SusuSedap Agro Bhd. involves in agriculture industry and has been in the market for nearly two...

 

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SusuSedap Agro Bhd. involves in agriculture industry and has been in the market for nearly two decades. SusuSedap has been producing fresh milk from their agriculture land in Pahang. The plant in Pahang has been operating for almost a decade producing fresh milks and delivers them daily to their operators. The following information are available as at 30 December 2020: Mature cattle - 1000 units Young cattle = 500 units The transportation costs to bring the cattle to the market are RM1,500 per truck. A truck can accommodate approximately 30 cattle per trip. Cattle (category) ture cattle ing cattle *Market value = production (litre) x lactation rate x price of milk Lactation rate Price of milk fotal market value (RM) 0.45 0.45 Production 5,000 litres 2,000 litres 0.5 RM1,125 RM 450 0.5 SusuSedap has decided to change their headquarters from Pahang to Kuala Lumpur. SusuSedap has purchased a piece of land in Damansara on 1 February 2017, for RM3million. The purchased land has a vacant and unoccupied old building, that was demolished to make way for the new building. The new building will be used as SusuSegar's new headquarters, and construction had started in January 20119 and completed on 30 December 2020. The construction costs had utilised all the borrowings the company have since January 2018. Period of construction was halted from 1 April 2020 until 31 May 2020 due to the Restricted Movement Control Order (RMCO) by the Government. The following costs were incurred: Legal fees for obtaining legal title of the land Demolition of the vacant building Fees for architects in designing the new building Real property gains tax paid to LHDN Government soft loan obtained to construct the new building, 5% interest, payable in 10 years period Construction cost Scrapped materials from old building disposed at scrap 4,000 RM 40,000 80,000 30,000 6,000 11 million 2 million value Loan received from SME Bank for construction of I million asset, 9% interest payable in 10 years (a) Do you think the building meets the definition of "qualifying asset as stated in MFRS 123? Justify your answer. (3 marks) (b) What does MFRS 123 state about interest on borrowings when constructing assets? (2 marks) (c) Determine the amount of interest on borrowings that are allowed to be capitalised as the cost of the new building. (5 marks) (d) Determine the total amount to be recognised as asset at the end of the year 2020. (5 marks) (e) Calculate the fair value of cattle for SusuSedap Agro Bhd and justify your answer with respect to MFRS 141. 102 (5 marks) (f) Show how the above transactions (a) to (e) are recorded in the financial statements of SusuSegar Agro Bhd, at the end of 2020. Showing clearly the (abstract) disclosure, the Statement of Financial Positions and Statement of Profit or Loss and Other Comprehensive Income. (10 marks) (g) MFRS 141 Agriculture was a controversial standard mainly because the standard requires assets to agriculture activity be measured at fair value. Briefly explain the four (4) arguments from those who oppose measuring activity based on fair value. (4 marks) (h) What is the basis of IASB on using fair value as basis of measurement for agriculture activities? (1 mark) SusuSedap Agro Bhd. involves in agriculture industry and has been in the market for nearly two decades. SusuSedap has been producing fresh milk from their agriculture land in Pahang. The plant in Pahang has been operating for almost a decade producing fresh milks and delivers them daily to their operators. The following information are available as at 30 December 2020: Mature cattle - 1000 units Young cattle = 500 units The transportation costs to bring the cattle to the market are RM1,500 per truck. A truck can accommodate approximately 30 cattle per trip. Cattle (category) ture cattle ing cattle *Market value = production (litre) x lactation rate x price of milk Lactation rate Price of milk fotal market value (RM) 0.45 0.45 Production 5,000 litres 2,000 litres 0.5 RM1,125 RM 450 0.5 SusuSedap has decided to change their headquarters from Pahang to Kuala Lumpur. SusuSedap has purchased a piece of land in Damansara on 1 February 2017, for RM3million. The purchased land has a vacant and unoccupied old building, that was demolished to make way for the new building. The new building will be used as SusuSegar's new headquarters, and construction had started in January 20119 and completed on 30 December 2020. The construction costs had utilised all the borrowings the company have since January 2018. Period of construction was halted from 1 April 2020 until 31 May 2020 due to the Restricted Movement Control Order (RMCO) by the Government. The following costs were incurred: Legal fees for