Hartamas Bhd is a company involved in manufacturing, packaging, and selling of frozen food and beverage products
Question:
Hartamas Bhd is a company involved in manufacturing, packaging, and selling of frozen food and beverage products for local and international market in Seri Kembangan. The finance department of the company is preparing the final process of financial statement for the year ended 31 December 2022. The financial statements will be authorized for issue on 31 March 2023 to the shareholders. The following balances were extracted from the book of account as at 31 December 2022: Debit Credit RM'000 RM'000 Ordinary shares 580,000 Retained profit 489,500 General reserves 5,000 Loan from MBS Bank 356,000 Revenue 1,270,000 Cost of sales 280,000 Tax paid 20,000 Dividend income 2,600 Administrative expenses 118,000 Distribution expenses 89,000 Finance expenses 56,000 Others operating expenses 4,000 Investment in CPT Bhd 796,000 8% Fixed deposit: BMMB Bhd 200,000 Intangible Assets 80,000 Accumulated amortization of intangible assets as at 1 January 2022 24,000 Biological Assets 1,100 Property, plant, and equipment as at 1 January 2022: Land 3,000 Building at cost 200,000 Plant and machinery at cost 520,000 Accumulated depreciation as at 1 January 2022: Building 80,000 Plant and machinery 225,000 Inventories 385,000 Trade receivables and payables 409,000 350,000 Cash and bank balances 221,000 3,382,100 3,382,100 CONFIDENTIAL 3 AC/NOV 2023/FAR460 Hak Cipta Universiti Teknologi MARA CONFIDENTIAL The following additional information is available: 1. Upon an investigation, the account clerk revealed that the following errors were made and no adjustment were yet to be made. i. Cash sales on 18 December 2021 amounting to RM100,000 were recorded as credit sales by mistake. ii. A payment for credit purchase to a supplier totaling RM180,000 in May 2022 was mistakenly accounted as maintenance cost. 2. The building of the company was depreciated at 5% per annum on a period of ownership basis, whereas plant and equipment was depreciated at 10% per annum on a yearly basis. All the property, plant, and equipment are using straight line method. The company adopts the revaluation model for its building. Depreciation for the year should be treated as administrative cost. 3. Hartamas Bhd decided to do impairment test to one of its machines, Machine A as there was a physical damage due to extensive use to meet the increase demand. On 1 January 2022, the carrying value of the machine A was RM6,400,000 (Cost RM16,000,000) with remaining useful life of 4 years. While the fair value less cost to sell was RM6,100,000 and the value-in-use was determined to be RM6,200,000. 4. As at 31 December 2022, one of the buildings, Building A in Setia Alam, has been transferred to investment property since the whole building were rented out to a third party. Building A was purchased on 1 March 2018 for RM1,500,000. At the date of transfer the fair value of the building was RM1,300,000. The company adopted the fair value model for its investment property. 5. The Company's biological assets consist of two thousand (2,000) 2-years old rabbits which were purchased on 1 January this year. The Company was in the early stage of breeding and maturing the rabbits and expected to sell them in 3 years-time. On 1 July 2022, the company bought an additional five hundred (500) 6-months old rabbits. General information about the fair value costs to sell of the rabbit were as follows: Date Age RM per rabbit 1 January 2022 2 years old 505 1 July 2022 6 months old 205 31 December 2022 3 years old 805 31 December 2022 2 years old 555 31 December 2022 1 year old 405 31 December 2022 6 months old 305 6.The company has amortised all intangible assets on a straight-line basis within 10 years of their useful lives and charged per year basis in the statement of profit or loss. 7.A group of customers is suing for RM2,000,000 in compensation for hospitalisation due to severe food poisoning caused by an expired frozen product purchased from an authorised distributor in December 2022. The company's lawyer believes that the plaintiff has a 30% chance of losing the case as at 18 December 2022, because the product was expired at the time of delivery to the distributors. 8. On 1 April 2023, the board of directors of Hartamas Bhd declared a final dividend amounting to RM500,000 in respect of the financial year ended 31 December 2022. 9. The current tax expense for the year ended was estimated at RM24,000,000. REQUIRED: PART A (GROUP PROJECT 1) a. Refer to additional information (1). Discuss the appropriate accounting treatment for the information found for year ended 31 December 2022. Prepare the relevant journal entries. (Show relevant workings, narration for the journal is not required). b. Refer to additional information (3). Explain the appropriate accounting for impairment test conducted on Machine X on 31 October 2022. Prepare relevant journal. (Show relevant workings, narration for the journal is not required). c. Refer to additional information (4). Prepare the relevant journal entries for the transfer of Building A from PPE to IP. (Show relevant workings, narration for the journal is not required). d. Refer to additional information (5). Prepare the relevant journal entries for the subsequent measurement of the rabbits for the year ended 31 December 2022. (Show relevant workings, narration for the journal is not required). e. Refer to additional information (6). Prepare relevant journal entries to record the transactions. (Show relevant workings, narration for the journal is not required). f. Refer to additional information (7). Discuss the appropriate accounting treatment for lawsuit for year ended 31 December 2022. Prepare the relevant journal entries. (Show relevant workings, narration for the journal is not required). g. Refer to additional information (8). Explain the appropriate accounting treatment when the Company declares the ordinary dividend after the reporting period. Prepare the following financial statements in accordance with the requirements of the Companies Act 2016 and MFRS101 Presentation of Financial Statements and other relevant Malaysian Financial Reporting Standards: a. Statement of Profit or Loss and other Comprehensive Income for the year ended 31 December 2022. b. Statement of Changes in Equity for the year ended 31 December 2022. c. Statement of Financial Position as at 31 December 2022 d. Notes to Property, Plant, and Equipment for the year ended 31 December 2022.
Global Marketing management
ISBN: 978-0470505748
5th edition
Authors: Masaaki Kotabe, Kristiaan Helsen