BBM206/05

Business Accounting II Jan 2015

Tutor-marked Assignment 1
Answer ALL questions.
1. The following trial balance was prepared by your friend.
RM'000
RM'000
Capital - 1 May 2013
230
Drawings
14
Plant at cost
83
Accumulated depreciation - plant
13
Office equipment at cost
33
Accumulated depreciation - Office equipment
8
Receivables
198
Payables
52
Sales
813
Purchases
516
Returns inwards
47
Discount allowed
4
Allowances for receivables
23
Administration costs
38
Salaries
44
Research cost to be written off
26
Loan to Kah Wan
25
Bank Overdraft
50
Bad Debts Written Off
77
Inventories - 1 May 2013
84
1,189
1,189
Additional information:
Inventories as at 30 April 2014 was valued at RM74,000.

Depreciation on plant is charged at 10% per annum on cost while

depreciation on office equipment is charged at 20% per annum on the
net book value at year-end.

Administration costs included prepaid insurance of RM3,000.

Salaries accrued is RM2,000.

It is agreed that the allowance for doubtful debts remain at RM23,000.

Required
Prepare
a) the statement of comprehensive income for the year ended 30 April 2014
[9 marks]
b) statement of financial position as at 30 April 2014
[11 marks]

2. Paragraph 57 of MFRS 138: Intangible Assets mentions that expenditures that incur
at development phase can be treated as intangible assets if they fulfil the certain
following criteria.
Describe the criteria.
[10 marks]

3. MFRS 6 Exploration for and Evaluation of Mineral Resources and MFRS

141 Agriculture are two standards that deal with natural resources.
a) Define natural resources as prescribed in the accounting standards.
[5 marks]
b) Define depletion as prescribed in the accounting standards.
[5 marks]
4. MFRS 116 requires that all depreciable assets should be depreciated and that all
plant assets, except for freehold land, are subject to depreciation.
(a) Identify the two commonly held assumptions concerning depreciation which are
false.
[6 marks]
(b) Justify why the assumptions identified in 1(a) above are false.
[4 marks]

5. Perniagaan Miley Aguilera had the following balances in the books at 30 June 2013.
Debit
Credit
RM000 RM000
Motor vehicles at cost
200
Motor vehicles accumulated depreciation 1 July 2012
70
Fixtures at cost
60
Fixtures accumulated depreciation 1 July 2012
20
Office equipment at cost
125
Office equipment accumulated depreciation 1 July 2012
45

The following adjustments have not yet been made in the books:

Motor vehicles are depreciated over four years on the straight line basis. On 31
march 2013 a motor vehicle that had cost RM20,000 on 1 July 2010 was disposed
of for RM8,000. It is the companys policy to charge a full years depreciation in the
year of the purchase, and hence none in the year of disposal. No entries have been
made for the disposal.
Fixtures are depreciated on the straight line basis over 10 years on an actual time
basis (i.e. from the date of acquisition). On 1 October 2012 fixtures were
purchased for RM40,000 whcih have not been entered in the books.
Office equipment is depreciated at 20% per annum on the reducing balance basis.

Required
Prepare ledger accounts for all the above items, showing clearly all calculation,
transfers to the Statement of Comprehensive Income for the year ending 30 June
2013, and balance to be carried down at 30 June 2013.
[25 marks]
6. Air Batu Campur Shd Bhd prepares financial statements to 31 December each
year. On 1 January it had the following balances on its non-current assets accounts:

Motor cycles (cost)

Plant and equipment (cost)
Motor cycles (accumulated depreciation)
Plant and equipment (accumulated depreciation)
3

RM
15,000
24,000
9,000
10,500

During the year to 31 December 2013 the following took place

Purchased a new machine on 1 February at a cost of RM7,500
Installed office equipment at a costs of RM11,500
Sold equipment on 1 April for RM2,000. The equipment was previously
purchased on 1 January 2009 for RM5,600.

Sold a motor cycle on 31 July for RM3,400 that had been purchased on 1
August 2010 for RM9,400 including RM100 road tax paid to Road
Transport Department and RM300 insurance to Etika Berhad for two years

Purchased a motor cycle on 1 August for RM10,000 including RM500

delivery, RM100 annual road tax and RM400 extended warranty
against mechanical defects for 36 months.

Carried out major repairs to some equipment on 1 October costing

RM15,000. This included a new motor costing RM5,000 which increased the
efficiency of the equipment by 200%.
The depreciation policy is that the company charges a full years depreciation
on non-current assets held at the end of each year using the following methods
and rates:
Motor cycles
25% p.a. reducing balance
Plant and equipment
20% p.a. straight line

Required:
Prepare the T accounts for the following accounts in the ledger of Air Batu
Campur Shd Bhd for the year ended 31 December 2013.
a) Motor cycles (cost)
[2 marks]
b) Motor cycle expenses
[2 marks]
c) Plant and equipment (cost)
[3 marks]
d) Repairs and maintenance
[1 mark]
e) Motor cycles (accumulated depreciation)
[5 marks]
f) Plant and equipment (accumulated depreciation)
[4 marks]
g) Plant and equipment (disposal)
[4 marks]
h) Motor cycles (disposal)
[4 marks]