Kemuning Bhd is involved in retail business. Its financial statements will be authorised for issue on...

 

 

  
 

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Kemuning Bhd is involved in retail business. Its financial statements will be authorised for issue on 31 March 2021. Given below is the trial balance as at 31 December 2020: Revenue Cost of sales Inventory at 31 Dec 2020 Administrative expenses Rental income from investment property Finance costs Land at valuation-1 Jan 2020 Building at valuation-1 Jan 2020 Accumulated depreciation on Building at 1 Jan 2020 Plant at cost Accumulated depreciation on Plant at 1 Jan 2020 Investment property-valuation 1 January 2020 Selling and distribution cost Trade receivables Bank Trade payables Ordinary share capital Non-redeemable preference share capital Other payables Revaluation Reserve -1 January 2020 Retained earnings- 1 January 2020 Development cost at 1 January 2020 (Note 8) 6% Bank loan Franchise at cost on 1 January 2020 Accumulated amortisation on Franchise 1 Jan 2020 Interim ordinary dividend paid Interim preference dividend paid Tax paid DR (RM) RM 000 572,200 42,000 66,600 20,000 300,000 56,000 144,000 48,000 60,000 55,000 11,200 4,000 16,000 8,000 6,000 4,000 1,413,000 CR(RM) RM'000 931,000 4,000 4,200 67,200 47,200 104,800 68,000 40,000 30,200 105,200 8,000 3,200 1,413,000 3. On 1 January 2020, Kemuning Bhd decided to sell one of its buildings which has a carrying amount of RM18,500,000. The building has been revalued previously at RM20,000,000. The building was not occupied since 1 January 2020. An active programme has been made to locate a buyer. The building is being marketed at its fair value of RM18,600,000. The expected cost to sell is RM60,000. As at 31 December 2020, the building has not been sold. 4. On 1 July 2020, Kemuning Bhd acquired a new equipment which cost of RM8,000,000 from Abel Bhd. Kemuning Bhd issued new ordinary shares as purchase consideration to Abel Bhd. The equipment is to be depreciated on a straight line basis over five years with nil residual value. Kemuning Bhd also received a government grant of RM160,000 on that date for the acquisition of the new equipment. It is the policy of the company to use the deferred income method for the government grant received 111. iv. Based on (3), (a) Explain the classification of the building on 1 January 2020. (2 marks) (b) Based on your classification in (a) above, explain the measurement of the building (2 marks) Based on (4), (a) Prepare journal entries to account for the acquisition of the equipment on 1 July 2020. (1 mark) (b) Prepare journal entries to account for the grant received. (2 marks) Kemuning Bhd is involved in retail business. Its financial statements will be authorised for issue on 31 March 2021. Given below is the trial balance as at 31 December 2020: Revenue Cost of sales Inventory at 31 Dec 2020 Administrative expenses Rental income from investment property Finance costs Land at valuation-1 Jan 2020 Building at valuation-1 Jan 2020 Accumulated depreciation on Building at 1 Jan 2020 Plant at cost Accumulated depreciation on Plant at 1 Jan 2020 Investment property-valuation 1 January 2020 Selling and distribution cost Trade receivables Bank Trade payables Ordinary share capital Non-redeemable preference share capital Other payables Revaluation Reserve -1 January 2020 Retained earnings- 1 January 2020 Development cost at 1 January 2020 (Note 8) 6% Bank loan Franchise at cost on 1 January 2020 Accumulated amortisation on Franchise 1 Jan 2020 Interim ordinary dividend paid Interim preference dividend paid Tax paid DR (RM) RM 000 572,200 42,000 66,600 20,000 300,000 56,000 144,000 48,000 60,000 55,000 11,200 4,000 16,000 8,000 6,000 4,000 1,413,000 CR(RM) RM'000 931,000 4,000 4,200 67,200 47,200 104,800 68,000 40,000 30,200 105,200 8,000 3,200 1,413,000 3. On 1 January 2020, Kemuning Bhd decided to sell one of its buildings which has a carrying amount of RM18,500,000. The building has been revalued previously at RM20,000,000. The building was not occupied since 1 January 2020. An active programme has been made to locate a buyer. The building is being marketed at its fair value of RM18,600,000. The expected cost to sell is RM60,000. As at 31 December 2020, the building has not been sold. 4. On 1 July 2020, Kemuning Bhd acquired a new equipment which cost of RM8,000,000 from Abel Bhd. Kemuning Bhd issued new ordinary shares as purchase consideration to Abel Bhd. The equipment is to be depreciated on a straight line basis over five years with nil residual value. Kemuning Bhd also received a government grant of RM160,000 on that date for the acquisition of the new equipment. It is the policy of the company to use the deferred income method for the government grant received 111. iv. Based on (3), (a) Explain the classification of the building on 1 January 2020. (2 marks) (b) Based on your classification in (a) above, explain the measurement of the building (2 marks) Based on (4), (a) Prepare journal entries to account for the acquisition of the equipment on 1 July 2020. (1 mark) (b) Prepare journal entries to account for the grant received. (2 marks)

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