SOLUTION 1

a.
DDN Bhd
Statement of Profit or Loss and Other Comprehensive Income
for the year ended 31 December 2021
RM
Revenue (310,000,000+(80% x800,000) 310,640,000
Cost of sales (210,000,000+600,000) (210,600,000)
Gross Profit 100,040,000
Administrative expenses (w1)
Selling and distribution expenses
Other operating expenses- Damage costs
Profit from operation 7,347,350
Finance costs (w1) (900,000)
Investment income
Fair value loss on investment property (43.6m-43m) (600,000)
Profit before tax 6,347,350
Taxation (5m-1.14m) (3,860,000)
Profit for the year 2,487,350
Other comprehensive income
Surplus on revaluation land (69m-68.7m) 300,000
Total comprehensive income for the year 2,787,350

Administrative Finance Selling and

W1 expense cost distribution
RM RM RM
8,300,000
as per trial balance 80,700,000 450,000
Auditors’ fees
Accrued interest on bank loan [(6%x 15
m) - 450k] 450,000
Depreciation on building
(52M/40 years) 1,300,000
Depreciation on plant and machinery
(26.7M-14.21M) /8 years 1,561,250
Retail commission (1% x 640,000) 6,400
Total 83,586,250 900,000 8,306,400

b.
DDN Bhd
Statement of Changes in Equity for the year ended 31 December 2021
General Retained
OSC PSC ARR reserve earnings

Balance b/d 110M 20M 16,300,000 4,210,000 23,090,000

Profit for the year 2,487,350

Surplus on revaluation
of land 300,000
Deficit on revaluation of
building (w) (8,700,000)
Realisation of surplus

(6,500,000/40 years) (162,500) 162,500

Dividend (1,900,000)

Balance c/d 110M 20M 7,737,500 4,210,000 23,839,850

(w)
FV=42M
CA= 52M – 1.3M = 50.7M
Deficit = 8,700,000

c.
DDN Bhd
Statement of Financial Position as at 31 December 2021

Non-current assets Note RM RM

Property, plant and equipment i 121,928,750
Investment property (43.6-0.6) 43,000,000
Investments 6,000,000
170,928,750
Current Assets
Inventories (2,400,000-600,000) 1,800,000
Accounts receivable (6,800,000+640,000) 7,440,000
Bank 8,210,000
Tax recoverable (5m-3.86m) 1,140,000 18,590,000
189,518,750

Equity
Share capital 130,000,000
Reserves 35,787,350 165,787,350

Non-current liabilities
6% Bank loan 15,000,000
CONFIDENTIAL 4 AC/FEB 2023/FAR270

Current liabilities
Accounts payable 7,450,000
Provision for damages 800,000
Accrued audit fees 25,000
Accrued retail commission 6,400
Accrued interest on loan 450,000 8,731,400
189,518,750

d. i.
Notes to the account

Plant and
Cost/ fair value Land Building machinery Total
Balance as at 1 Jan 2021 68,700,000 52,000,000 26,700,000

Surplus on revaluation of land 300,000

Deficit on revaluation of building (8,700,000)of

Elimination of accumulated depreciation (1,300,000)

Balance as at 31 Dec 2021 69,000,000 42,000,000 26,700,000

Accumulated depreciation
Balance as at 1 Jan 2021 - 14,210,000

Charge for the year 1,300,000of 1,561,250of

Elimination of accumulated depreciation (1,300,000)

Balance as at 31 Dec 2021 - 15,771,250

Carrying amount 69,000,000 42,000,000 10,928,750 121,928,750

ii. Contingent liabilities

On 15 January 2022, part of company’s building was damaged by earthquake. The loss was
estimated at RM150,000.

SOLUTION 2

A. (i) Investment property

(iv) Investment property
B. (i)

1 July 2020 RM
Dr Investment Property - Building 8,500,000
Cr MyBank Finance 8,500,000

30 June 2021
Dr Investment property-Building 1,950,000
Cr Gain on fair value - SOPL 1,950,000
(10,450,000 -8,500,000)

(ii) On 1 July 2020, Air Force Bhd should recognize the 10-storey building according to its
uses. This is because the building can be sold separately. Therefore, according to MFRS
140 Investment Property, the portion rented out is recognised as Investment property
and another portion occupied by the owner as Property, Plant and Equipment under
MFRS 116. The 7-storey building recognised as Investment Property shall be recorded
at its fair value of RM8,500,000. A gain in fair value amounting to
RM1,950,000(10,450,000 - 8,500,000) is charged to SOPL. The 3-storey building
recognized as Property, plant and equipment shall initially be recorded at
RM2,000,000. The depreciation charged for the year was RM40,000 (RM2,000,000/50
years).

C. On 1 July 2020, there is a transfer from Property, plant and equipment to Investment
property because of change of use of the shop lot from owner occupied to earning
rentals. On the date of transfer, surplus on revaluation amounting to
RM1,200,000(RM4,200,000-RM3,000,000) is recognized in Asset Revaluation Reserve.
The deemed cost of shop lot as Investment property using the fair value of RM4,200,000.
As the measurement policy of the company for its Investment property is using fair value
model, there is a loss on fair value to be recorded in the SOPL amounting to RM400,000
(RM3,800,000 – RM4,200,000) as at 30 June 2021. No depreciation for IP using FV
model.

