021 1,040,000
(-) Carrying value of old component (64,000)
(+) Cost of new component 130,000
Carrying amount after the replacement as at 1 January 2021 1,106,000
(-) Depreciation (69,125)
(1,106,000/8 years x 0.5 year)
Carrying amount as at 30 June 2021 1,036,875

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ii.

RM RM
1 Jan 2021 Dr Machinery 130,000
Cr Cash/Bank 130,000

Dr Accumulated depreciation 31,000

(95,000-64,000)
Dr SOPL-Loss on disposal 64,000
Cr Machinery 95,000

30 June 2021 Dr SOPL – Depreciation 69,125

Cr Acc. Depreciation 69,125

C.

i. Surplus or deficit on revaluation of building on 1 July 2020

RM
Carrying amount of building at 30 June 2020 26,600,000
FV at 1 July 2020 23,800,000
Deficit on revaluation (2,800,000)

ii. Carrying amount building as at 30 June 2021

RM
FV at 1 July 2020 23,800,000
(-) Accumulated depreciation (850,000)
(23,800,000/28 years)
CA at 30 June 2021 22,950,000

iii. Journal entries

RM RM
1 July 2020 Dr Land 500,000
Cr Asset revaluation reserve- Land 500,000

Dr Accumulated depreciation- Building 8,400,000

Dr SOPL-deficit on revaluation 2,800,000
Cr Building 11,200,000

30 June 2021 Dr Asset revaluation reserve –Deficit 150,000

on land (10,350k-10,500k)
Cr Land 150,000

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 Dr SOPL-Depreciation – Building 850,000
Cr Accumulated depreciation 850,000

Dr Accumulated depreciation 850,000

Cr Building 850,000

Dr Building 50,000
Cr SOPL – Surplus on revaluation of building 50,000
(23,000-22,950)

D.

Cost/valuation Office Equipment Plant and machinery

Balance at 1 July 2020 200,000 400,000
Disposal cost (400,000)
Balance at 30 June 2021 200,000 0

Accumulated depreciation
Balance at 1 July 2020 (200,000x20%x 3 years) (400,000x 10%x 3 years)
120,000 120,000
Charge for the year 40,000 (40k x 0.5) 20,000
Disposal accumulated depreciation (140,000)
Balance at 30 June 2021 160,000 0

Carrying amount 40,000 0

Accumulated impairment loss

Balance at 1 July 2020 0 0
Charge for the year w1 4,000 0
Balance at 30 June 2021 4,000 0

Carrying amount 36,000 0

Working 1:

Impairment loss of office equipment

RM
Initial cost as at 1 July 2017 200,000
(-) Accumulated depreciation (200,000 x 20% x 4 years) (160,000)
Carrying amount as at 30 June 2021 40,000

(-) Higher off VIU (RM36,000) and FV-CTS (RM25,000) = RA

Recoverable amount (36,000)
Impairment loss 4,000

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QUESTION 2

A.

i. Investment property

ii. Investment property

iii. Not an Investment property

iv. Not an Investment property

v. Not an Investment property

B. a.

Date Dr(RM) Cr(RM)

1 July 2019 Investment Property 5,300,000
Bank√ (30% x RM5,300,000) 1,590,000
Payable- One Borneo 3,710,000
Management Sdn Bhd

30 June 2020 Fair value loss of investment 300,000

property (SOPL)
Investment Property 300,000

30 June 2021 Investment property 500,000

Fair value gain on investment 500,000
property (SOPL)

b.
➢ The transfer of investment property to property, plant and equipment on 1 July 2021 is
because of there is a change of use from rented out property to owner occupied property.
➢ The accounting treatment in accordance with MFRS140 Investment Property is to measure
the owner-occupied property at its deemed cost of fair value RM4,580,000 on the date of
transfer on 1 July 2021.
➢ RM595,000 [4,580,000-(4,000,000-15,000)] being the difference of fair value at the date of
transfer and prior year fair value is recognised as gain in fair value of investment property in
the statement of profit or loss.
➢ The shop lot shall then be depreciated over its remaining useful life of 32 years (35 years-3
years).

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