obtaining legal title of the land Demolition of the vacant building Fees for architects in designing the new building Real property gains tax paid to LHDN Government soft loan obtained to construct the new building, 5% interest, payable in 10 years period Construction cost Scrapped materials from old building disposed at scrap 4,000 RM 40,000 80,000 30,000 6,000 11 million 2 million value Loan received from SME Bank for construction of I million asset, 9% interest payable in 10 years (a) Do you think the building meets the definition of "qualifying asset as stated in MFRS 123? Justify your answer. (3 marks) (b) What does MFRS 123 state about interest on borrowings when constructing assets? (2 marks) (c) Determine the amount of interest on borrowings that are allowed to be capitalised as the cost of the new building. (5 marks) (d) Determine the total amount to be recognised as asset at the end of the year 2020. (5 marks) (e) Calculate the fair value of cattle for SusuSedap Agro Bhd and justify your answer with respect to MFRS 141. 102 (5 marks) (f) Show how the above transactions (a) to (e) are recorded in the financial statements of SusuSegar Agro Bhd, at the end of 2020. Showing clearly the (abstract) disclosure, the Statement of Financial Positions and Statement of Profit or Loss and Other Comprehensive Income. (10 marks) (g) MFRS 141 Agriculture was a controversial standard mainly because the standard requires assets to agriculture activity be measured at fair value. Briefly explain the four (4) arguments from those who oppose measuring activity based on fair value. (4 marks) (h) What is the basis of IASB on using fair value as basis of measurement for agriculture activities? (1 mark) SusuSedap Agro Bhd. involves in agriculture industry and has been in the market for nearly two decades. SusuSedap has been producing fresh milk from their agriculture land in Pahang. The plant in Pahang has been operating for almost a decade producing fresh milks and delivers them daily to their operators. The following information are available as at 30 December 2020: Mature cattle - 1000 units Young cattle = 500 units The transportation costs to bring the cattle to the market are RM1,500 per truck. A truck can accommodate approximately 30 cattle per trip. Cattle (category) ture cattle ing cattle *Market value = production (litre) x lactation rate x price of milk Lactation rate Price of milk fotal market value (RM) 0.45 0.45 Production 5,000 litres 2,000 litres 0.5 RM1,125 RM 450 0.5 SusuSedap has decided to change their headquarters from Pahang to Kuala Lumpur. SusuSedap has purchased a piece of land in Damansara on 1 February 2017, for RM3million. The purchased land has a vacant and unoccupied old building, that was demolished to make way for the new building. The new building will be used as SusuSegar's new headquarters, and construction had started in January 20119 and completed on 30 December 2020. The construction costs had utilised all the borrowings the company have since January 2018. Period of construction was halted from 1 April 2020 until 31 May 2020 due to the Restricted Movement Control Order (RMCO) by the Government. The following costs were incurred: Legal fees for obtaining legal title of the land Demolition of the vacant building Fees for architects in designing the new building Real property gains tax paid to LHDN Government soft loan obtained to construct the new building, 5% interest, payable in 10 years period Construction cost Scrapped materials from old building disposed at scrap 4,000 RM 40,000 80,000 30,000 6,000 11 million 2 million value Loan received from SME Bank for construction of I million asset, 9% interest payable in 10 years (a) Do you think the building meets the definition of "qualifying asset as stated in MFRS 123? Justify your answer. (3 marks) (b) What does MFRS 123 state about interest on borrowings when constructing assets? (2 marks) (c) Determine the amount of interest on borrowings that are allowed to be capitalised as the cost of the new building. (5 marks) (d) Determine the total amount to be recognised as asset at the end of the year 2020. (5 marks) (e) Calculate the fair value of cattle for SusuSedap Agro Bhd and justify your answer with respect to MFRS 141. 