COMPREHENSIVE CASE OF AIRA ASIA BHD Aira Asia Bhd (AAB) is principally engaged in the cultivation...

 

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COMPREHENSIVE CASE OF AIRA ASIA BHD Aira Asia Bhd (AAB) is principally engaged in the cultivation of oil palm, civil engineering, construction works, and property development. AAB just recently listed on the main board of Bursa Malaysia. As a public listed company, AAB should strictly follow the requirements of presenting the accounting information. The accountant of AAB, Mr. Adhnan should decide on the accounting information that should be presented in its financial statement. For example, should AAB provide information on how much it costs to acquire its assets, or how much the assets are currently worth? Should AAB combine all the activities and show as one segment, or should it report all the activities as a separate segment? Mr Adhnan also in a state of agitation on the requested by one of the executive directors. He asked Mr Adhnan 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 AAB to win the case was relatively high". Director X AAB 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 AAB 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 AAB'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 2020: Debit (RM) 12,000 3,600 Credit (RM) Cash Accounts receivable Prepaid insurance Supplies Land 2,500 15,000 60,000 Building Furniture Equipment Accumulated depreciation – building Accumulated depreciation - equipment Accumulated depreciation- furniture Accounts payable Salaries payable Interest payable Unearned commissions revenue Unearned subscriptions revenue Bank loan – long term Share capital Retained earnings Income summary Commissions revenue 3,000 20,000 4,400 1,200 800 47,600 52,100 37,900 32,700 Subscriptions revenue Advertising expense 4,300 Depreciation expense - building Depreciation expense -equipment Depreciation expense - Insurance expense Interest expense Salaries expense Supplies expense Utilities expense Total - furniture 1,800 2,365 33,475 15,800 2,860 176,700 176,700 Additional information: (i) The company's insurance coverage is provided by a single comprehensive 12-month policy that began on 1 May 2020. Supplies on hand on 31 October 2020 total RM2,850. (ii) (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 2020, when the regular RM350 payment was made. A review of the unadjusted balance in the unearned commissions revenue account indicates the unearned balance should be RM450. (v) (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 eared by employees in October but are not due to be paid to them until the next pay day in November amounted to RM325. QUESTIONS: 1. In the first paragraph, identify the issue that is facing by the accountant of AAB? (СТPS) 2. Based on the issue identified, how does the accountant of AAB could resolve it? (CTPS) 3. For the law suit case facing by AAB, identify which fundamental quality and ingredient of a fundamental quality that was violated if Mr Adhnan 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 AAB, the responsibility of preparing the accounting information was also taken over by Mr Adhnan department. Thus, he instructed his staff to complete the following task for AB: a. Prepare all necessary adjusting journal entries on 31 October 2020. b. Prepare a statement of profit or loss and other comprehensive income for the year ended 31 October 2020. c. Prepare a statement of financial position as at 31 October 2020. -END OF QUESTIONS- COMPREHENSIVE CASE OF AIRA ASIA BHD Aira Asia Bhd (AAB) is principally engaged in the cultivation of oil palm, civil engineering, construction works, and property development. AAB just recently listed on the main board of Bursa Malaysia. As a public listed company, AAB should strictly follow the requirements of presenting the accounting information. The accountant of AAB, Mr. Adhnan should decide on the accounting information that should be presented in its financial statement. For example, should AAB provide information on how much it costs to acquire its assets, or how much the assets are currently worth? Should AAB combine all the activities and show as one segment, or should it report all the activities as a separate segment? Mr Adhnan also in a state of agitation on the requested by one of the executive directors. He asked Mr Adhnan 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 AAB to win the case was relatively high". Director X AAB 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 AAB 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 AAB'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 2020: Debit (RM) 12,000 3,600 Credit (RM) Cash Accounts receivable Prepaid insurance Supplies Land 2,500 15,000 60,000 Building Furniture Equipment Accumulated depreciation – building Accumulated depreciation - equipment Accumulated depreciation- furniture Accounts payable Salaries payable Interest payable Unearned commissions revenue Unearned subscriptions revenue Bank loan – long term Share capital Retained earnings Income summary Commissions revenue 3,000 20,000 4,400 1,200 800 47,600 52,100 37,900 32,700 Subscriptions revenue Advertising expense 4,300 Depreciation expense - building Depreciation expense -equipment Depreciation expense - Insurance expense Interest expense Salaries expense Supplies expense Utilities expense Total - furniture 1,800 2,365 33,475 15,800 2,860 176,700 176,700 