ABFA 3134 Financial Accounting Framework

Past Year Answers

Exam Date: 18 Dec 2020

Question 1(A)
(a)
Debit Credit
Date Descriptions RM RM
2020
Aug 1 Fixed deposits 150,000
Bank 150,000
(Placement of fixed deposit)
2020
Nov 30 Interest receivables (RM150,000 x 4% x 4/12) 2,000
Interest received 2,000
(Interest earned for the year ended 30 November 2020 for fixed deposit
placed on 1 August 2020)
2020
Nov 30 Interest received 2,000
Profit or loss 2,000
(Closing of interest received for the year ended 30 November 2020 to
profit or loss)

(b)
Canggih Enterprise
Statement of profit or loss for the year ended 30 November 2020 (extract)
RM
Other income
Interest received 2,000

Canggih Enterprise
Statement of financial postion as at 30 November 2020 (extract)
RM
Currrent assets
Interest receivable 2,000
Question 1(B)
Delux Bhd
Statement of changes in equity for the year ended 30 September 2020
Ordinary Preference
Revaluation
General Retained
shares shares reserve reserve earnings Total
RM'000 RM'000RM'000 RM'000 RM'000 RM'000
Bal as at 1 Oct 2019 8,500 4,000 - 448 778 13,726
Profit for the year 1,320 1,320
Right issuance 1,760 1,760
Revaluation (7,100 - 6,750) 350 350
Interim dividend (320) (320)
Final ordinary dividend (384) (384)
Final preference dividend (240) (240)
To general reserve (1/3 x 1,320) 440 (440) -
Bal as at 30 Sep 2020 10,260 4,000 350 888 714 16,212

Right issues = 1/5 x 8,000,000 x RM1.10

= 1,600,000 x RM1.10 = RM1,760,000

Final ordinary dividend = RM0.04 x (8,000,000 + 1,600,000)

= RM384,000

Final preference dividend = 6% x RM4,000,000

= RM240,000

Non-current assets schedule

Freehold Motor
land Premises vehicles Total
RM'000RM'000 RM'000 RM'000
Cost/Valuation
As at 1 Oct 2019 6,750 ### 1,250 13,800
Revaluation 350 - - 350
As at 30 Sep 2020 7,100 ### 1,250 14,150

Accumulated depreciation
As at 1 Oct 2019 - 464 320 784
Charge for the year - 116 80 196
As at 30 Sep 2020 - 580 400 980
Net book value
As at 1 Oct 2019 6,750 ### 930 13,016
As at 30 Sep 2020 7,100 ### 850 13,170

Depreciation for premises Depreciation of motor vehicles

= RM5,800k/50 years = RM116k = (RM1,250k - RM50k)/15 years = RM80k
Question 2(A)
(a) Net realisable value the estimated selling price in the ordinary course of business less the
estimated costs of completion & the estimated costs necessary to make the sale.

(b) Work in progress - In the process of production for such sale.

(c) Weighted average method - It assumes inventories are stored together and it may be impossible
impractical to identify them separately. All items going in and out of the store are combined and an
average price for the items would be determined

Question 2(B)
Permanent differences are item that are included in the computation of accounting profit but are
excluded in the computation of taxable profit at all times.
Permanent differences do not give rise to deferred taxation.
For example, donations to unapproved charities and penalty and fines.

Question 2(C)
(i) Identifiability
It is separable, capable of being separated or removed from the entity and sold, licensed, entered
or exchanged, either individually or together with a related contract, asset or liability.

(ii) Control over the resource

The power to obtain future economic benefits flowing from the underlying resource and restrict
others from having access to those benefits.

(iii) Existence of Future Economic Benefits

Arise from the sale of products or services, cost savings (reduction in expenditure) or renting of
the assets.
Question 3(A)
URP on unsold inventory = 1/6 x (RM360,000 - RM300,000) = RM10,000
Profit attributable to NCI = 25% x RM1,200k = RM300k

Faith Bhd Group

Consolidated statement of profit or loss for the year ended 31 December 2020
RM'000
Revenue (7,500 + 4,500 - interco sales 360) 11,640
Cost of sales (3,500 + 1,800 - interco purchases 360 + URP 10) (4,950)
Gross profit 6,690
Expenses (1,950 + 1,150) (3,100)
Operating profit before tax 3,590
Dividends from quoated investments (350 + 100) 450
Dividends from Trust (150 - 150) -
Profit before tax 4,040
Taxation (980 + 450) (1,430)
Profit for the year 2,610

Profit for the year attributable to:

Owners of the parent (2,610 - 300) 2,310
Non-controlling interest 300
2,610

Question 3(B)

Debit Credit
Date Descriptions RM RM
2017
Oct 1 Plant - Cost 750,000
Bank 750,000
(Purchased of plant)
2018
Sep 30 Depreciation (750,000 / 10 years) 75,000
Plant - Accumulated depreciation 75,000
(Depreciation for 2018)
2018
Sep 30 Plant - Accumulated depreciation (75,000 x 1 year) 75,000
Plant - Cost/Valuation 75,000
(Elimination of accumulated depreciation upon revaluation)
2018
Sep 30 Plant - Cost/Valuation 45,000
Plant - Revaluation reserve/surplus 45,000
(Revaluation surplus at 30 Sep 2018)
(FV: 720k vx Carrying amount: 750k - 75k)
2019
Sep 30 Depreciation (720,000 / 9 years) 80,000
Plant - Accumulated depreciation 80,000
(Depreciation for 2019)
2019
Sep 30 Plant - Revaluation reserve/surplus (45,000/9) 5,000
Retained earnings 5,000
(Transfer to retained earnings when asset in used)
2020
Sep 30 Depreciation (720,000 / 9 years) 80,000
Plant - Accumulated depreciation 80,000
(Depreciation for 2020)
2020
Sep 30 Plant - Revaluation reserve/surplus (45,000/9) 5,000
Retained earnings 5,000
(Transfer to retained earnings when asset in used)
2020
Sep 30 Plant - Revaluation reserve/surplus 20,000
Plant - Accumulated impairment loss 20,000
(Impairment loss reversed from revaluation reserve)