102 (5 marks) (f) Show how the above transactions (a) to (e) are recorded in the financial statements of SusuSegar Agro Bhd, at the end of 2020. Showing clearly the (abstract) disclosure, the Statement of Financial Positions and Statement of Profit or Loss and Other Comprehensive Income. (10 marks) (g) MFRS 141 Agriculture was a controversial standard mainly because the standard requires assets to agriculture activity be measured at fair value. Briefly explain the four (4) arguments from those who oppose measuring activity based on fair value. (4 marks) (h) What is the basis of IASB on using fair value as basis of measurement for agriculture activities? (1 mark) SusuSedap Agro Bhd. involves in agriculture industry and has been in the market for nearly two decades. SusuSedap has been producing fresh milk from their agriculture land in Pahang. The plant in Pahang has been operating for almost a decade producing fresh milks and delivers them daily to their operators. The following information are available as at 30 December 2020: Mature cattle - 1000 units Young cattle = 500 units The transportation costs to bring the cattle to the market are RM1,500 per truck. A truck can accommodate approximately 30 cattle per trip. Cattle (category) ture cattle ing cattle *Market value = production (litre) x lactation rate x price of milk Lactation rate Price of milk fotal market value (RM) 0.45 0.45 Production 5,000 litres 2,000 litres 0.5 RM1,125 RM 450 0.5 SusuSedap has decided to change their headquarters from Pahang to Kuala Lumpur. SusuSedap has purchased a piece of land in Damansara on 1 February 2017, for RM3million. The purchased land has a vacant and unoccupied old building, that was demolished to make way for the new building. The new building will be used as SusuSegar's new headquarters, and construction had started in January 20119 and completed on 30 December 2020. The construction costs had utilised all the borrowings the company have since January 2018. Period of construction was halted from 1 April 2020 until 31 May 2020 due to the Restricted Movement Control Order (RMCO) by the Government. The following costs were incurred: Legal fees for obtaining legal title of the land Demolition of the vacant building Fees for architects in designing the new building Real property gains tax paid to LHDN Government soft loan obtained to construct the new building, 5% interest, payable in 10 years period Construction cost Scrapped materials from old building disposed at scrap 4,000 RM 40,000 80,000 30,000 6,000 11 million 2 million value Loan received from SME Bank for construction of I million asset, 9% interest payable in 10 years (a) Do you think the building meets the definition of "qualifying asset as stated in MFRS 123? Justify your answer. (3 marks) (b) What does MFRS 123 state about interest on borrowings when constructing assets? (2 marks) (c) Determine the amount of interest on borrowings that are allowed to be capitalised as the cost of the new building. (5 marks) (d) Determine the total amount to be recognised as asset at the end of the year 2020. (5 marks) (e) Calculate the fair value of cattle for SusuSedap Agro Bhd and justify your answer with respect to MFRS 141. 102 (5 marks) (f) Show how the above transactions (a) to (e) are recorded in the financial statements of SusuSegar Agro Bhd, at the end of 2020. Showing clearly the (abstract) disclosure, the Statement of Financial Positions and Statement of Profit or Loss and Other Comprehensive Income. (10 marks) (g) MFRS 141 Agriculture was a controversial standard mainly because the standard requires assets to agriculture activity be measured at fair value. Briefly explain the four (4) arguments from those who oppose measuring activity based on fair value. (4 marks) (h) What is the basis of IASB on using fair value as basis of measurement for agriculture activities? (1 mark) SusuSedap Agro Bhd. involves in agriculture industry and has been in the market for nearly two decades. SusuSedap has been producing fresh milk from their agriculture land in Pahang. The plant in Pahang has been operating for almost a decade producing fresh milks and delivers them daily to their operators. The following information are available as at 30 December 2020: Mature cattle - 1000 units Young cattle = 500 units The transportation costs to bring the cattle to the market are RM1,500 per truck. A truck can accommodate approximately 30 cattle per trip. Cattle (category) ture cattle ing cattle *Market value = production (litre) x lactation rate x price of milk Lactation rate Price of milk fotal market value (RM) 0.45 0.45 Production 5,000 litres 2,000 litres 0.5 RM1,125 RM 450 0.5 SusuSedap has decided to change their headquarters from Pahang to Kuala Lumpur. SusuSedap has purchased a piece of land in Damansara on 1 February 2017, for RM3million. The purchased land has a vacant and unoccupied old building, that was demolished to make way for the new building. The new building will be used as SusuSegar's new headquarters, and construction had started in January 20119 and completed on 30 December 2020. The construction costs had utilised all the borrowings the company have since January 2018. Period of construction was halted from 1 April 2020 until 31 May 2020 due to the Restricted Movement Control Order (RMCO) by the Government. The following costs were incurred: Legal fees for obtaining legal title of the land Demolition of the vacant building Fees for architects in designing the