SOLUTION 3

A. Indicators of transfer control at a point in time may include; but are not limited to:
• The entity has a present right to payment or the asset;
• The customer has legal title to the asset;
• The entity has transferred physical possession of the asset;
• The customer has significant risks and rewards of ownership of the asset; and
• The customer has accepted the asset.
B.
i. FIVE-STEP MODEL in accordance with MFRS 15 Revenue from Contracts with
Customers.

STEP 1: Identify the contract with the customer

Medevice Bhd signed a contract with a customer, Tapah Specialist Sdn Bhd to sell a package
of medical scanning device on 2 January 2022.

STEP 2: Identify the performance obligations in the contract

There are 3 performance obligations in the contract:
1. Medical Scanning Device + Installation
2. One year Post Customer Care (PCC)
3. 5 days Training

STEP 3: Determine the transaction price

The total transaction price is RM1,200,000

STEP 4: Allocate the transaction price to the performance obligations in the contract

No. Performance Stand-alone Allocated transaction price (RM)

obligations selling price
1 Medical Scanning RM1,140,000 1,140,000/1,300,000x 1,200,000 = 1,052,307.69
Device + Installation
2 1 year Post Customer RM150,000 150,000/1,300,000 x 1,200,000 = 138,461.54
Care (PCC)
(12,500 x 12 months)
3 5 days of Training RM10,000 10,000/1,300,000x 1,200,000 = 9,230.77
(2,000 x 5 days)
RM1,300,000 1,200,000

STEP 5: Recognise the revenue when or as the entity satisfies the performance
obligation
• Revenue from the sale and installation of medical scanning device of
RM1,052,307.69

• Meanwhile, service revenue from the 5 days training of RM9,230.77 will be

recognised at a point in time on 7 January 2022 when the training was completed.
• Revenue from providing the one-year post customer care of RM138,461.54 will be
recognized monthly over time when the services were performed and satisfied.
(20 x ½ = 10 marks)

ii. Journal entries to record the above transaction in the month of January 2022.
Date
4/1/2022 Contract asset 1,052,307.69
Revenue from sale & installation of 1,052,307.69
machine

7/1/2022 Contract asset 9,230.77

Revenue from training service 9,230.77

28/1/2022 Account Receivables 1,073,076.92 1,061,538.46 (of)

Contract asset 11,538.46
Revenue from post
customer care service
(138,461.54/12
months)
(8 x ½ = 4 marks)

C.
The contract arrangement includes 2 separate performance obligations for the following
reasons:
i. The printed hard copies and online access of the story book are both capable of being
distinct because the customer could use separately and benefit from them on their
own .
ii. The printed hard copies of the story book and online access are distinct within the
context of the contract because they are of different formats. Hence, they are not
interdependent and do not significantly customise or interrelated with each other.

SOLUTION 4

A.
The entity shall adjust the opening balance of each affected component of equity for the
earliest prior period presented and the other comparative amounts disclosed for each prior
period presented as if the new accounting policy has always been applied.
B. a. Category:
i. change in
accounting
estimate
ii. prior year error iii.
prior year error

B. b. Journal entries

i. Motor vehicle
Carrying amount (RM15,000- (15,000/8 X 2y) = 11,250
Revised depreciation expense:
RM11,250/3y = RM3,750

Dr SOPL-depreciation RM 3,750
Cr Accumulated depreciation RM3,750

ii. Machinery

Dr Retained earnings RM300,000

Cr PPE (machinery) RM300,000

Dr Accumulated depreciation machine RM60,000

Cr Retained earnings RM30,000
Cr SOPL – over depreciation RM30,000

iii. Write off retained earnings

Depreciation = RM10,000/40 = RM250,000 per year

Dr Investment property (250kx4) RM1,000,000

Cr Retained earnings RM750,000
Cr SOPL – over depreciation RM250,000

Dr Investment property RM1,000,000

Cr SOPL-gain in FV of IP RM1,000,000

B. c. Adjustment of opening retained earnings

Retained earnings as at 1/1/2021 30,000,000
Less Prior year error [machinery] [300,000]
Add Prior year error [accumulated depreciation machinery] 30,000
Add Prior year error [Investment property] 750,000
New retained earnings as at 1/1/2021 30,480,000

SOLUTION 5

A.
Account payable arise from obligation to pay for goods or services supplied to the
entity and the amount and timing are certain while for provision is a liability of
uncertain amount and timing.
Or any relevant answers
B. a. i.
There is
a injured). However, even though it is probable that outflow
reliable cost estimates is yet unknown. Thus, Apocalips Bhd needs to make a
disclosure in the notes to the accounts a contingent liability ii.

- cancellable contract). This is a

probable that outflow will take
place with a reliable
cost estimates of RM500,000.

iii.
legal present

of RM12,000,000 (2,000,000 x 3% x RM200).

b.

i. No journal entry.

ii. Dr Rental expenses RM500,000

Cr provision for rental RM500,000

iii. Dr Warranty RM12,000,000

Cr Provision for Warranty RM12,000,000