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Tutorial Revision W13 Qs

Aneka Bhd needs to address several issues in preparing its financial statements for the year ended 31 December 2022: (1) One customer was declared bankrupt after owing RM15,000. This amount should be written off as a bad debt. (2) The company decided to recognize its brand name as an internally generated intangible asset valued at RM5 million. (3) A worker is claiming RM500,000 in damages from a work injury. Legal advice suggests settling for RM200,000-350,000 depending on the injury's permanence.

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16 views1 page

Tutorial Revision W13 Qs

Aneka Bhd needs to address several issues in preparing its financial statements for the year ended 31 December 2022: (1) One customer was declared bankrupt after owing RM15,000. This amount should be written off as a bad debt. (2) The company decided to recognize its brand name as an internally generated intangible asset valued at RM5 million. (3) A worker is claiming RM500,000 in damages from a work injury. Legal advice suggests settling for RM200,000-350,000 depending on the injury's permanence.

Uploaded by

Lim XinYi
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Question: Chapter Prov, Contingent, IA

Aneka Bhd’s financial year end is 31 December 2022. Below are some of the
problems related to the financial information of the company that require management
attention when recognising the transactions in the accounting books:

(i) On 20 February 2023, before the financial statements were authorised for
issue, it was found that one of Aneka Bhd’s long term customers, Mr. Evans,
was still owing the company RM15,000 at 31 December 2022, had been
declared bankrupt. Mr Evans has disclosed his financial state to Aneka Bhd a
week before the company’s financial statements were authorised for issue.
(6 marks)

(ii) Over the years, Aneka Bhd has successfully developed its brand name and this
has resulted in increase in sales. It has been decided by all of the directors to
recognise its internally generated brand as an intangible asset in the financial
statements as at 31 December 2022. The brand is estimated at RM5 million.
(6 marks)

(iii) During the year, Aneka Bhd received a claim for RM500,000 from one of its
workers, Steffanie. Steffanie is now paralysed due to a stroke attack after she
was forced to worked exceeding 20 hours per day without a break. In the
opinion of Aneka Bhd’s legal advisor, the company would have to settle the
claim between RM200,000 to RM350,000, depending on whether the paralysis
is temporary or permanent. The medical opinion is that there is a 30% chance
that the paralysis will be permanent. (6 marks)

(iv) A claim for losses incurred by a customer has been filed towards Aneka Bhd
for its defective product. The customer has claimed near to RM75,000 to the
company. According to the company’s lawyers, from their legal opinion the
claim will succeed, but Aneka Bhd will be able to reclaim 50% of the amount
from Evergreen Bhd, who supplied the malfunctioned product. (6 marks)

(v) One of Aneka Bhd’s product which was recently launched in the market has
suffered some bad publicity. Due to the infections caused by bacteria, several
customers of Aneka Bhd claimed that the product has harmed their health
conditions. The customers filed a court case in December 2022 claiming
damages of RM500,000. Aneka Bhd’s lawyer advised the company that the
most probable outcome is that the company will have to pay the customers
RM370,000. (6 marks)

Required:

Advise Aneka Bhd’s management on the appropriate decision to recognise all


of the financial transactions in the company’s accounting books. Support your
answers by referring to the relevant MFRS Standards.
[Total: 30 marks]

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