FINANCIAL ACCOUNTING AND REPORTING 1 (AAC 20203)

ASSIGNMENT 2

PROGRAM OUTCOME:

PLO 3 Perform technical skills based on sound financial knowledge in providing basic
accounting and finance-related solutions;

COURSE OUTCOME

CLO 2 Account for cash, receivables, inventories, property, plant and equipment,
intangibles, investments, current and non-current liabilities, provisions, contingencies, share
capital and reserves in accordance with Malaysian Financial Reporting Standards (MFRS).
.

INSTRUCTIONS
 This is pairing assignment.
 Answer all questions and show all workings.
 Dateline for assignment submission is on (10/6/2023) WEDNESDAY

ASSIGNMENT FORMAT

 Total questions: 1
 Total marks: 50
 The assignment shall be handwritten
 Save the answers into 1 pdf document.
 Upload pdf document in Google Classroom.
QUESTION 1 – INITIAL MEASUREMENT, DEPRECIATION, DISPOSAL

Royce Enterprise is a business that involves in trading business of raw

materials for flavored cookies. The balances below were extracted from Royce
Enterprise books as at 1 June 2021.

Non-Current Assets Cost Accumulated

(RM) Depreciation (RM)
Machineries 98,650 23,650
Motor Vehicles 475,800 120,500

For the year ended 31 May 2022, the business provides the following
information:

One of the machineries acquired on 1 August 2018 that cost RM28,500 was
traded in for a new machinery on 1 March 2022. The purchase price of the
new machinery is RM9,800 excluding installation cost of RM800, dismantling
and restoring cost RM 400 and fire insurance RM 300. It was agreed that the
trade in value was RM5,000 and the remaining balance remain unpaid.
balance -
6000

One of the motor vehicles involves in an accident and suffer total damaged.
As such this motor vehicle is to be disposed on 1 February 2022. Insurance
settlement received was RM26,200. The motor vehicles were acquired on 1
March 2017 at RM45,500.

Depreciation policy:
 15% depreciation is to be charged on cost for all the machineries owned
by the business on straight line basis per annum, monthly basis.
 Motor vehicles are to be depreciated 20% on carrying value per annum,
monthly basis.

You are required to prepare the following for the year ended 31 May
2022: (Note: Show all relevant workings).

(a) Calculate the initial cost of new Machinery.

(3 marks)
(b) Journal entries for the year ended 2022.
(10 marks)
(c) Accounts for each of non-current assets.
(4 marks)
(d) Accumulated depreciation accounts for each of the non-current assets.
 (3 marks)
(e) Disposal account for each of asset disposed.
(5 marks)

QUESTION 2 - REVALUATION

Rolls Rocher Bhd has two pieces of land and building was revalued every
year.

The detailed information of the land for the year ended 31 May 2020,2021 and
2022 were as follows:

Carrying Revaluation as at end of year

Amount
31 May 2020 2021 2022
2019
RM RM
80000
+
-
RM
100000 20000
+
RM
Land High 500,000 580,000 480,000 500,000
Land Low 400,000 360,000 430,000 Sold
40K 70K
+

RM500K by cheque
-

The detailed information of the building for the year ended 31 May 2021 and
2022 were as follows:

Cost Cost as at the end of year

1 March 2021 2022
RM RM
Building High 850,000 +

140,000 990,000
1 April 2021 2022
Building Low 650,000 -

Additional information:

(i) The company adopts the revaluation model in the accounts.

(ii) The Building High’s and Building Low’s remaining useful life were 30
and 60 years.

(iii) The company used straight line method and monthly basis to account
for the buildings.

(iv) On 31 May 2022, Land Low was sold for RM500,000. The payment was
made by cheque on the same day.
You are required to prepare:

(a) Journal entries to record the above land revaluations. (narrations are
not required).
(10 marks)

(b) Journal entries to record all transactions related to buildings for the year
ended 31 May 2021 and 31 May 2022. (narrations are not required,
show all workings)
(5 marks)

