1. The accountant of BBB faces the issue of deciding how to present accounting information in BBB's financial statements, such as whether to report asset costs or values, and whether to report business segments separately or combined.
2. To resolve this, the accountant can follow accounting standards to determine the appropriate presentation of information in the financial statements.
3. If the director's request to suppress disclosure of the lawsuit is followed, it would violate the fundamental quality of transparency by omitting relevant financial information from the statements.
1. The accountant of BBB faces the issue of deciding how to present accounting information in BBB's financial statements, such as whether to report asset costs or values, and whether to report business segments separately or combined.
2. To resolve this, the accountant can follow accounting standards to determine the appropriate presentation of information in the financial statements.
3. If the director's request to suppress disclosure of the lawsuit is followed, it would violate the fundamental quality of transparency by omitting relevant financial information from the statements.
1. The accountant of BBB faces the issue of deciding how to present accounting information in BBB's financial statements, such as whether to report asset costs or values, and whether to report business segments separately or combined.
2. To resolve this, the accountant can follow accounting standards to determine the appropriate presentation of information in the financial statements.
3. If the director's request to suppress disclosure of the lawsuit is followed, it would violate the fundamental quality of transparency by omitting relevant financial information from the statements.
1. The accountant of BBB faces the issue of deciding how to present accounting information in BBB's financial statements, such as whether to report asset costs or values, and whether to report business segments separately or combined.
2. To resolve this, the accountant can follow accounting standards to determine the appropriate presentation of information in the financial statements.
3. If the director's request to suppress disclosure of the lawsuit is followed, it would violate the fundamental quality of transparency by omitting relevant financial information from the statements.
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BKAR1013 FINANCIAL ACCOUNTING AND REPORTING I (A212)
COMPREHENSIVE CASE 1: CONCEPTUAL FRAMEWORK FOR FINANCIAL REPORTING, RECORDING PROCESS AND PRESENTATION OF FINANCIAL STATEMENTS
DUE DATE: 10 MAY 2022
Guidelines for submission:
1) The comprehensive case is a group work. Please answer all questions.
2) Please write the details of all group members - name, matric number, class group on the front page and page number on the bottom of your answer document.
3) Two groups will present each case (based on lecturer’s allocation). The presentation would be held after submission.
4) Your answer should be TYPED and subsequently scanned with a scanner or mobile scanner apps in a combined PDF file. The scanned document must be clear, easily readable and complete. Photo is not allowed.
5) Submit your scanned answer via Online Learning portal → within
the allotted time and period, before 12.00 mid night, 10 MAY 2022 (MYT). Only one submission per group will be accepted.
1 COMPREHENSIVE CASE OF BUMI BERSAMA BHD (BBB)
Bumi Bersama Bhd (BBB) is principally engaged in the cultivation of oil palm, civil engineering, construction works, and property development. BBB just recently listed on the main board of Bursa Malaysia. As a public listed company, BBB should strictly follow the requirements of presenting the accounting information. The accountant of BBB, En. Yasin should decide on the accounting information that should be presented in its financial statement. For example, should BBB provide information on how much it costs to acquire its assets, or how much the assets are currently worth? Should BBB combine all the activities and show as one segment, or should it report all the activities as a separate segment?
En. Yasin also in a state of agitation on the requested by one of the executive directors. He asked En. Yasin to suppress the information about the lawsuit that has been filed towards the company. His argument was captured as below.
“For a newly listed company, this kind of disclosure is damaging to the company and should be hidden. Besides, the chances for BBB to win the case was relatively high”. Director X
BBB also acquired a new subsidiary, Antanah Bhd (AB). This new subsidiary just operated for one year, and since then, AB outsourced the company’s account. Thus, for consolidation purpose, the great challenges for BBB after taking over AB are to scrutinize the accounting method used and to adjust the subsidiary company’s year-end to make it similar to BBB’s accounting year-end which is on 31 December. However, the account of AB has to be closed first as the company’s year-end is approaching, which is on 31 October.
