Question 2

a. Define with an example of a non-current asset and an intangible non-current asset.[4 marks]

b. Good Gloves Sdn Bhd is a glove manufacturing company. In a review of its provisions for the year ended 31 March 2022, Good Glovess assistant accountant has suggested the following accounting treatments:

i. Making a provision for a constructive obligation of RM400,000; this being the sales value of goods expected to be returned by retail customers after the year end under the companys advertised 30-day returns policy

ii. Based on past experience, a RM200,000 provision for unforeseen liabilities arising after the year end.

Required:

Explain which of the above suggestions is permitted by Malaysia Financial Reporting Standards. [6 marks]

Metric owns an item of plant which has a carrying amount of RM248,000 as at 1 April 2020. It is being depreciated at 12% per annum on a reducing balance basis. The plant is used to manufacture a specific product which has been suffering a slow decline in sales. Metric has estimated that the plant will be retired from use on 31 March 2023. The estimated net cash flows from the use of the plant and their present values are:

	Net cash flows RM	Present values RM
Year to 31 March 2021	120,000	109,200
Year to 31 March 2022	80,000	66,400
Year to 31 March 2023	52,000	39,000
	252,000	214,600

On 1 April 2022, Metric had an alternative offer from a rival to purchase the plant for RM200,000.

Required:

Calculate the value of the plant to be recognised in Metrics statement of financial position as at 31 March 2021. Show all relevant workings. [5 marks]