CONFIDENTIAL

UNIVERSITI KUALA LUMPUR BUSINESS SCHOOL

MID TERM EXAMINATION

OCTOBER 2023 SEMESTER

SUBJECT CODE : EAB 30703

SUBJECT TITLE : FINANCIAL ACCOUNTING AND REPORTING 4

LEVEL : BACHELOR

TIME / DURATION : 2 HOURS

DATE :

INSTRUCTIONS TO CANDIDATES

1. Please read the instructions given in the question paper CAREFULLY.

2. This question paper consists of THREE (3) questions.

3. Answer ALL questions.

4. Please write your answers on your own paper.

THERE ARE FOUR (4) PAGES OF QUESTIONS, EXCLUDING THIS PAGE.

 CONFIDENTIAL
(Total: 50 marks)
Question 1:

Identify the concept that is best described in each of the items below:

Timely Prudence
Consistency Accrual
Verifiable
Materiality Going concern
Comparable

1. Kekanda Bhd continues in business, and the owner measures the assets at its cost.

2. Prego provides for all specific doubtful debts when finalizing its annual financial
statements.

3. The economic activities of TDP Bhd. are divided into 12-month periods for the purpose
of issuing annual reports.

4. MIMI Bhd. measures all its inventories using the average method since it began
operations.

5. Sales transactions recorded by Jalal Bhd are supported by sales invoices.

(10 marks)

EAB 30703_Financial Accounting and Reporting 4 1

 CONFIDENTIAL
Question 2

On 1 March 2023 ABC Bhd. acquired a machine from XYZ under the following terms:

RM’000
List price of machine 4,500
Import duty 1,300
Delivery fees 50
Electrical installation costs 145
Pre-production testing 5
Purchase of a five-year maintenance contract 60
with Ally (paid in full upon purchase)

In addition, the above information ABC Bhd. was granted a trade discount of 10% on the
initial list price of the asset and a settlement discount of 5% if payment for the machine was
received within one month of purchase. ABC Bhd. paid for the plant on 25 March 2023. The
machine is used in the manufacturing of ABC Bhd. goods.

Required:

i. Identify and list the relevant MFRS.

(2 marks)
ii. Briefly explain how should the above be accounted for initial recognition.
Determine the amount to be capitalized at 1 March 2023.
(10 marks)

iii. Briefly explain why some of the items mentioned above are not capitalized and explain
how they should be recognized instead.
(4 marks)

iv. ABC Bhd depreciates all its machines on straight line basis. It was estimated that the
asset has an estimated useful life of 5 years and a residual value of RM50,000.
Calculate the depreciation for the machine for the year ending 2023.
(4 marks)

[20 marks]

EAB 30703_Financial Accounting and Reporting 4 2

 CONFIDENTIAL
Question 3

On 1 January 2022, Hillpark Bhd purchased a landed property at a cost of RM4,870,000.

The building is rented out to a tenant. Hillpark Bhd also incurs the following costs in
connection with the purchase of the property:

RM
Legal fees and stamp duty 178,500
Feng Shui cost for re-arrangements of interiors 25,800
Real estate agency fees 240,500

The property is classified as investment property and accounted for under the fair value
model. On 31 December of 2022, the market value of the investment property is
RM5,850,000. At 31 November 2023, the property was sold to the existing tenant for a
consideration of RM6,070,000.

Required:

i. Identify and list the relevant MFRS.

(2 marks)
ii. Determine the cost of the investment property on initial recognition.
(4 marks)
iii. Briefly explain why certain of the item(s) mentioned above are not capitalized and
explain how they should be recognised instead.
(3 marks)
iv. Calculate the gain or loss on disposal and show the journal entry for the disposal.
(11 marks)

[20 marks]

END OF QUESTION PAPER

EAB 30703_Financial Accounting and Reporting 4 3