Delima Bhd acquired an asset for RM880,000 on 1 January 2019. The estimated useful life of...

   

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Delima Bhd acquired an asset for RM880,000 on 1 January 2019. The estimated useful life of the asset is 8 years. The fair value of the asset on 31 December 2020 was RM695,000 (this amount also represented the net realizable value of the asset). The company's financial year end is 31 December every year. The company adopted different types of measurement model for the subsequent measurement of different types of assets as follows: Revaluation model - Property, Plant and Equipment and Intangible asset Fair value model - Investment property Required: a. Assume Delima Bhd carries out development project which is currently considered to be technically feasible and bring probable future economic benefits, and the asset acquired was patent for use in development project. i. Explain the accounting treatment of the acquired asset in the books of Delima Bhd for the year ended 31 December 2019 (state the relevant MFRS). ii. Prepare relevant journal entries for the acquired asset for the year ended 31 December 2020. (2 marks) b. Assuming Delima Bhd is a wholesaler, and the asset is purchased for resale in the ordinary course of business, explain the accounting treatment of the asset purchased for the year ended 31 December 2019 and 31 December 2020 (state the relevant MFRS). (5 marks) (Total: 10 marks) Delima Bhd acquired an asset for RM880,000 on 1 January 2019. The estimated useful life of the asset is 8 years. The fair value of the asset on 31 December 2020 was RM695,000 (this amount also represented the net realizable value of the asset). The company's financial year end is 31 December every year. The company adopted different types of measurement model for the subsequent measurement of different types of assets as follows: Revaluation model - Property, Plant and Equipment and Intangible asset Fair value model - Investment property Required: a. Assume Delima Bhd carries out development project which is currently considered to be technically feasible and bring probable future economic benefits, and the asset acquired was patent for use in development project. i. Explain the accounting treatment of the acquired asset in the books of Delima Bhd for the year ended 31 December 2019 (state the relevant MFRS). ii. Prepare relevant journal entries for the acquired asset for the year ended 31 December 2020. (2 marks) b. Assuming Delima Bhd is a wholesaler, and the asset is purchased for resale in the ordinary course of business, explain the accounting treatment of the asset purchased for the year ended 31 December 2019 and 31 December 2020 (state the relevant MFRS). (5 marks) (Total: 10 marks)

Answer rating: 100% (QA)

a i The asset would be treated as a Property Plant and Equipment in the books of Delima Bhd The rele... View the full answer