(c) Extract Statement of Profit or Loss and Other Comprehensive Income

for the year ended 31 May 2020, 2021 and 2022.
(10 marks)
QUESTION 2. Land how

31/5/2019 Land how 400,000

8CAND HIGH

(2019) Bank 4
00,000
9) 31 may 2019, record purchase of land

31 500,000 31/5/2020 SOCI-Loss Revaluation 40,000

May 2019 Land High on

Bank 500,000 Land Low 40,000

② Record increase in revaluation (2020) 31/5/2021 (and how 70,000

31 May 2020 Land High 80,000 RR 4 0,000

RR 80,000 SOCI-Gain on revaluation 30,000

③ Record decrease (2021) 31/5/2022 Bank 500,000

31 2021 RR 00,000 Gain on disposal 70,000

May

SOCI-Loss 20,000 Land LOW 430,000

on revaluation

Land High 100,000

④Record increase (2022) BUILDINGLOU

31 May 2022 20,000 114/2021 Building Low 650,000

Land High

RR 20,000 Bank 650,000

2021

850K depr=(650,000/60) x2112:1806

↑cost
BUILDINGHIGH -
useful life 30 y 2022 10,833
=

1/3/2021 Building High 850,000 31/5/2021 Depr 1806

Bank 850,000 AD 1806

850K/30y:20,333 31/5/2022 Depr 10833

Depreciation 2021 -

monthly basis
* march -may:20,333x3112:7083 AD 10833

Depreciation 2022
-
28,333 31/5/2022 Bank 637361

Record depreciation
*
Building for 637,361

31/5/2021 Depreciation 7083 c) SOC 2020 SOCI 2022

AC2. Depr 7083 EXPENSE OTHER INCOME

31/512022 Depreciation 28,333 Loss on Revaluation (Land Low) 40,000 gain on disposal -

Land Low 70k

Acc. DePU 28,333 SOCI 2021 EXPENSE

To
*
record increase in value of Building High OTHER INCOME Depr-Building High 28,333

find fair 850,000 -

7003-28,333:814,584 Gain revaluation (Land (ow) 30,000

-

Building LOW 10,833

value on
=

increase in value:175,416 EXPENSE

31/5/2022 Building High 175,416 Loss on revaluation (Land High) 20,000

RR 175,416 Depreciation -

Building High 7083

1806
-

Building 100
QUESTIONI c) motorvehicles

9) cost of new machinery disposal

*

of old vehicle

purchase price + installation cost

dismantling
+

& restoration Bank -

insurance settlement 26,300
SOCI-
9800 800 400 loss disposal 19,300
=
+
+
on -
MV

RM 11,000
=
motor vehicle 45,500

b) machineries *
depreciation of old my

trade in old machine

*
2017

1/3/2022 Bank 5,000 (45,500 20%) x 3112:2,275

x

SOCI -

Loss on disposal 23,500 2018

43225
machinery 28500 (45,500 2275)x20%:8645
-

purchase
* new machine 2019

34580
11312022 machinery 11,000 (43225 -
8645)x20%:6916

Bank 5,000 2020

27664
Acc. payable 6,000 (34,580 -
6916(x20%:5533

depreciation for old machine

* 2021

22,131
(28,500 x 15%) x3/12 1,069
:

(27664 -

55337x20%:4426

depreciation
* for new machine 2022

17,705
(11,000 x 15%) x 9/12:1,238 (22,131 -

4426) x20%) 9112:2656 x

depreciation for remaining machine

*
depreciation of remaining
*
mu

fair value of MU disposed

((98650 (475800
~

- 28,500) 15%) 10,523

x =
-
17705) -
120,500) x20%:67,519

Depr for year 2022, machine Depr of

MV for year 2022:70,175

1069 + 1238 10523:RM12,830

+

31/5/2022 Depreciation 70,175

31/5/2022 Depr-machine 12,830 Acc. depreciation 70,175

Acc.depr-machine 12,830 d) ACC. DEPR MACHINE

ACC

C MACHINERY ACCOUNT Balance c/d 36480 Balance bid 23,650

balance bld 98650 bank 5,000 Depreciation 12,830

Bank 5,000 Loss 23,500 36480 36480

on disposal

ACC. payable 6,000 balance (/d 81,150 ACC DEPR-MU

109,650 109,650 balance (Id 190,675balancebld 120,500

ACCOUNT
MOTOR VEHICLE Depreciation 70,175

balance bld 475,000 bank -

insurance settlement 26,200 190,675 190,675

Loss on disposal 19,300

balance e/d 430,300

475,800 475,808
d) MACHINE DISPOSAL ACL mU DISPOSAL ACCOUNT

machine 28,500 Bank 5,000 MV 48500B9nK26,200

Loss on disposal 23,500 Loss ondisp 19300

28500
28,500 48500 48500