Additional information: (i) The company's insurance coverage is provided by a single comprehensive 12-month policy that began on 1 May 2020. Supplies on hand on 31 October 2020 total RM2,850. (ii) (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 2020, when the regular RM350 payment was made. A review of the unadjusted balance in the unearned commissions revenue account indicates the unearned balance should be RM450. (v) (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 eared by employees in October but are not due to be paid to them until the next pay day in November amounted to RM325. QUESTIONS: 1. In the first paragraph, identify the issue that is facing by the accountant of AAB? (СТPS) 2. Based on the issue identified, how does the accountant of AAB could resolve it? (CTPS) 3. For the law suit case facing by AAB, identify which fundamental quality and ingredient of a fundamental quality that was violated if Mr Adhnan 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 AAB, the responsibility of preparing the accounting information was also taken over by Mr Adhnan department. Thus, he instructed his staff to complete the following task for AB: a. Prepare all necessary adjusting journal entries on 31 October 2020. b. Prepare a statement of profit or loss and other comprehensive income for the year ended 31 October 2020. c. Prepare a statement of financial position as at 31 October 2020. -END OF QUESTIONS- COMPREHENSIVE CASE OF AIRA ASIA BHD Aira Asia Bhd (AAB) is principally engaged in the cultivation of oil palm, civil engineering, construction works, and property development. AAB just recently listed on the main board of Bursa Malaysia. As a public listed company, AAB should strictly follow the requirements of presenting the accounting information. The accountant of AAB, Mr. Adhnan should decide on the accounting information that should be presented in its financial statement. For example, should AAB provide information on how much it costs to acquire its assets, or how much the assets are currently worth? Should AAB combine all the activities and show as one segment, or should it report all the activities as a separate segment? Mr Adhnan also in a state of agitation on the requested by one of the executive directors. He asked Mr Adhnan 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 AAB to win the case was relatively high". Director X AAB 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 AAB 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 AAB'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 2020: Debit (RM) 12,000 3,600 Credit (RM) Cash Accounts receivable Prepaid insurance Supplies Land 2,500 15,000 60,000 Building Furniture Equipment Accumulated depreciation – building Accumulated depreciation - equipment Accumulated depreciation- furniture Accounts payable Salaries payable Interest payable Unearned commissions revenue Unearned subscriptions revenue Bank loan – long term Share capital Retained earnings Income summary Commissions revenue 3,000 20,000 4,400 1,200 800 47,600 52,100 37,900 32,700 Subscriptions revenue Advertising expense 4,300 Depreciation expense - building Depreciation expense -equipment Depreciation expense - Insurance expense Interest expense Salaries expense Supplies expense Utilities expense Total - furniture 1,800 2,365 33,475 15,800 2,860 176,700 176,700 Additional information: (i) The company's insurance coverage is provided by a single comprehensive 12-month policy that began on 1 May 2020. Supplies on hand on 31 October 2020 total RM2,850. (ii) (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 2020, when the regular RM350 payment was made. A review of the unadjusted balance in the unearned commissions revenue account indicates the unearned balance should be RM450. (v) (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 eared by employees in October but are not due to be paid to them until the next pay day in November amounted to RM325. QUESTIONS: 1. In the first paragraph, identify the issue that is facing by the accountant of AAB? (СТPS) 2. Based on the issue identified, how does the accountant of AAB could resolve it? (CTPS) 3. For the law suit case facing by AAB, identify which fundamental quality and ingredient of a fundamental quality that was violated if Mr Adhnan 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 AAB, the responsibility of preparing the accounting information was also taken over by Mr Adhnan department. Thus, he instructed his staff to complete the following task for AB: a. Prepare all necessary adjusting journal entries on 31 October 2020. b. Prepare a statement of profit or loss and other comprehensive income for the year ended 31 October 2020. c. Prepare a statement of financial position as at 31 October 2020. -END OF QUESTIONS- COMPREHENSIVE CASE OF AIRA ASIA BHD Aira Asia Bhd (AAB) is principally engaged in the cultivation of oil palm, civil engineering, construction works, and property development. AAB just recently listed on the main board of Bursa Malaysia. As a public listed company, AAB should strictly follow the requirements of presenting the accounting information. The accountant of AAB, Mr. Adhnan should decide on the accounting information that should be presented in its financial statement. For example, should AAB provide information on how much it costs to acquire its assets, or how much the assets are currently worth? Should AAB combine all the activities