BKAR 3063 SPECIALISED FINANCIAL ACCOUNTING

CHAPTER 1: ACCOUNTING FOR AGRICULTURE

Extra exercise

Farm Fresh Bhd began a business to grow deer at Bukit Tinggi on 1 January 2022. On 1
March 2022, the company purchased 40 deer at cost of RM250 each by cash. The deer aged 3
years old on the day it was purchased. The company plan to sell the deer when they reach 5
years old.

The market price of a 3-years old deer from an active market on 31 December 2022 was
RM350 each meanwhile the cost to sell all deer is estimated to be RM50 each. Other
operating cost incurred to manage and feed the deer amounted to RM3,000 during year 2022.

The company applied for a grant from the government to buy a machine to feed the deer. On
1 April 2023, the company successfully received a conditional grant from the Ministry of
Agriculture amounting to RM20,000 to buy the machine. The company utilized the grant to
buy the said machine on 1 May 2023.

Farm Fresh Bhd accounting year ends every 31 December each year.

REQUIRED:

(a) Prepare the journal entries for the above transactions during year 2022.

(b) Prepare an extract of statement of profit and loss and statement of financial position for
the year ended 31 December 2022.

(c) Prepare the journal entries to record the government grant.