Blue Farming and Milk Industry Bhd (BFM Bhd) is a public listed company, established in 2000....

     

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Blue Farming and Milk Industry Bhd (BFM Bhd) is a public listed company, established in 2000. The company was incorporated in Malaysia, involved in dairy farming, manufacturing and distributing of dairy products. The following balances are for the year ended 30 June 2019. Sales Cost of sales Administration expenses Selling and distribution expenses Finance costs Land (at revaluation) Buildings (at revaluation) Equipment Machine A Machine B Motor vehicles Fixtures and fittings Goodwill Accumulated depreciation as at 1 July 2018: Buildings Equipment Machine A Machine B Motor vehicles Fixtures and fittings Biological assets Investment properties Investments Intangible assets Tax paid Accounts receivable Inventories Bank balances Ordinary shares 5% Cumulative preference shares Retained profits Note 2 2 1 1 1 2 1 1 3 5 Dr RM'000 11,800 6,020 1,200 265 11,000 32,000 5,200 4,050 18,100 2,640 628 750 940 4,000 2,100 794 277 2,320 510 447 Cr RM'000 25,000 3,840 988 770 1,905 792 251 45,000 10,000 9,280 Revaluation reserve (land) 8% Debentures Deferred income Accounts payable Accruals interim dividend 2 4 6 525 105,566 450 5,000 300 1,760 230 105,566 The following notes are related to the balances given above: 1. On 1 July 2016, BFM Bhd acquired King Manufactures Sdn Bhd. During the acquisition, the equipment and machine A were revalued at RM5,200,000 and RM4,050,000 respectively. The agreed purchase consideration for the assets was RM10,000,000. The goodwill is derived from the acquisition. Some technical problems had caused both assets to be less productive during the financial year ended 30 June 2018. As at 30 June 2018, it was estimated that the expected value in use amounted to RM7,000,000. BFM Bhd determined that if the equipment and machine A were to be sold, the market value would be RM7,200,000. The cost to sell them was estimated at 5.5% of the fair value. For the financial year ended 30 June 2019, BFM Bhdhad conducted a major inspection on the equipment and machine A. The company also did some intensive technical adjustment to improve the capacity of the plants. Due to this reason, it was expected that the value in use would be increased by 5% as compared to the year ended 30 June 2018 projection and the net selling price was estimated to be RM7,200,000. It is the company's policy to depreciate equipment and machinesat 10% on carrying amount. Machine A has a salvage value of RM50,000. The depreciations of equipment and machines are part of cost of sales. Goodwill has indefinite useful life. IA 2. The building was revalued for the first time on 1 July 2015 where the revaluation result in a deficit of RM150,000. The remaining useful life of the building for on 1 July 2015 was 25 years. The building was revalued on 1 July 2018 at RM32,500,000. The land was also revalued for the first time on 1 July 2015 at a surplus. The fair value of the land drop to RM10,000,000 on 30 June 2018, but was never recorded by the company. The land is not depreciated. The motor vehicles, and fixtures and fittings are depreciated on straight line basis at 10% per annum. 3. BFM Bhd has a farm in Betong area where they breed 300 1-year old and 400 1.5-year old dairy cattle. The amount of RM940,000 was the fair value less cost to sell as at 1 July 2018. On 1 January 2019, the company had 50 newborn cattlethat were valued at RM550 per newborn at fair value less cost to sell. 27 On 30 June 2019, the fair value of the cattle (excluding newborn) was RM1,150,000. The fair value less cost to sell of a newborn and a 6-months old cattle were RM570 and RM670 respectively at that date. During the year, the related cost to sell a cattle was RM120. 60,00 R&D 780 > e. 4. A government grant was received 10 years ago after the company complied with condition on setting up the dairy cattle farm. The balance of the deferred income has yet to be amortised for another 5 years. d. 5. Included in the amount of intangible assets was a research carried out by the company on 1 February 2019 amounting RM14,000. 2.81 6. The interim dividend paid for the year included half year dividend for 5% cumulative preference shares. The finance cost represents interest on debentures. 7. The tax expense for the year was RM542,000. Required: a. b. C. Determine the carrying amount of each of the assets of the cash generating unit as at 30 June 2018 and 30 June 2019. Show the computation of the impairment loss and reversal of impairment loss. (10 marks) Prepare the journal entries to record the transactions based on note no.2. (5 marks) Based on note no.3, calculate the changes in fair value less cost to sell due to physical change and price change of the cattle and newborn cattle for the year ended 30 June 2019. (5 marks) Prepare the following financial statements in a form suitable for publication: i. Statement of profit or loss and other comprehensive income for the year ended 30 June 2019. ii. Statement of changes in equity for the year ended 30 June 2019. iii. Statement