new building Real property gains tax paid to LHDN Government soft loan obtained to construct the new building, 5% interest, payable in 10 years period Construction cost Scrapped materials from old building disposed at scrap 4,000 RM 40,000 80,000 30,000 6,000 11 million 2 million value Loan received from SME Bank for construction of I million asset, 9% interest payable in 10 years (a) Do you think the building meets the definition of "qualifying asset as stated in MFRS 123? Justify your answer. (3 marks) (b) What does MFRS 123 state about interest on borrowings when constructing assets? (2 marks) (c) Determine the amount of interest on borrowings that are allowed to be capitalised as the cost of the new building. (5 marks) (d) Determine the total amount to be recognised as asset at the end of the year 2020. (5 marks) (e) Calculate the fair value of cattle for SusuSedap Agro Bhd and justify your answer with respect to MFRS 141. 102 (5 marks) (f) Show how the above transactions (a) to (e) are recorded in the financial statements of SusuSegar Agro Bhd, at the end of 2020. Showing clearly the (abstract) disclosure, the Statement of Financial Positions and Statement of Profit or Loss and Other Comprehensive Income. (10 marks) (g) MFRS 141 Agriculture was a controversial standard mainly because the standard requires assets to agriculture activity be measured at fair value. Briefly explain the four (4) arguments from those who oppose measuring activity based on fair value. (4 marks) (h) What is the basis of IASB on using fair value as basis of measurement for agriculture activities? (1 mark) SusuSedap Agro Bhd. involves in agriculture industry and has been in the market for nearly two decades. SusuSedap has been producing fresh milk from their agriculture land in Pahang. The plant in Pahang has been operating for almost a decade producing fresh milks and delivers them daily to their operators. The following information are available as at 30 December 2020: Mature cattle - 1000 units Young cattle = 500 units The transportation costs to bring the cattle to the market are RM1,500 per truck. A truck can accommodate approximately 30 cattle per trip. Cattle (category) ture cattle ing cattle *Market value = production (litre) x lactation rate x price of milk Lactation rate Price of milk fotal market value (RM) 0.45 0.45 Production 5,000 litres 2,000 litres 0.5 RM1,125 RM 450 0.5 SusuSedap has decided to change their headquarters from Pahang to Kuala Lumpur. SusuSedap has purchased a piece of land in Damansara on 1 February 2017, for RM3million. The purchased land has a vacant and unoccupied old building, that was demolished to make way for the new building. The new building will be used as SusuSegar's new headquarters, and construction had started in January 20119 and completed on 30 December 2020. The construction costs had utilised all the borrowings the company have since January 2018. Period of construction was halted from 1 April 2020 until 31 May 2020 due to the Restricted Movement Control Order (RMCO) by the Government. The following costs were incurred: Legal fees for obtaining legal title of the land Demolition of the vacant building Fees for architects in designing the new building Real property gains tax paid to LHDN Government soft loan obtained to construct the new building, 5% interest, payable in 10 years period Construction cost Scrapped materials from old building disposed at scrap 4,000 RM 40,000 80,000 30,000 6,000 11 million 2 million value Loan received from SME Bank for construction of I million asset, 9% interest payable in 10 years (a) Do you think the building meets the definition of "qualifying asset as stated in MFRS 123? Justify your answer. (3 marks) (b) What does MFRS 123 state about interest on borrowings when constructing assets? (2 marks) (c) Determine the amount of interest on borrowings that are allowed to be capitalised as the cost of the new building. (5 marks) (d) Determine the total amount to be recognised as asset at the end of the year 2020. (5 marks) (e) Calculate the fair value of cattle for SusuSedap Agro Bhd and justify your answer with respect to MFRS 141. 102 (5 marks) (f) Show how the above transactions (a) to (e) are recorded in the financial statements of SusuSegar Agro Bhd, at the end of 2020. Showing clearly the (abstract) disclosure, the Statement of Financial Positions and Statement of Profit or Loss and Other Comprehensive Income. (10 marks) (g) MFRS 141 Agriculture was a controversial standard mainly because the standard requires assets to agriculture activity be measured at fair value. Briefly explain the four (4) arguments from those who oppose measuring activity based on fair value. (4 marks) (h) What is the basis of IASB on using fair value as basis of measurement for agriculture activities? (1 mark)

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