Convincing Features
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Ladang Segar Bhd (LSB or the Company) has been involved in the manufacture of various dairy products since 2016. The company gets its milk supply from various cattle farming areas in Sarawak. On 1 July 2023, the Company ventured into agriculture, breeding dairy cattle for its milk production. The following is the trial balance of LSB as at 30 June 2024. The financial statement is authorised for issue on 30 September 2024.
| Debit (RM) | Credit (RM) |
|---|---|
| Ordinary share capital 5,500,000 | |
| 7% Preference share capital 2,500,000 | |
| Asset revaluation reserve (land) 172,000 | |
| Retained earnings (1 July 2023) 440,000 | |
| 5% Debenture 500,000 | |
| Accounts payable 30,400 | |
| Provision for future operating losses 23,000 | |
| Rental income 64,000 | |
| Interim ordinary dividend 250,000 | |
| Interim preference dividend 175,000 | |
| Land at revaluation 2,000,000 | |
| Building at cost 4,000,000 | |
| Machineries at cost 850,000 | |
| Motor vehicles at cost 446,000 | |
| Accumulated depreciation (1 July 2023) | |
| Building 1,000,000 | |
| Machineries 336,000 | |
| Motor vehicles 105,000 | |
| Investment property 1,500,000 | |
| Intangible assets 300,000 | |
| Accumulated ammortisation of intangible assets (1 July 2023) 50,000 | |
| Biological assets 680,000 | |
| Bank balance 458,500 | |
| Accounts receivable 151,000 | |
| Allowance for accounts receivable 11,000 | |
| Closing inventories 185,000 | |
| Sales 2,024,300 | |
| Cost of sales 950,000 | |
| Administrative expenses 309,200 | |
| Selling and distribution expenses 116,000 | |
| Operating cost for cattle breeding 240,000 | |
| Debenture interest 25,000 | |
| Tax paid 120,000 | |
| 12,755,700 | 12,755,700 |
The following requirements relate to the additional information above. Relate your answers to the relevant MFRSs.
a) Based on the additional information (1), explain briefly the accounting treatment of the revaluation of land on 30 June 2024. Prepare the journal entry for the revaluation of the building for the year ended 30 June 2024.
(8 marks)
b) Based on the additional information (2), prepare relevant journal entries to record the disposal of the license. (Show relevant workings, narration for the journal is not required).
(8 marks)
c) Based on the additional information (3), discuss briefly the classification of the 3-storey building.
(5 marks)
d) Based on the additional information (4), calculate the gain or loss in fair value less cost to sell and the carrying amount of the livestock as at 30 June 2024.
(8 marks)
e) Based on the additional information (5), explain the accounting treatment on the legal suit faced by the company for the year ended 30 June 2024.
(8 marks)
f) Based on the additional information (6), discuss the appropriate adjustment for the error made in recording the payment. Prepare the journal entries to record the error and the increase in allowance for accounts receivable.
(8 marks)
g) Based on the additional information (7), explain the accounting treatment on the final ordinary dividend declared on 25 July 2024 in accordance with the appropriate accounting standard.
(5 marks)
(Show all relevant workings)
(50 marks)
Prepare the following financial statements for LSB in accordance with the requirements of the Companies Act 2016 and MFRS101 Presentation of Financial Statements and other Malaysian Financial Reporting Standards:
a) Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2024.
b) Statement of Changes in Equity for the year ended 30 June 2024.
c) Statement of Financial Position as at 30 June 2024.
d) Notes to Property, Plant, and Equipment.
(Show all relevant workings)
(50 marks)
Total: 100 Marks