of financial position as at 30 June 2019. iv. Notes to disclose the movement in the company's property, plant and equipment. (35 marks) Evaluate the following ratios of Blue Farming and Milk Industry Bhd for the year ended 30 June 2019. i. Current ratio ii. Quick ratio iii. Gross profit margin iv. Net profit margin Show all necessary workings. Round up your answer to the nearest unit RM'000. (10 marks) (Total: 65 marks) QUESTION 2 Fine Lumber Bhd has identified the following states as its reportable segments for the year ended 31 December 2019.The following information relates to the states with details of their revenue,results and assets. Selangor Sales to Pahang Other sales to Kelantan Export sales to Middle East Export sales to Singapore Sarawak Sales to Johor Export sales to Brunei Export sales to Singapore Johor Export sales to Canada Other segments (Pahang and Sabah) Other sales to Perak Export sales to Brunei Results Unallocated expenses Finance costs Assets Liabilities Head Office RM'000 92,800 10,940 50,070 47,800 Tax expense for the year were RM1,125,000. RM'000 206,080 55,000 303,900 72,600 32,000 195,900 213,700 130,000 33,000 74,320 Selangor Sarawak 5 RM'000 165,400 200,920 111,800 RM'000 18,750 41,600 39,000 Johor Others RM'000 RM'000 (8,300) (4,200) 13,000 22,330 7,800 9,750 Required: a) Prepare a segmental report in accordance with MFRS8 Operating Segments for Fine Lumber Bhd. (15 marks) b) Compare the use of 10% quantitative threshold test with the 75% revenue constraint in determining reportable segment. (5 marks) (Total: 20 marks) QUESTION 3 QuenaBuilders Bhd prepares its interim report on a quarterly basis. Its current financial year ends on 30 June 2019. The business bought two excavators costing RM185,000 each on 1 January 2019. The company paid other direct costs related to the purchase of the excavators amounting RM25,000. The excavatorsare depreciated using straight line method on a monthly basis and its expected to be used for 10 years. Required: a) State the minimum disclosure requirement of an interim reporting based on MFRS134 Interim Financial Reporting. (5 marks) b) Determinethe reporting periods for interim and comparative financial reports for statement of financial position for second and third quarter for the financial year ended 30 June 2019 (5 marks) c) Discuss the accounting treatment on the recognition and measurement principles applicable for the above transaction in the preparation of the interim report for the third and fourth quarter. (5 marks) (Total: 15 marks) Blue Farming and Milk Industry Bhd (BFM Bhd) is a public listed company, established in 2000. The company was incorporated in Malaysia, involved in dairy farming, manufacturing and distributing of dairy products. The following balances are for the year ended 30 June 2019. Sales Cost of sales Administration expenses Selling and distribution expenses Finance costs Land (at revaluation) Buildings (at revaluation) Equipment Machine A Machine B Motor vehicles Fixtures and fittings Goodwill Accumulated depreciation as at 1 July 2018: Buildings Equipment Machine A Machine B Motor vehicles Fixtures and fittings Biological assets Investment properties Investments Intangible assets Tax paid Accounts receivable Inventories Bank balances Ordinary shares 5% Cumulative preference shares Retained profits Note 2 2 1 1 1 2 1 1 3 5 Dr RM'000 11,800 6,020 1,200 265 11,000 32,000 5,200 4,050 18,100 2,640 628 750 940 4,000 2,100 794 277 2,320 510 447 Cr RM'000 25,000 3,840 988 770 1,905 792 251 45,000 10,000 9,280 Revaluation reserve (land) 8% Debentures Deferred income Accounts payable Accruals interim dividend 2 4 6 525 105,566 450 5,000 300 1,760 230 105,566 The following notes are related to the balances given above: 1. On 1 July 2016, BFM Bhd acquired King Manufactures Sdn Bhd. During the acquisition, the equipment and machine A were revalued at RM5,200,000 and RM4,050,000 respectively. The agreed purchase consideration for the assets was RM10,000,000. The goodwill is derived from the acquisition. Some technical problems had caused both assets to be less productive during the financial year ended 30 June 2018. As at 30 June 2018, it was estimated that the expected value in use amounted to RM7,000,000. BFM Bhd determined that if the equipment and machine A were to be sold, the market value would be RM7,200,000. The cost to sell them was estimated at 5.5% of the fair value. For the financial year ended 30 June 2019, BFM Bhdhad conducted a major inspection on the equipment and machine A. The company also did some intensive technical adjustment to improve the capacity of the plants. Due to this reason, it was expected that the value in use would be increased by 5% as compared to the year ended 30 June 2018 projection and the net selling price was estimated to be RM7,200,000. It is the company's policy to depreciate equipment and machinesat 10% on carrying amount. Machine A has a salvage value of RM50,000. The depreciations of equipment and machines are part of cost of sales. Goodwill has indefinite useful life. IA 2. The building was revalued for the first time on 1 July 2015 where the revaluation result in a deficit of RM150,000. The remaining useful life of the building for on 1 July 2015 was 25 years. The building was revalued on 1 July 2018 at RM32,500,000. The land was also revalued for the first time on 1 July 2015 at a surplus. The fair value of the land drop to RM10,000,000 on 30 June 2018, but was never recorded by the company. The land is not depreciated. The motor vehicles, and fixtures and fittings are depreciated on straight line basis at 10% per annum. 