Berembun Berhad is a consultancy company located in Kuala Lumpur. Berembun Berhad provides public courses and...
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Berembun Berhad is a consultancy company located in Kuala Lumpur. Berembun Berhad provides public courses and specialised in-house training courses for a number of clients around the Klang valley area. Berembun Berhad's trial balance as at 31 December 2022 is as follows: RM Revenue Purchases Administrative expenses Finance costs Income tax expense Inventories at 1 January 2022 Trade receivables Cash Plant and equipment: carrying amount 2 at 31 December 2022 Fixtures and fittings: carrying amount at 31 December 2022 Note 1 Land and buildings: carrying amount 3 at 31 December 2022 Retained earnings at 1 January 2022 Ordinary share capital (RM1 shares) Loans 5 5% Bonds Trade payables Tax payable 6 7 447,000 87,600 11,000 180,000 143,000 60,000 7,300 80,000 1,490,000 27,400 2,533,300 RM 1,245,000 450,300 150,000 400,000 100,000 8,000 180,000 2,533,300 Additional Information: 1. Revenue consists of tuition fees and book sales. Courses are run throughout the year, with fees due one month prior to the commencement of the course. At the year end, fees of RM25,000 had been received, and included in revenue, in respect of a course that has been delivered in January 2023. 2. Plant and equipment refer to printing machinery which was purchased on 1 January 2019 and has been used to produce texts and course notes. However, Berembun Berhad is now moving towards e-books and online courses and expects to phase out printed materials by 31 December 2026. 3. Berembun uses revaluation accounting to value machinery. The fair value of the machinery as at 31 December 2022 is estimated at RM46,000. No adjustment has been made for this. Depreciation on this machinery has been correctly included in cost of sales and no further adjustment is necessary for the depreciation. 4. The cost of the land was RM800,000. Due to the rising price of land in the area, the company has decided to change its accounting policy to revaluation policy. As at 31 December 2022, the land was valued at RM1,200,000. There was no material change in the value of buildings. 5. Closing inventory was valued at RM155,000. However, included in the year end inventory count was inventory costing RM5,000 in relation to training materials for which a new edition was published shortly after the year end. The 2022 materials can no longer be used by Berembun Berhad. 6. On 29 December 2022 Berembun Berhad was notified that one of its customers was declared bankrupt and ceased trading. At the year end, the customer owed RM9,180 to Berembun Berhad. Course notes costing RM2,000 had recently been prepared and printed for a specially designed course that Berembun Berhad was due to deliver to this customer on 31 December 2022. These materials were included in inventory at the year end. No adjustment has been made for this. The loan of RM400,000 above is due on 31 December 2035. On 1 July 2022, Berembun Berhad breached a covenant on its debt obligation and the loan becomes due on demand. Having convinced the bank that the covenant issue will resolved by the first quarter of 2023, Berembun Berhad managed to obtain a waiver from the bank on 22 December 2022. 8. RM100,000 of 5% bonds were issued for RM100,000 on 1 January 2021. The bonds mature on 31 December 2028, but bondholders have the option of calling (demanding payment on) the bonds on 30 June 2023. However, the option to call is not expected to be exercised, given prevailing market conditions. Required: Prepare the statement of profit or loss for Berembun Berhad for the year ended 31 December 2022 and a statement of financial position at that date in a suitable form for publication. Berembun Berhad is a consultancy company located in Kuala Lumpur. Berembun Berhad provides public courses and specialised in-house training courses for a number of clients around the Klang valley area. Berembun Berhad's trial balance as at 31 December 2022 is as follows: RM Revenue Purchases Administrative expenses Finance costs Income tax expense Inventories at 1 January 2022 Trade receivables Cash Plant and equipment: carrying amount 2 at 31 December 2022 Fixtures and fittings: carrying amount at 31 December 2022 Note 1 Land and buildings: carrying amount 3 at 31 December 2022 Retained earnings at 1 January 2022 Ordinary share capital (RM1 shares) Loans 5 5% Bonds Trade payables Tax payable 6 7 447,000 87,600 11,000 180,000 143,000 60,000 7,300 80,000 1,490,000 27,400 2,533,300 RM 1,245,000 450,300 150,000 400,000 100,000 8,000 180,000 2,533,300 Additional Information: 1. Revenue consists of tuition fees and book sales. Courses are run throughout the year, with fees due one month prior to the commencement of the course. At the year end, fees of RM25,000 had been received, and included in revenue, in respect of a course that has been delivered in January 2023. 2. Plant and equipment refer to printing machinery which was purchased on 1 January 2019 and has been used to produce texts and course notes. However, Berembun Berhad is now moving towards e-books and online courses and expects to phase out printed materials by 31 December 2026. 3. Berembun uses revaluation accounting to value machinery. The fair value of the machinery as at 31 December 2022 is estimated at RM46,000. No adjustment has been made for this. Depreciation on this machinery has been correctly included in cost of sales and no further adjustment is necessary for the depreciation. 4. The cost of the land was RM800,000. Due to the rising price of land in the area, the company has decided to change its accounting policy to revaluation policy. As at 31 December 2022, the land was valued at RM1,200,000. There was no material change in the value of buildings. 5. Closing inventory was valued at RM155,000. However, included in the year end inventory count was inventory costing RM5,000 in relation to training materials for which a new edition was published shortly after the year end. The 2022 materials can no longer be used by Berembun Berhad. 6. On 29 December 2022 Berembun Berhad was notified that one of its customers was declared bankrupt and ceased trading. At the year end, the customer owed RM9,180 to Berembun Berhad. Course notes costing RM2,000 had recently been prepared and printed for a specially designed course that Berembun Berhad was due to deliver to this customer on 31 December 2022. These materials were included in inventory at the year end. No adjustment has been made for this. The loan of RM400,000 above is due on 31 December 2035. On 1 July 2022, Berembun Berhad breached a covenant on its debt obligation and the loan becomes due on demand. Having convinced the bank that the covenant issue will resolved by the first quarter of 2023, Berembun Berhad managed to obtain a waiver from the bank on 22 December 2022. 8. RM100,000 of 5% bonds were issued for RM100,000 on 1 January 2021. The bonds mature on 31 December 2028, but bondholders have the option of calling (demanding payment on) the bonds on 30 June 2023. However, the option to call is not expected to be exercised, given prevailing market conditions. Required: Prepare the statement of profit or loss for Berembun Berhad for the year ended 31 December 2022 and a statement of financial position at that date in a suitable form for publication.
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Principles of Auditing and Other Assurance Services
ISBN: 978-0078025617
19th edition
Authors: Ray Whittington, Kurt Pany
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