and show as one segment, or should it report all the activities as a separate segment? Mr Adhnan also in a state of agitation on the requested by one of the executive directors. He asked Mr Adhnan 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 AAB to win the case was relatively high". Director X AAB 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 AAB 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 AAB'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 2020: Debit (RM) 12,000 3,600 Credit (RM) Cash Accounts receivable Prepaid insurance Supplies Land 2,500 15,000 60,000 Building Furniture Equipment Accumulated depreciation – building Accumulated depreciation - equipment Accumulated depreciation- furniture Accounts payable Salaries payable Interest payable Unearned commissions revenue Unearned subscriptions revenue Bank loan – long term Share capital Retained earnings Income summary Commissions revenue 3,000 20,000 4,400 1,200 800 47,600 52,100 37,900 32,700 Subscriptions revenue Advertising expense 4,300 Depreciation expense - building Depreciation expense -equipment Depreciation expense - Insurance expense Interest expense Salaries expense Supplies expense Utilities expense Total - furniture 1,800 2,365 33,475 15,800 2,860 176,700 176,700 Additional information: (i) The company's insurance coverage is provided by a single comprehensive 12-month policy that began on 1 May 2020. Supplies on hand on 31 October 2020 total RM2,850. (ii) (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 2020, when the regular RM350 payment was made. A review of the unadjusted balance in the unearned commissions revenue account indicates the unearned balance should be RM450. (v) (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 eared by employees in October but are not due to be paid to them until the next pay day in November amounted to RM325. QUESTIONS: 1. In the first paragraph, identify the issue that is facing by the accountant of AAB? (СТPS) 2. Based on the issue identified, how does the accountant of AAB could resolve it? (CTPS) 3. For the law suit case facing by AAB, identify which fundamental quality and ingredient of a fundamental quality that was violated if Mr Adhnan 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 AAB, the responsibility of preparing the accounting information was also taken over by Mr Adhnan department. Thus, he instructed his staff to complete the following task for AB: a. Prepare all necessary adjusting journal entries on 31 October 2020. b. Prepare a statement of profit or loss and other comprehensive income for the year ended 31 October 2020. c. Prepare a statement of financial position as at 31 October 2020. -END OF QUESTIONS- COMPREHENSIVE CASE OF AIRA ASIA BHD Aira Asia Bhd (AAB) is principally engaged in the cultivation of oil palm, civil engineering, construction works, and property development. AAB just recently listed on the main board of Bursa Malaysia. As a public listed company, AAB should strictly follow the requirements of presenting the accounting information. The accountant of AAB, Mr. Adhnan should decide on the accounting information that should be presented in its financial statement. For example, should AAB provide information on how much it costs to acquire its assets, or how much the assets are currently worth? Should AAB combine all the activities and show as one segment, or should it report all the activities as a separate segment? Mr Adhnan also in a state of agitation on the requested by one of the executive directors. He asked Mr Adhnan 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 AAB to win the case was relatively high". Director X AAB 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 AAB 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 AAB'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 2020: Debit (RM) 12,000 3,600 Credit (RM) Cash Accounts receivable Prepaid insurance Supplies Land 2,500 15,000 60,000 Building Furniture Equipment Accumulated depreciation – building Accumulated depreciation - equipment Accumulated depreciation- furniture Accounts payable Salaries payable Interest payable Unearned commissions revenue Unearned subscriptions revenue Bank loan – long term Share capital Retained earnings Income summary Commissions revenue 3,000 20,000 4,400 1,200 800 47,600 52,100 37,900 32,700 Subscriptions revenue Advertising expense 4,300 Depreciation expense - building Depreciation expense -equipment Depreciation expense - Insurance expense Interest expense Salaries expense Supplies expense Utilities expense Total - furniture 1,800 2,365 33,475 15,800 2,860 176,700 176,700 Additional information: (i) The company's insurance coverage is provided by a single comprehensive 12-month policy that began on 1 May 2020. Supplies on hand on 31 October 2020 total RM2,850. (ii) (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 2020, when the regular RM350 payment was made. A review of the unadjusted balance in the unearned commissions revenue account indicates the unearned balance should be RM450. (v) (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 eared by employees in October but are not due to be paid to them until the next pay day in November amounted to RM325. QUESTIONS: 1. In the first paragraph, identify the issue that is facing by the accountant of AAB? (СТPS) 2. Based on the issue identified, how does the accountant of AAB could resolve it? (CTPS) 3. For the