CONFIDENTIAL 1 AC/FEB 2022/FAR210

UNIVERSITI TEKNOLOGI MARA

SAMPLE-FINAL ASSESSMENT

COURSE : FINANCIAL ACCOUNTING 3

COURSE CODE : FAR210
EXAMINATION :
TIME : 3 HOURS

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of five (5) questions.

2. Answer ALL questions in the Answer Booklet. Start each answer on a new page.

3. Answer ALL questions in English.

4. Please check to make sure that this examination pack consists of:

i) the Question Paper

ii) an Answer Booklet – provided by the Faculty

5. Please submit the Answer online.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

This examination paper consists of 8 printed pages
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QUESTION 1

Munawwarah Bhd has involved in business since 2010. Given below is the company’s Trial
Balance as at 31 December 2021:

Debit (RM) Credit (RM)

Ordinary share capital as at 1 January 2021 6,450,000
Retained profit as at 1 January 2021 1,077,000
5% Bank loan 450,000
Sales 12,420,000
Rental income 96,000
Investment income 75,600
Accounts payables 610,000
Accounts receivable 1,250,000
Inventories (at cost) as at 31 December 2021 479,000
Cash and bank 557,800
Freehold land at cost 4,353,000
Buildings at cost 2,500,000
Plant and machinery at cost 1,450,000
Motor vehicles at cost 730,100
Investment 1,960,000
Accumulated depreciation as at 1 January 2021:
- Buildings 480,000
- Plant and machinery 436,000
- Motor vehicles 330,400
Cost of sales 7,664,000
Administrative expenses 247,000
Distribution expenses 123,100
Director’s remuneration 105,000
Auditors’ fee 31,000
Interest paid on bank loan 15,000
Tax paid 960,000
22,425,000 22,425,000

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Additional information:

1. Land is not depreciated. Other property, plant and equipment are depreciated on yearly
basis as follows:

Building: 5% on cost
Plant and machinery: 10% on carrying value
Motor Vehicle: 20% on carrying value

Depreciation expense is classified as an administrative expense. However, depreciation

on motor vehicles is treated as a distribution cost.

2. The following transactions are related to property, plant & equipment:

i. On 5 December 2021, a new machinery was acquired at RM80,000 by cash. This

transaction has not been recorded in company’s book.
ii. On 31 December 2021, the freehold land was revalued to RM5,000,000 and the
directors decided to incorporate this amount into the accounts for the year.

3. The following provisions are to be made for:

i. A 3% bonus share was declared by the company’s directors on the 30 December

2021 based on the ordinary share held at the beginning of the year. This share
was not entitled for any dividend during the year.
ii. Directors also declared the final dividend of 2% on the ordinary share held at the
beginning of the year.
iii. Directors’ remuneration outstanding of RM25,000.

4. The bank loan was secured from Bank Islam Malaysia Berhad on 5 January 2021.

5. Net realisable value of the closing inventories at year end was RM429,000 while the
taxation expense for the year was estimated at RM998,300.

6. On 30 December 2021 RM100,000 was transferred to General reserves.

Required:

a. In accordance with the requirements of the Companies Act 2016, MFRS 101
Presentation of Financial Statements and other relevant Malaysian Financial Reporting
Standards:

i. Prepare the Statement of Profit or Loss and Other Comprehensive Income for the
year ended 31 December 2021.
(8 marks)

ii. Present the Statement of Changes in Equity for the year ended 31 December
2021.
(5 marks)

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iii. Determine the Statement of Financial Position as at 31 December 2021.

(7 marks)

b. Prepare a note on the property, plant and equipment.

(5 marks)
(Total: 25 marks)

QUESTION 2

Warisan Alam Berhad is a property development company for houses and apartments around
Jengka, Pahang. On 1 January 2020, in fulfilling the increasing market demand, Warisan Alam
Berhad constructed a building to be used as the company’s office and marketing outlet. The
construction of the office and marketing outlet building was completed and ready for its
intended use on 3 March 2021. The building is estimated to be used for 20 years. The
contractor’s costs were RM1,140,000. Warisan Alam also incurred the following costs in the
construction of the building:

Costs RM
Direct materials 138,000
Painting, decoration and advertising 12,000
Outlet launching ceremony 45,000
Direct labour used in construction 94,500
Installation of building security system 25,000
Professional fee for building’s environmental, health & safety 35,000
Engineering & technical overheads 22,500
Interest costs incurred to finance the construction 15,500
General overheads 4,000

A labour strike had caused a cost inefficiency of RM4,500 related to direct labour and a direct
materials wastage of RM8,000. Warisan Alam Berhad also has to pay annual property tax and
license of RM2,500 for the constructed office and marketing outlet building.

The company also has a warehouse building which was purchased on 1 July 2019 at
RM1,375,000. On 1 January 2021, the board of directors decided to revalue the warehouse
building. A professional valuer was hired and estimated the fair value of the warehouse
building on 1 January 2021 of RM1,500,000. The board of directors decided to incorporate the
new value of the warehouse building in the company’s books of accounts.

During 2021, Warisan Alam Berhad experienced a significant declining in market demand. To
meet its working capital requirements, the board of directors decided to sell a piece of the
company’s land in Maran, Pahang for RM1,450,000 on 31 December 2021. The land was
bought by Warisan Alam Berhad ten years ago. On 1 January 2021, the land was revalued to
RM1,200,000 with a revaluation surplus of RM500,000 by an independent professional valuer.

The company depreciates all its building at the rate of 5% per annum on cost, yearly basis.
The financial year end of Warisan Alam Berhad is on the 31 December each year.

