CONFIDENTIAL 1 AC/NOV 2022/FAR270

UNIVERSITI TEKNOLOGI MARA

COMMON TEST
ANSWER SCHEME

COURSE : FINANCIAL ACCOUNTING 4

COURSE CODE : FAR270
EXAMINATION : NOVEMBER 2022

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QUESTION 1

A (i) Identify the cost to be capitalized and expense off.

1. Capitalised √
2. Capitalised √
3. Expense Off √
4. Expense Off √
5. Capitalised √
(5 marks)

A (ii) Initial cost of Truck (Cahaya Bhd)

RM
Purchase price less discount (250,000 – 5,000) 245,000√
Delivery and transportation 7,500√
Road tax and insurance 4,800 √
Cost of painting company’s logo 3,000√
Initial cost 260,300√
(5√ X 1 mark = 5 marks)

B (i) Compute the carrying amount of the mixing machine as at 30 June 2022
Ababil Bhd
Cost/ Valuation RM
As at 1 July 2021 270,000√
Less: Accumulated Depreciation
270,000-20,000 X 2 years (100,000)√√
5 years
Carrying amount as at 1 July 2021 170,000
Add: Special component (1 Feb 2022) 80,000√
Balance as at 30 June 2022 250,000

Less: Depreciation charge for the year

Charged for the year
250,000 – 20,000 76,667√√√
(5 – 2) years
Carrying amount as at 30 June 2022 173,333√
(8√ X ½ mark = 4 marks)

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B (ii) Journal entries

1 Feb 2022 Dr Machinery 80,000√

Cr Bank 80,000√

30 June 2022 Dr SOPL - Depreciation 76,667√

Cr Accumulated depreciation 76,667√
(4√ X 1 mark = 4 marks)

C i) Surplus or deficit on revaluation of building

Alfeel Bhd
RM
Cost 70,000,000
Less: Accumulated Depreciation (18,800,000)
Carrying amount as at 30 June 2021 51,200,000√
Fair Value at 1 July 2021 55,000,000√
Surplus on revaluation√ 3,800,000√
(4√ X ½ mark = 2 marks)

ii) Carrying amount of building

RM
Fair Value at 1 July 2021 55,000,000√
Less: Accumulated depreciation (2,115,385)√√
55,000,000 /26 years
Carrying amount as at 30 June 2022 52,884,615√

(4√ X 1 mark = 4 marks)

iii) Journal entries

1 July 2021 Dr SOPL - Deficit√ 300,000
Cr Land 300,000√

Dr Building √ 3,800,000
Cr ARR- Building 3,800,000√

Dr Accumulated depreciation 18,800,000√

Cr Building 18,800,000

30 June 2022 Dr Land 1,300,000√

Cr SOPL - Surplus 300,000√
Cr ARR - Surplus 1,000,000√

Dr SOPL (Depr) – building 2,115,385√

Cr Accumulated depreciation 2,115,385
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Dr Accumulated depreciation 2,115,385√

Cr Building 2,115,385

Dr ARR - Building√ 884,615

Cr Building 884,615√
(12√ X ½ mark = 6 marks)

D. Kirana quest Bhd

2020 2021
RM RM
At cost/valuation
Beginning balance as at 1 Jan 10,200,000 13,800,000
Add: Surplus on revaluation** 4,416,000√
Less: Elimination of AD (816,000) √
Balance as at 31 December 13,800,000 13,800,000

Accumulated Depreciation
Beginning balance as at 1 Jan 816,000 600,000
Charge for the year 600,000√ 600,000√
(13,800,000/23years)
Less: Elimination of AD (816,000)√
Balance as at 31 December 600,000 1,200,000

Accumulated Impairment loss

Beginning balance as at 1 Jan - -
Charge for the year *** - 3,100,000√
Balance as at 31 December - 3,100,000
CA 13,200,000 9,500,000√

Revaluation surplus**
CA = 10,200,000 – 816,000
= RM9,384,000√

Surplus= 13,800,000 – 9,384,000

= RM4,416,000

Impairment***
FVLCTS = 9,000,000
Value in use = 9,500,000

Recoverable amount = the higher between FVLCTS and Value in use

= RM9,500,000√

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CA = 13,800,000 – 1,200,000
= RM12,600,000√

Impairment loss = 12,600,000 – 9,500,000

= RM3,100,000

(10√ X 1/2 mark = 5 marks)

QUESTION 2

A.
i. An owned investment property shall be recognised as an asset when and only when:
a. It is probable that the future economic benefits that are associated with the
investment property will flow to the entity; √
b. The cost of the investment property can be measure reliably. √
(2√ x 1 = 2 marks)

ii.
Floor 1- Floor rented out to tenant should be classified as an investment
property based on MFRS 140 since it is held to earn rentals. √

Floor 2 - Floor occupied by Anas Bhd will be classified as PPE based on MFRS
116 since it is used by the company (owner-occupied). √

Floor3 - Vacant floor and unoccupied should also be classified as an investment

property based on MFRS 140 since it is held for undetermined future use. √

(3√ x 1 = 3 marks)

B.
i. On 1/6/2020, the whole building shall be classified as an investment property
under MFRS140 because the number of floor for rented out is more significant
(14/15) compared to the owner occupied (1/15). √ The building also cannot be
sold separately. √ The asset is initially measured at its cost of RM18,700,000√.
(17m + 0.6m+1.1m)

On 31/12/2020, the difference of RM400,000 (18.7m-18.3m) is recognised as a

fair value loss in the SOPL√. The Investment property should be recognised at
its fair value of RM18,300,000 as at 31/12/2020 in the SOFP.

On 31/12/2021, the difference of RM1,700,000 (20m-18.3m) is recognised as a

fair value gain in the SOPL√. The Investment property should be recognised at
its fair value of RM20,000,000 as at 31/12/2021 in the SOFP.
(5√ x 1 = 5 marks)

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ii.

PSV Bhd
Statement of Profit or Loss and Other Comprehensive Income for the year
ended 31 December (extract)

2020 2021
Other expenses
FV loss on investment property√ (400,000) √
Other income
FV gain on investment property √ 1,700,000√

PSV Bhd
Statement of Financial Position as at 31 December (extract)

Non-current assets 2020 2021

Investment property RM18,300,000 RM20,000,000√

(5√ x 1 = 5 marks)

END OF SUGGESTED SOLUTION

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