FAR510 JULY 2021

Suggested solution

PART C

QUESTION 1

Statement of profit and loss and other comprehensive income

for the year ended 30 June 2020
RM’000
Revenue 158,920
Cost of sales (74,860)
Gross profit 84,060
Distribution expenses (4,460)
Administrative expenses (13,149)
Finance expenses (3,840)
Gain on fair value investment property 840
Surplus revaluation building 1,000

Profit before tax 64,451

Income tax expense (5,180)
Profit after tax 59,271

Other comprehensive income:

- Deficit on revaluation of land (500)
- Surplus on revaluation of building 5,739 (OF)
Total comprehensive income 64,510

EPS : 59,271 (OF) / 60,000 = 0.99

Workings:
Cost of sales Dist exp Admin exp Finance
exp
RM’000 RM’000 RM’000 RM’000
As per trial 43,780 4,460 8,560 3,680
balance
Impairment loss 4,000
Depreciation of 589 (OF)
building
Depreciation of 20,480
plant (19,680 +
800)
Depreciation of 10,600
plant classified as
ncahfs
Interest expense - 160
right of use asset

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 FAR510 JULY 2021
74,860 4,460 13,149 3,840

16

Statement of changes in equity for the year ended 30 June 2020

Ordinary Retained
shares earnings ARR
RM’000 RM’000 RM’000
Balance as at 1 July 2019 60,000 6,380 12,700
Deficit revaluation land (500)
Surplus revaluation building 5,739
Current year profit 59,271
Balance as at 30 June 2020 60,000 65,651 17,939
6

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 FAR510 JULY 2021

Statement of financial position as at 30 June 2020

Non-current assets RM’000

Property, plant and equipment 79,170
Investment property 29,500
Intangible assets (18,800 + 4,500) 23,300
Right of use asset (4,000 - 800) 3,200

Currents assets
Inventory 4,300
Trade receivables 7,860
Tax recoverable (800 + 5,720 - 5,180) 1,340
Bank (10,900 - 4,500 - 900) 5,500

Non-Current Assets Held For Sale # 49,000

203,170
Equity
Share capital 60,000
Retained earnings 65,651
Other reserves 17,939

Non-current liabilities
10% Debentures 31,660
Lease liability 2,490.4

Current liabilities
Trade payables 24,660
Lease liability 769.6

203,170

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 FAR510 JULY 2021

Notes on PPE
Land Buildings Plant and Total
Machinery
Cost valuation RM’000 RM’000 RM’000 RM’000
As at 1 July 2019 13,400 28,400 204,400
Deficit on revaluation (500)
Surplus on revaluation 6,739 (OF)
Eliminate - disposal plant (106,000)
Elimination AD (4,849) (OF)

Bal c d 12,900 30,290 98,400

Acc Depreciation
As at 1 July 2019 - 4,260 85,140
Elimination (53,000)
106,000 5 x 2.5 yrs
Elimination (4,849) (OF)
Current depreciation: - 589 (OF)
Building 28,400 – 4,260
41
Current depreciation: 19,680
Plant & Machinery
Depreciation of plant 10,600
classified as ncahfs

Bal c d - - 62,420
Carrying amount 12,900 30,290 35,980 79,170
14

(60 x ½ = 30 marks)

Non-Current Assets Held For Sale

Cost RM106,000
Acc Dep (RM53,000)
Carrying value RM 53,000
Fair value (50,000 – 1,000) RM49,000
Impairment loss RM4,000

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 FAR510 JULY 2021
Workings for item No.5:
Annual payment: RM900,000
5 terms of contract
Present value lease liability (given) RM4,000,000

Year end Opening Interest Payment Closing

balance balance
30 6 20 4,000,000 160,000 (900,000) 3,260,000
30 6 21 3,260,000 130,400 (900,000) 2,490,400
30 6 22 2,490,400 99,616 (900,000) 1,690,016

Dr Depreciation 800,000
Cr Acc depreciation 800,000

Rental payment

Dr Lease liability 740,000

Dr Interest expense 160,000
Cr Cash 900,000

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 FAR510 JULY 2021

QUESTION 2

Megah Holding Bhd

Statement of Cash Flows for the year ended 30 June 2020

Cash flows from operating activities: RM’000 RM’000

Profit before tax (3,300 + 1,100) 4,400
+ - Adjustments for:
Finance cost 92
Depreciation 400
Fair value loss on IP 6
Impairment loss on reclassification to held for 90
sale
4,988
Changes in working capital:
Increase in inventory (660)
Increase in trade receivables (170)
Increase in trade payables 195
Cash generated from operations 4,353
Interest paid (42)
Tax paid (1,005)
Net cash flow from operating activities 3,306

Cash flows from investing activities:

Purchase of PPE (1,416)
Purchase of investment property (920)
Net cash from investing activities (2,336)

Cash flows from financing activities:

Proceeds from issue of shares 2,500
Payment to lease creditor (122)
Proceeds from long-term loan 120
Payment of dividend (400)
Net cash flow from financing activities 2,098

Net increase in Cash and Cash Equivalents 3,068

Cash and Cash Equivalents at beginning of (76
period 1)
Cash and Cash Equivalents at end of period 2,307

(20 marks)

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 FAR510 JULY 2021

Workings:

Cash and cash equivalent:

2020 (RM’000) 2019 (RM’000)
Bank 2,165 -
Short term investment 142 -
Overdraft - (761)
2,307 (761)

Interest Payable
Bank 42 Balance b d 130
Balance c d 180 P&L – finance cost 92

Taxation
Bank 1,005 Balance b d - DT 200
Balance c d - DT 280 - CT 115
- CT 130 P&L 1,100

Ordinary Share Capital

Balance c d 7,800 Balance b d 5,040
Equipment 260
Bank 2,500

Retained earnings
Bank (Dividend paid) 400 Balance b d 2,500
Balance c d 5,400 PAT 3,300
PBT Add 1,100

Or

Retained earnings
Bank (Dividend paid) 400 Balance b d 2,500
Balance c d 5,400 Transfer from ARR 280
PAT 3,020
PBT Add 1,100

Asset Revaluation Reserve

Deficit 280 Balance b d 1,008
Balance c d 1,548 Surplus 820

Or if student recognized deficit at sopl

Asset Revaluation Reserve

Transfer to RE 280 Balance b d 1,008
Balance c d 1,548 Surplus 820

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 FAR510 JULY 2021
PPE
Balance b d 8,000 Depreciation 400
OSC 260 Deficit 280
Reclassified from IP 634 Reclassified to NCAHFS 450
ARR - Land 820 Balance c d 10,000
Bank 1,416

Lease creditor
Bank 122 Balance b d - CL 96
Balance c d - NCL 504 - NCL 600
- CL 70

Investment property
Balance b d 800 Reclassified - PPE 634
Bank 920 SOPL - loss 6
Balance c d 1,080

Profit After Tax (PAT) 3,300 (bal c / d – bal b / d + dividend)

+ Tax 1,100
Profit Before Tax (PBT) 4,400