(b)
As at 30 Sep 2020
Carrying amount (before impairment) RM RM
Revalued amount @ 30 Sep 2018 720,000
Subsequent accumulated depreciation (80,000 x 2) (160,000)
560,000
Recoverable amount
FVLCOD 540,000
VIU 500,000
Higher of FVLCOD and VIU 540,000
Impairment loss 20,000

(c)
Revaluation reserve balances RM
As at 30 Sep 2018 45,000
Annual transfer to retained earnings (5,000 x 2) (10,000)
Reversal due to impairment loss (20,000)
As at 30 Sep 2020 15,000
Question 4(A)
(a) Provision:
All provisions are contingent liabilities as there is uncertainty about the timing & amount.
IAS 37 permits provisions to be recognised as liabilities.
As there are present obligations and the outflow of resources embodying economic benefits to
settle the obligation is probable.

Contingent liabilities: not recognised as liabilities as

they are possible obligations that are yet to confirm
or they are present obligations that do not meet the recognition criteria.

(b) (i)
There is a present obligation on the warranty cost as a result of past event, namely the sale of
products with warranties given,
An outflow of resources embodying economic benefits in settlement probable for the
warranties as a whole.
A provision is recognized for the best estimate of the electrical appliances under the warranty.

(ii)
There is a present obligation on the tree replanting costs as a result of past event, namely the
practice of replanting the tress after logged.
It is probable that an outflow of resources embodying economic benefits in settlement.
A provision is recognised for the costs of replanting the trees.

Question 4(B)
(a)
This is a non-adjusting event as it indicative of condition (decline in investment value)
arose after the reporting period. The nature and the estimated financial effets of the event should
be disclosed in the financial statements of the reporting period.

(b)
This is a non-adjusting event as it indicative of condition (increase in ordinary shares)
arose after the reporting period. The nature and the estimated financial effets of the event should
be disclosed in the financial statements of the reporting period.

(c)
This is a non-adjusting event as it indicative of condition (obligation on dividends)
arose after the reporting period. The nature and the estimated financial effets of the event should
be disclosed in the financial statements of the reporting period.

(d)
This is an adjusting event as it provide evidence of condition (incentive) existed at the
end of reporting period. RM9'm = RM180'm x 5% is to be recognised as expenses and increased
to the carrying amount of the accruals in the financial statements of the reporting period.
(e)
This is an adjusting event as it provide evidence of condition (NRV below costs) existed at the
end of reporting period. RM20,000 = RM100,000 - RM80,000 is to be recognised as expenses
and deducted from the carrying amount of the inventories in the financial statements of the
reporting period.

Question 5
Parent's controlling percentage Non-controlling percentage
102,000,000 / 120,000,000 x 100 = 85% = 100% - 85% = 15%

Goodwill on consolidation
RM'000 RM'000
Investment in subsidiary 120,000
Non-controlling interest (15% x 965) 19,920
139,920
Less: Net assets acquired
Ordinary shares 120,000
General reserves 7,300
Retained earnings 5,500 (132,800)
Goodwill on acquisition 7,120
Less: Impairment loss (20% x 7,120) (1,424)
5,696

Consolidated Retained Earnings on consolidation

RM'000 RM'000
Parent's balance 304,250
Less: URP on unsold inventory (2/3 x 6,000 x 25/125) (800)
303,450
Add: Share on post-acquisition
Subsi's balance 9,000
Less: Pre-acquisition (5,500)
Post-acquisition 3,500
85% holding 2,975
306,425
Less: Impairment loss (1,424)
305,001

Consolidated General Reserves on consolidation

RM'000 RM'000
Parent's balance 248,250
Add: Share on post-acquisition
Subsi's balance 10,000
Less: Pre-acquisition (7,300)
Post-acquisition 2,700
85% holding 2,295
250,545
Non-controlling interest on consolidation
RM'000 RM'000
Subsidiary's equity
Ordinary shares 120,000
General reserves 10,000
Retained earnings 9,000
139,000
15% holding 20,850

Aman Bhd Group

Consolidated Statement of Financial Position as at 30 Septembere 2020
RM'000
Non-current assets
Property, plant and equipment (665,000 + 123,400) 788,400
Other investment (180,000 + 20,000) 200,000
Goodwill 5,696
994,096
Current assets
Inventories (146,500 + 31,000 - URP 800) 176,700
Amount owing by subsidiary (48,000 - 48,000) -
Trade and other receivables (328,000 + 15,900) 343,900
Bank (170,000 + 17,000 + CIT 5,500) 192,500
713,100
Total Assets 1,707,196

Equity
Ordinary shares 900,000
Retained earnings 305,001
General reserves 250,545
1,455,546
Non-controlling interest 20,850
1,476,396
Current liabilities
Trade & other payables (205,000 + 25,800) 230,800
Amount owing to holding (42,500 - 42,500) -
230,800

Total equity and liabilities 1,707,196

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