QUESTION $4(15$ MARKS$)$

Santapan Rohani Bhd decided to repurchase $10\%$ of its ordinary shares under the company's buyback scheme at RM$1\mathrm{.}70$ per share. Other costs of buying back the shares including broker commission and fees amounted to RM$70,000.$

At the date of the repurchase, the shareholders' equity of Santapan Rohani Bhd showed the following balances:

Issued and paid up capital:

$8,000,000$ Ordinary shares at RM$1$ per unit

Reserves:

Retained earnings

RM$\text{'}000$

$8,000$

$[2,500],[10,500]$

Required:

$($i$)$ Prepare journal the required journal entry $($narration is not required$)$ to account for the share acquisition under the following alternatives:

Alternative $1$: If the repurchased shares are immediately retired.

Alternative $2$: If the repurchased shares are kept as treasury shares.

$(7$ marks$)$

$($ii$)$ Advise the board of directors of Santapan Rohani Bhd as to the legal requirements that must be fulfilled before the company embark on the share buyback scheme.

$(5$ marks$)$