Below is the unadjusted trial balance of AB for the 12-month fiscal year ended 31 October 2021:
Debit (RM) Credit (RM)
Cash 12,000 Accounts receivable 3,600 Prepaid insurance 0 Supplies 2,500 Land 15,000 Building 60,000 Furniture 3,000 Equipment 20,000 Accumulated depreciation – building 0 Accumulated depreciation – equipment 0 Accumulated depreciation – furniture 0 Accounts payable 4,400 Salaries payable 0 Interest payable 0 Unearned commissions revenue 1,200 Unearned subscriptions revenue 800 Bank loan – long term 47,600 Share capital 52,100 Retained earnings 0 Income summary 0
Additional information: (i) The company’s insurance coverage is provided by a single comprehensive 12-month policy that began on 1 May 2021. (ii) Supplies on hand on 31 October 2021 total RM2,850. (iii) The estimated useful life for building, furniture and equipment were 50 years, 10 years and 20 years, respectively. (iv) Interest of RM208 on the bank loan of October were paid on 1 November 2021, when the regular RM350 payment was made. (v) A review of the unadjusted balance in the unearned commissions revenue account indicates the unearned balance should be RM450. (vi) A review of the unadjusted balance in the subscription revenue account revealed that RM2,000 has not been earned. (vii) Salaries that have been earned by employees in October but are not due to be paid to them until the next pay day in November amounted to RM325.
3 QUESTIONS: 1. In the first paragraph, identify the issue that is facing by the accountant of BBB? (CTPS) 2. Based on the issue identified, how does the accountant of BBB could resolve it? (CTPS) 3. For the law suit case facing by BBB, identify which fundamental quality and ingredient of a fundamental quality that was violated if En. Yasin follows the director’s request? 4. "The lawsuit against the company should be disclosed". Do you agree or disagree? Discuss. (CTPS) 5. How will the prudence concept help to explain the lawsuit issue? 6. Why the accounting year-end of parent and subsidiary companies should be matched? Explain based on any appropriate concept of the qualitative characteristic of accounting information. 7. As a resut of the took over AB by BBB, the responsibility of preparing the accounting information was also taken over by En. Yasin department. Thus, he instructed his staff to complete the following task for AB: a. Prepare all necessary adjusting journal entries on 31 October 2021. b. Prepare a statement of profit or loss and other comprehensive income for the year ended 31 October 2021. c. Prepare a statement of financial position as at 31 October 2021.
-END OF QUESTIONS-
4 Critical Thinking and Problem Solving (CTPS) Rubric Semester Session : __________________________________________________ Course Name ( Course Code) : __________________________________________________ Lecture group : Student Name (Matric No) : __________________________________________________ Task description :___________________________________________________
CONTENT (Critical Thinking and Problem Solving)
Traits Poor Fair Good Excellent Score (0-3) (4-6) (7-9) (10-12) 1 Problem Identification Unable to identify Able to identify issue/problem Independently able to Independently able to issue/problem even with with minimum assistance. identify issue/problem with identify issue/problem very assistance. clarity. clearly and accurately. 2 Problem Analysis Unable to analyze Able to analyze issue/ Able to analyze issue/problem Able to analyze issue/problem issue/problem and fail to problem but does not clearly and clearly describe some of and clearly describe all the define the contributing factors. describe the contributing the contributing factors. contributing factors. x2 factors. 3 Conceptualization and Unable to generate any new Able to generate new ideas Able to generate new ideas Able to generate new ideas Generation of solutions ideas and/or offer alternative and/or provide alternative and/or provide alternative and/or provide alternative x2 solutions. solutions with some solutions without assistance. solutions with accuracy, assistance. clarity and detailed.
4 Evaluation Unable to evaluate Able to evaluate several Able to evaluate several Able to evaluate several appropriate alternative alternative solutions with alternative solutions with alternative solutions clearly solutions. some reasonable assistance. minimum assistance. and accurately without assistance.
5 Decision making Unable to make decision Able to make decision based Able to make good decision Able to make excellent based on identified ideas and on identified ideas and based on identified ideas and decision based on identified solutions even with assistance. solutions with some solutions with minimum ideas and solutions without assistance. assistance. assistance.
TOTAL SCORE Lecturer’s Name: ___________________________________________________ Date: _________________________________
