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Solution FAR270 APRIL 2022
Solution FAR270 APRIL 2022
Solution FAR270 APRIL 2022
QUESTION 1
A.
1. Capitalised √
2. Capitalised √
3. Capitalised √
4. Expense off √
5. Expense off √
(5√ x 1 mark = 5 marks)
RM
Computer 7,000√
Custom made software 3,500√
Installation and testing 700√
Transportation cost 200√
Initial costs 11,400√
(5√ x 1 mark = 5 marks)
B.
i. Carrying amount of the machinery at 30 June 2021
RM
Initial cost as at 1 July 2016 2,700,000
(-) Accumulated depreciation (1,350,000)
RM RM
1 July 2021 Dr Machinery 500,000√
Cr Cash/Bank 500,000√
Dr Accumulated depreciation
150,000√
(300,000 x 10%x 5)
Dr SOPL-Loss 150,000√
Cr Machinery 300,000
(4√ x 1 = 4 marks)
CONFIDENTIAL 4 AC/TEST APR 2022/FAR270
C.
i. Surplus or deficit building
RM
Carrying amount of building at 1 January 2020 19,330,000√
Accumulated depreciation 1,380,714√√
((19,330,000 / 28) x 2)
Carrying amount at 31 December 2021 17,949,286
FV at 31 December 2021 22,000,000√
Surplus on revaluation 4,050,714
(4√ x ½ mark = 2 marks)
RM R
M
31 Dec 2021 Dr Land√ 2,200,000√
Cr Asset revaluation reserve- Land√ 2,000,000
SOPL√ 200,000
Dr Building √ 4,050,714√
Cr Asset revaluation reserve- 4,050,714
Building√
D.
Cost/valuation Land Building Motor
vehicle
Balance at 1 January 2021 1,000,000 3,000,000 -
Addition 150,000√
Disposal (1,000,000) √ (1,200,000)√
Balance at 31 December 0 1,800,000 150,000
2021
Accumulated depreciation
Balance at 1 January 2021 750,000
-
Charge for the year (62.5 + 52.5) 115,000 √√ ((150 – 15) / 10)
13,500√√
Disposal (300 +25) (325,000)√√
Balance at 31 December - 540,000 13,500
2021
QUESTION 2
A.
i. Non-investment Property√
ii. Non-investment Property√ Bonus mark
iii. Investment Property√
iv. Investment Property√
v. Non-investment Property√
(5√ x 1 mark=5 marks)
B.
a.
LongTong Bhd
Statement of Profit or Loss (extract) for the year ended 31 December 2021
Other income
Fair Value Gain of Investment Property 2,000,000√
Expenses
Depreciation Property, Plant and Equipment 250,000√
(RM10,000,000/20 years X 6/12)
Equity
Asset Revaluation Reserve √ 2,250,000√
(RM12,000,000-[RM10,000,000-RM250,000])
(5√ X 1 mark=5 marks)
b. Explain the accounting treatment in relation to the above as at 1 July 2021 and as at
31 December 2021.
On 1 July 2021, the building will be classified as MFRS116 building as there was a change in 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 RM 10,000,000√ on the date of transfer. RM2,000,000√ (RM10,000,000-
RM8,000,000) 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
building is then depreciated over the remaining useful life of 20 years. The depreciation of the
building for the year ended 31 December 2021 is RM250,000√ (RM10,000,000/20 x 6/12).