3. BFM Bhd has a farm in Betong area where they breed 300 1-year old and 400 1.5-year old dairy cattle. The amount of RM940,000 was the fair value less cost to sell as at 1 July 2018. On 1 January 2019, the company had 50 newborn cattlethat were valued at RM550 per newborn at fair value less cost to sell. 27 On 30 June 2019, the fair value of the cattle (excluding newborn) was RM1,150,000. The fair value less cost to sell of a newborn and a 6-months old cattle were RM570 and RM670 respectively at that date. During the year, the related cost to sell a cattle was RM120. 60,00 R&D 780 > e. 4. A government grant was received 10 years ago after the company complied with condition on setting up the dairy cattle farm. The balance of the deferred income has yet to be amortised for another 5 years. d. 5. Included in the amount of intangible assets was a research carried out by the company on 1 February 2019 amounting RM14,000. 2.81 6. The interim dividend paid for the year included half year dividend for 5% cumulative preference shares. The finance cost represents interest on debentures. 7. The tax expense for the year was RM542,000. Required: a. b. C. Determine the carrying amount of each of the assets of the cash generating unit as at 30 June 2018 and 30 June 2019. Show the computation of the impairment loss and reversal of impairment loss. (10 marks) Prepare the journal entries to record the transactions based on note no.2. (5 marks) Based on note no.3, calculate the changes in fair value less cost to sell due to physical change and price change of the cattle and newborn cattle for the year ended 30 June 2019. (5 marks) Prepare the following financial statements in a form suitable for publication: i. Statement of profit or loss and other comprehensive income for the year ended 30 June 2019. ii. Statement of changes in equity for the year ended 30 June 2019. iii. Statement of financial position as at 30 June 2019. iv. Notes to disclose the movement in the company's property, plant and equipment. (35 marks) Evaluate the following ratios of Blue Farming and Milk Industry Bhd for the year ended 30 June 2019. i. Current ratio ii. Quick ratio iii. Gross profit margin iv. Net profit margin Show all necessary workings. Round up your answer to the nearest unit RM'000. (10 marks) (Total: 65 marks) QUESTION 2 Fine Lumber Bhd has identified the following states as its reportable segments for the year ended 31 December 2019.The following information relates to the states with details of their revenue,results and assets. Selangor Sales to Pahang Other sales to Kelantan Export sales to Middle East Export sales to Singapore Sarawak Sales to Johor Export sales to Brunei Export sales to Singapore Johor Export sales to Canada Other segments (Pahang and Sabah) Other sales to Perak Export sales to Brunei Results Unallocated expenses Finance costs Assets Liabilities Head Office RM'000 92,800 10,940 50,070 47,800 Tax expense for the year were RM1,125,000. RM'000 206,080 55,000 303,900 72,600 32,000 195,900 213,700 130,000 33,000 74,320 Selangor Sarawak 5 RM'000 165,400 200,920 111,800 RM'000 18,750 41,600 39,000 Johor Others RM'000 RM'000 (8,300) (4,200) 13,000 22,330 7,800 9,750 Required: a) Prepare a segmental report in accordance with MFRS8 Operating Segments for Fine Lumber Bhd. (15 marks) b) Compare the use of 10% quantitative threshold test with the 75% revenue constraint in determining reportable segment. (5 marks) (Total: 20 marks) QUESTION 3 QuenaBuilders Bhd prepares its interim report on a quarterly basis. Its current financial year ends on 30 June 2019. The business bought two excavators costing RM185,000 each on 1 January 2019. The company paid other direct costs related to the purchase of the excavators amounting RM25,000. The excavatorsare depreciated using straight line method on a monthly basis and its expected to be used for 10 years. Required: a) State the minimum disclosure requirement of an interim reporting based on MFRS134 Interim Financial Reporting. (5 marks) b) Determinethe reporting periods for interim and comparative financial reports for statement of financial position for second and third quarter for the financial year ended 30 June 2019 (5 marks) c) Discuss the accounting treatment on the recognition and measurement principles applicable for the above transaction in the preparation of the interim report for the third and fourth quarter. (5 marks) (Total: 15 marks)

Answer rating: 100% (QA)

Question 1a 1 Carrying amount of equipment as at 3062018 Cost RM5200000 Accumulated depreciation RM988000 Carrying amount RM5200000 RM988000 RM4212000 ... View the full answer