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Required:

a. Explain briefly whether the constructed office and marketing outlet building satisfies the
definition of an asset of Warisan Alam Berhad.
(3 marks)

b. Explain briefly whether the constructed office and marketing outlet building satisfies the
definition of property, plant and equipment in accordance with MFRS 116 Property, Plant
and Equipment.
(4 marks)

c. Find the initial cost of the constructed office and marketing outlet building as at 3 March
2021.
(5 marks)

d. Calculate the total revenue expenditure for the constructed office and marketing outlet
building that will be charged as an expense in the Statement of Profit & Loss for the
financial year ended 31 December 2021.
(3 marks)

e. Recommend the accounting treatment on the revaluation of the warehouse building on

1 January 2021.
(5 marks)

f. Recommend the accounting treatment on the disposal of the land on 31 December 2021.
(5 marks)
(Total: 25 marks)

QUESTION 3

CareNot Manufacturing & Trading is a wholesaler of muslimah apparels in Kuantan. The

company closes its account on 31 December every year. On 1 October 2021, CareNot
Manufacturing & Trading sold goods worth RM6,000 to MyRatu Boutique with credit term of
2/5, net 30.

On 1 November 2021, MyRatu Boutique declared that the business was unable to pay the
debt as promised. As a result, CareNot Manufacturing & Trading accepted from MyRatu
Boutique a RM6,000, 12% 45-days note in exchange on 1 November 2021.

Required:

a. List THREE (3) factors that might influence a customer’s credit term.
(3 marks)

b. Present the journal entry in the books of CareNot Manufacturing & Trading, for the
transaction on 1 November 2021.
(2 marks)

c. Determine the maturity date AND maturity value of the note receivable (Use 360 days a
year).
(5 marks)
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d. CareNot Manufacturing & Trading produced the following ageing analysis of receivables
as at 31 December 2021:

No. of days past due Amount outstanding Expected credit loss rate (%)
0 days past due RM460,000 2%
1 – 30 days RM295,000 4%
31 – 90 days RM160,000 8%
Over 90 days RM5,000 100%

CareNot Manufacturing & Trading estimated its expected credit loss rate based on its
historical credit loss experience and adjusted for forward-looking estimates. The
allowance for impairment of trade receivables as at 1 January 2021 was RM50,000.

Required:

Determine the amount of impairment of trade receivables to be recognized in CareNot

Manufacturing & Trading’s Statement of Profit or Loss AND the net realizable of
receivables to be disclosed in the Statement of Financial Position as at 31 December
2021.
(5 marks)
(Total: 15 marks)

QUESTION 4

Segamat Sport Berhad (SSB) trades indoor and outdoor sports equipment around Southern
Malaysia. The following information relates to SSB’s TWO (2) groups of sports equipment
which remained unsold as at 31 December 2021:

Total Total
Non-
Carriage units units Net
Purchase refundable
Group inwards purcased sold realisable
price/unit purchase
(total) during during value/unit
tax/unit
the year the year
Sportex
5% of
(Outdoor
RM120 RM4,500 purchase 450 410 RM138
Sport
price
Equipments)
Champz
5% of
(Indoor
RM80 RM3,500 purchase 700 650 RM75
Sport
price
Equipments)

Additional information:

1. Shipping term for Sportex is FOB shipping point while Champz is FOB destination.

2. Both Sportex and Champz have no opening inventories.

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Required:

a. State whether Sportex and Champz are items of inventories for Segamat Sport Berhad
in accordance to MFRS102 Inventories.
(2 marks)

b. List any TWO (2) examples of costs that should be excluded from the cost of inventories
and recognised as expenses in the period in which they are incurred.
(2 marks)

c. Compute the value of inventories for both Sportex and Champz as at 31 December 2021
for Segamat Sport Berhad by applying the group of similar items valuation.
(6 marks)
(Total: 10 marks)

QUESTION 5

Below are relevant extracts from Pitzer Bhd’s financial statements for the financial year ended
31 December 2020 and 31 December 2021:

2020 (RM) 2021 (RM)

ASSETS:
Freehold land 386,000 477,000
Plant and machinery at cost 182,000 212,000
Inventories 44,000 52,000
Bank 13,000 55,000
Tax recoverable 6,000 -
Fixed deposits 20,000 27,000
Account receivables 86,400 97,200
737,400 920,200

LIABILITIES & EQUITIES

Ordinary Share Capital 264,000 364,000
General reserve 112,420 112,420
Retained earnings 36,400 135,280
5% Bank loan 169,400 135,400
Bank overdraft 13,400 7,600
Account payables 69,780 62,340
Tax payable - 9,960
Accumulated depreciation of Plant & Machinery 72,000 93,200
737,400 920,200

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Additional information:

1. The profit before tax for the year ended 31 December 2021 was RM213,640.

2. Fixed deposits were qualified as Cash & Cash Equivalent.

3. During the year, the following transactions incurred for property, plant & equipment:

i. There was a purchase of freehold land & plant and machinery during the year
ii. A piece of land costing RM100,000 had been sold for RM200,000

4. There is a repayment of bank loan of at the end of the year.

5. Dividend for the year has been fully paid.

6. Tax expense for the year was RM57,360.

Required:

a. Prepare the Statement of Cash Flows for the year ended 31 December 2021 for Pitzer
Bhd using the INDIRECT METHOD in accordance with MFRS107.
(20 marks)

b. Cash flows are inflows and outflows of cash and cash equivalents. Discuss TWO (2)
benefits of cash flow information to Pitzer Bhd.
(5 marks)
(Total: 25 marks)

END OF QUESTION PAPER

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