BBM206/05 Business Accounting II Jan 2015 Tutor-marked Assignment 1 Answer ALL questions.

1. The following trial balance was prepared by your friend.

RM'000 RM'000

Capital - 1 May 2013 230

Drawings 14

Plant at cost 83

Accumulated depreciation - plant 13

Office equipment at cost 33

Accumulated depreciation - Office equipment 8

Receivables 198

Payables 52

Sales 813

Purchases 516

Returns inwards 47

Discount allowed 4

Allowances for receivables 23

Administration costs 38

Salaries 44

Research cost to be written off 26

Loan to Kah Wan 25

Bank Overdraft 50

Bad Debts Written Off 77

Inventories - 1 May 2013 84

1,189 1,189

Additional information:

Inventories as at 30 April 2014 was valued at RM74,000.

Depreciation on plant is charged at 10% per annum on cost while

depreciation on office equipment is charged at 20% per annum on the

net book value at year-end. Administration costs included prepaid insurance of RM3,000. Salaries accrued is RM2,000. It is agreed that the allowance for doubtful debts remain at RM23,000.

1

Required

Prepare

a) the statement of comprehensive income for the year ended 30 April 2014

[9 marks] b) statement of financial position as at 30 April 2014

[11 marks] 2. Paragraph 57 of MFRS 138: Intangible Assets mentions that expenditures that incur

at development phase can be treated as intangible assets if they fulfil the certain following criteria.

Describe the criteria.

[10 marks]

3. MFRS 6 Exploration for and Evaluation of Mineral Resources and MFRS

141 Agriculture are two standards that deal with natural resources. a) Define “natural resources” as prescribed in the accounting standards.

[5 marks] b) Define “depletion” as prescribed in the accounting standards.

[5 marks]

4. MFRS 116 requires that all depreciable assets should be depreciated and that all

plant assets, except for „freehold land‟, are subject to depreciation.

(a) Identify the two commonly held assumptions concerning depreciation which are

false.

[6 marks]

(b) Justify why the assumptions identified in 1(a) above are false.

[4 marks]

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5. Perniagaan Miley Aguilera had the following balances in the books at 30 June 2013.

Debit Credit

RM000 RM000

Motor vehicles at cost 200

Motor vehicles accumulated depreciation 1 July 2012 70

Fixtures at cost 60

Fixtures accumulated depreciation 1 July 2012 20

Office equipment at cost 125

Office equipment accumulated depreciation 1 July 2012 45

The following adjustments have not yet been made in the books:

Motor vehicles are depreciated over four years on the straight line basis. On 31 march 2013 a motor vehicle that had cost RM20,000 on 1 July 2010 was disposed of for RM8,000. It is the company‟s policy to charge a full year‟s depreciation in the year of the purchase, and hence none in the year of disposal. No entries have been made for the disposal.

Fixtures are depreciated on the straight line basis over 10 years on an actual time basis (i.e. from the date of acquisition). On 1 October 2012 fixtures were purchased for RM40,000 whcih have not been entered in the books.

Office equipment is depreciated at 20% per annum on the reducing balance basis.

Required

Prepare ledger accounts for all the above items, showing clearly all calculation, transfers to the Statement of Comprehensive Income for the year ending 30 June 2013, and balance to be carried down at 30 June 2013.

[25 marks]

6. Air Batu Campur Shd Bhd prepares financial statements to 31 December each year. On 1 January it had the following balances on its non-current assets accounts:

RM

Motor cycles (cost) 15,000

Plant and equipment (cost) 24,000

Motor cycles (accumulated depreciation) 9,000

Plant and equipment (accumulated depreciation) 10,500

3

During the year to 31 December 2013 the following took place

Purchased a new machine on 1 February at a cost of RM7,500

Installed office equipment at a costs of RM11,500 Sold equipment on 1 April for RM2,000. The equipment was previously

purchased on 1 January 2009 for RM5,600. Sold a motor cycle on 31 July for RM3,400 that had been purchased on 1

August 2010 for RM9,400 including RM100 road tax paid to Road Transport Department and RM300 insurance to Etika Berhad for two years

Purchased a motor cycle on 1 August for RM10,000 including RM500 delivery, RM100 annual road tax and RM400 extended warranty against mechanical defects for 36 months.

Carried out major repairs to some equipment on 1 October costing RM15,000. This included a new motor costing RM5,000 which increased the efficiency of the equipment by 200%.

The depreciation policy is that the company charges a full year‟s depreciation on non-current assets held at the end of each year using the following methods and rates:

Motor cycles 25% p.a. reducing balance

Plant and equipment 20% p.a. straight line Required: Prepare the T accounts for the following accounts in the ledger of Air Batu Campur Shd Bhd for the year ended 31 December 2013.

a) Motor cycles (cost) [2 marks]

b) Motor cycle expenses

[2 marks] c) Plant and equipment (cost)

[3 marks] d) Repairs and maintenance

[1 mark] e) Motor cycles (accumulated depreciation)

[5 marks] f) Plant and equipment (accumulated depreciation)

[4 marks] g) Plant and equipment (disposal)

[4 marks] h) Motor cycles (disposal)

[4 marks]

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