law suit case facing by AAB, identify which fundamental quality and ingredient of a fundamental quality that was violated if Mr Adhnan 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 AAB, the responsibility of preparing the accounting information was also taken over by Mr Adhnan department. Thus, he instructed his staff to complete the following task for AB: a. Prepare all necessary adjusting journal entries on 31 October 2020. b. Prepare a statement of profit or loss and other comprehensive income for the year ended 31 October 2020. c. Prepare a statement of financial position as at 31 October 2020. -END OF QUESTIONS- COMPREHENSIVE CASE OF AIRA ASIA BHD Aira Asia Bhd (AAB) is principally engaged in the cultivation of oil palm, civil engineering, construction works, and property development. AAB just recently listed on the main board of Bursa Malaysia. As a public listed company, AAB should strictly follow the requirements of presenting the accounting information. The accountant of AAB, Mr. Adhnan should decide on the accounting information that should be presented in its financial statement. For example, should AAB provide information on how much it costs to acquire its assets, or how much the assets are currently worth? Should AAB combine all the activities and show as one segment, or should it report all the activities as a separate segment? Mr Adhnan also in a state of agitation on the requested by one of the executive directors. He asked Mr Adhnan 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 AAB to win the case was relatively high". Director X AAB 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 AAB 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 AAB'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 2020: Debit (RM) 12,000 3,600 Credit (RM) Cash Accounts receivable Prepaid insurance Supplies Land 2,500 15,000 60,000 Building Furniture Equipment Accumulated depreciation – building Accumulated depreciation - equipment Accumulated depreciation- furniture Accounts payable Salaries payable Interest payable Unearned commissions revenue Unearned subscriptions revenue Bank loan – long term Share capital Retained earnings Income summary Commissions revenue 3,000 20,000 4,400 1,200 800 47,600 52,100 37,900 32,700 Subscriptions revenue Advertising expense 4,300 Depreciation expense - building Depreciation expense -equipment Depreciation expense - Insurance expense Interest expense Salaries expense Supplies expense Utilities expense Total - furniture 1,800 2,365 33,475 15,800 2,860 176,700 176,700 Additional information: (i) The company's insurance coverage is provided by a single comprehensive 12-month policy that began on 1 May 2020. Supplies on hand on 31 October 2020 total RM2,850. (ii) (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 2020, when the regular RM350 payment was made. A review of the unadjusted balance in the unearned commissions revenue account indicates the unearned balance should be RM450. (v) (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 eared by employees in October but are not due to be paid to them until the next pay day in November amounted to RM325. QUESTIONS: 1. In the first paragraph, identify the issue that is facing by the accountant of AAB? (СТPS) 2. Based on the issue identified, how does the accountant of AAB could resolve it? (CTPS) 3. For the law suit case facing by AAB, identify which fundamental quality and ingredient of a fundamental quality that was violated if Mr Adhnan 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 AAB, the responsibility of preparing the accounting information was also taken over by Mr Adhnan department. Thus, he instructed his staff to complete the following task for AB: a. Prepare all necessary adjusting journal entries on 31 October 2020. b. Prepare a statement of profit or loss and other comprehensive income for the year ended 31 October 2020. c. Prepare a statement of financial position as at 31 October 2020. -END OF QUESTIONS- COMPREHENSIVE CASE OF AIRA ASIA BHD Aira Asia Bhd (AAB) is principally engaged in the cultivation of oil palm, civil engineering, construction works, and property development. AAB just recently listed on the main board of Bursa Malaysia. As a public listed company, AAB should strictly follow the requirements of presenting the accounting information. The accountant of AAB, Mr. Adhnan should decide on the accounting information that should be presented in its financial statement. For example, should AAB provide information on how much it costs to acquire its assets, or how much the assets are currently worth? Should AAB combine all the activities and show as one segment, or should it report all the activities as a separate segment? Mr Adhnan also in a state of agitation on the requested by one of the executive directors. He asked Mr Adhnan 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 AAB to win the case was relatively high". Director X AAB 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 AAB 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 AAB'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 2020: Debit (RM) 12,000 3,600 Credit (RM) Cash Accounts receivable Prepaid insurance Supplies Land 2,500 15,000 60,000 Building Furniture Equipment Accumulated depreciation – building Accumulated depreciation - equipment Accumulated depreciation- furniture Accounts payable Salaries payable Interest payable Unearned commissions