Additional information: 1. 2. 3. 4. 5. The company adopts revaluation model for its building. As...

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Additional information: 1. 2. 3. 4. 5. The company adopts revaluation model for its building. As at 1 July 2018, the fair value of the building is RM95 million. On that date, the remaining useful life of the building is 25 years. As at year end, the revaluation amount has not yet recorded. Note: the company follows requirement of MFRS 116 where the company makes annual transfer to retained earnings for any revaluation surplus as the asset is being used and depreciated. Asset revaluation reserve as at 1 July 2018 amounted to RM16 million as stated in the trial balance is related to the revaluation that was done a few years ago on the company's freehold land, located in Sepang. On 30 June 2019, the freehold land was once again revalued to RM160 million. However, the new revalued amount has not yet recorded. On 1 July 2018, the company purchased a new equipment costing RM1,650,000 to replace the old equipment that was purchased in July 2014 at a cost of RM1,220,000. The old equipment was trade-in for RM885,000. The transaction on 1 July 2018 has not yet recorded. Plant and machinery is depreciated over their useful life of 10 years. The depreciation expenses are classified as administrative expenses. The policy of the company is to depreciate all its assets using the straight line method on yearly basis, giving full year's depreciation in the year of purchase and none in the year of disposal. A plant which was purchased on 1 July 2012 at a cost of RM1,340,000 had a reduction in production capacity since September 2018. This had caused several breakdowns during the production process. The board of directors of Laguna Bhd therefore decided to provide impairment on the plant as at year end. The fair value of the plant as at 30 June 2019 is RM350,000 and if it disposed, the company has to incur a dismantling cost of RM12,400. No record has been made to account the impairment loss. The company acquired a building costing RM2,500,000 on 1 July 2013 with the estimated useful life of 30 years. The building is rented out to a third party for RM15,000 per month and the tenancy agreement will be expired on 30 June 2019. Since acquisition, the building was reclassified as investment property and the company adopts the fair value model to measures its investment property subsequent to the initial recognition. The fair value of the investment property on 30 June 2018 was RM4,628,000 and the figure has been recorded. Based on the tenancy agreement, the rental needs to be paid on annual basis and will be due on 30 June each year. However, the rental income for the year ended 30 June 2019 has not been received from the tenants and no record has been made to accrue the rental amount. As at 30 June 2019, the company decided not to renew the tenancy agreement and planned to use the building as the company's research center. The fair value of the building is RM5,350,000 on that date. No records have been made to account these transactions. 3 Additional information: 1. 2. 3. 4. 5. The company adopts revaluation model for its building. As at 1 July 2018, the fair value of the building is RM95 million. On that date, the remaining useful life of the building is 25 years. As at year end, the revaluation amount has not yet recorded. Note: the company follows requirement of MFRS 116 where the company makes annual transfer to retained earnings for any revaluation surplus as the asset is being used and depreciated. Asset revaluation reserve as at 1 July 2018 amounted to RM16 million as stated in the trial balance is related to the revaluation that was done a few years ago on the company's freehold land, located in Sepang. On 30 June 2019, the freehold land was once again revalued to RM160 million. However, the new revalued amount has not yet recorded. On 1 July 2018, the company purchased a new equipment costing RM1,650,000 to replace the old equipment that was purchased in July 2014 at a cost of RM1,220,000. The old equipment was trade-in for RM885,000. The transaction on 1 July 2018 has not yet recorded. Plant and machinery is depreciated over their useful life of 10 years. The depreciation expenses are classified as administrative expenses. The policy of the company is to depreciate all its assets using the straight line method on yearly basis, giving full year's depreciation in the year of purchase and none in the year of disposal. A plant which was purchased on 1 July 2012 at a cost of RM1,340,000 had a reduction in production capacity since September 2018. This had caused several breakdowns during the production process. The board of directors of Laguna Bhd therefore decided to provide impairment on the plant as at year end. The fair value of the plant as at 30 June 2019 is RM350,000 and if it disposed, the company has to incur a dismantling cost of RM12,400. No record has been made to account the impairment loss. The company acquired a building costing RM2,500,000 on 1 July 2013 with the estimated useful life of 30 years. The building is rented out to a third party for RM15,000 per month and the tenancy agreement will be expired on 30 June 2019. Since acquisition, the building was reclassified as investment property and the company adopts the fair value model to measures its investment property subsequent to the initial recognition. The fair value of the investment property on 30 June 2018 was RM4,628,000 and the figure has been recorded. Based on the tenancy agreement, the rental needs to be paid on annual basis and will be due on 30 June each year. However, the rental income for the year ended 30 June 2019 has not been received from the tenants and no record has been made to accrue the rental amount. As at 30 June 2019, the company decided not to renew the tenancy agreement and planned to use the building as the company's research center. The fair value of the building is RM5,350,000 on that date. No records have been made to account these transactions. 3

Answer rating: 100% (QA)

Based on the additional information provided here are the accounting adjustments that need to be made as at 30 June 2019 1 Building Revaluation The co... View the full answer