revenue Unearned subscriptions revenue Bank loan – long term Share capital Retained earnings Income summary Commissions revenue 3,000 20,000 4,400 1,200 800 47,600 52,100 37,900 32,700 Subscriptions revenue Advertising expense 4,300 Depreciation expense - building Depreciation expense -equipment Depreciation expense - Insurance expense Interest expense Salaries expense Supplies expense Utilities expense Total - furniture 1,800 2,365 33,475 15,800 2,860 176,700 176,700 Additional information: (i) The company's insurance coverage is provided by a single comprehensive 12-month policy that began on 1 May 2020. Supplies on hand on 31 October 2020 total RM2,850. (ii) (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 2020, when the regular RM350 payment was made. A review of the unadjusted balance in the unearned commissions revenue account indicates the unearned balance should be RM450. (v) (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 eared by employees in October but are not due to be paid to them until the next pay day in November amounted to RM325. QUESTIONS: 1. In the first paragraph, identify the issue that is facing by the accountant of AAB? (СТPS) 2. Based on the issue identified, how does the accountant of AAB could resolve it? (CTPS) 3. For the law suit case facing by AAB, identify which fundamental quality and ingredient of a fundamental quality that was violated if Mr Adhnan 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 AAB, the responsibility of preparing the accounting information was also taken over by Mr Adhnan department. Thus, he instructed his staff to complete the following task for AB: a. Prepare all necessary adjusting journal entries on 31 October 2020. b. Prepare a statement of profit or loss and other comprehensive income for the year ended 31 October 2020. c. Prepare a statement of financial position as at 31 October 2020. -END OF QUESTIONS- COMPREHENSIVE CASE OF AIRA ASIA BHD Aira Asia Bhd (AAB) is principally engaged in the cultivation of oil palm, civil engineering, construction works, and property development. AAB just recently listed on the main board of Bursa Malaysia. As a public listed company, AAB should strictly follow the requirements of presenting the accounting information. The accountant of AAB, Mr. Adhnan should decide on the accounting information that should be presented in its financial statement. For example, should AAB provide information on how much it costs to acquire its assets, or how much the assets are currently worth? Should AAB combine all the activities and show as one segment, or should it report all the activities as a separate segment? Mr Adhnan also in a state of agitation on the requested by one of the executive directors. He asked Mr Adhnan 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 AAB to win the case was relatively high". Director X AAB 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 AAB 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 AAB'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 2020: Debit (RM) 12,000 3,600 Credit (RM) Cash Accounts receivable Prepaid insurance Supplies Land 2,500 15,000 60,000 Building Furniture Equipment Accumulated depreciation – building Accumulated depreciation - equipment Accumulated depreciation- furniture Accounts payable Salaries payable Interest payable Unearned commissions revenue Unearned subscriptions revenue Bank loan – long term Share capital Retained earnings Income summary Commissions revenue 3,000 20,000 4,400 1,200 800 47,600 52,100 37,900 32,700 Subscriptions revenue Advertising expense 4,300 Depreciation expense - building Depreciation expense -equipment Depreciation expense - Insurance expense Interest expense Salaries expense Supplies expense Utilities expense Total - furniture 1,800 2,365 33,475 15,800 2,860 176,700 176,700 Additional information: (i) The company's insurance coverage is provided by a single comprehensive 12-month policy that began on 1 May 2020. Supplies on hand on 31 October 2020 total RM2,850. (ii) (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 2020, when the regular RM350 payment was made. A review of the unadjusted balance in the unearned commissions revenue account indicates the unearned balance should be RM450. (v) (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 eared by employees in October but are not due to be paid to them until the next pay day in November amounted to RM325. QUESTIONS: 1. In the first paragraph, identify the issue that is facing by the accountant of AAB? (СТPS) 2. Based on the issue identified, how does the accountant of AAB could resolve it? (CTPS) 3. For the law suit case facing by AAB, identify which fundamental quality and ingredient of a fundamental quality that was violated if Mr Adhnan 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 AAB, the responsibility of preparing the accounting information was also taken over by Mr Adhnan department. Thus, he instructed his staff to complete the following task for AB: a. Prepare all necessary adjusting journal entries on 31 October 2020. b. Prepare a statement of profit or loss and other comprehensive income for the year ended 31 October 2020. c. Prepare a statement of financial position as at 31 October 2020. -END OF QUESTIONS-

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1 In the first paragraph identify the issue that is facing by the accountant of AAB The accountant i... View the full answer