SS CT 1 FAR270 Sem MAC2022 Student

FAR270 COMMON TEST 1
SEM MAC-AUG 2022
QUESTION 1
A. (i)
1. Capitalised
2. Capitalised
3. Capitalised
4. Expense off
5. Expense off
(ii) Initial cost of new computer on 1 July 2021
Cost item RM
Computer 7,000
Custom made software 3,500
Installation and testing 700
Transportation cost 200
Initial costs 11,200
B (i) Carrying amount of the machinery at 30 June 2021
RM
Initial cost as at 1 July 2016 2,700,000
Less: Accumulated depreciation (1,350,000)
Carrying value as at 1 July 2021 1,350,000
Less: Carrying value of old component (150,000)
300,000 – (300,000 x 10% x 5 years)
5 years : 1/7/2016 – 30/6/2021
Add: Cost of new component 500,000
Carrying amount after the replacement as at 1 July 2021 1,700,000
(ii)
RM RM
1 July 2021 Dr Machinery 500,000
Cr Cash/Bank 500,000
Dr Accumulated Depreciation 150,000

(300,000 x 10% x 5 years)
Dr SOPL- Loss on disposal 150,000
Cr Machinery 300,000
1|P age
C. (i) Surplus or deficit of Building
RM
Carrying amount of building at 1 January 2020 19,330,000
Accumulated depreciation (1,380,714)
(19,330,000/28) x 2
Carrying amount at 31 December 2021 17,949,286
Fair value at 31 December 2021 22,000,000
Surplus on revaluation 4,050,714
ii. Accounting treatment for land
On 31 December 2021, there is a surplus on revaluation of RM2,200,000(RM5,000,000 –

RM2,800,000). Since there was a deficit of RM200,000 ( RM3,000,000 – RM2,800,000) during the
initial revaluation, only RM2,000,000 of the surplus will be transferred to the Asset revaluation
Reserve. The balance of RM200,000 is off set in the Statement of Profit or Loss. The carrying amount
of the land for 31 December 2021 is RM5,000,000.
iii. Journal Entries
RM RM
31/12/2021 DR Land 2,200,000
CR Asset Revaluation Reserve- Land 2,000,000
CR SOPL 200,000
DR Building 4,050,714
CR Asset Revaluation Reserve 4,050,714
DR Depreciation Building 690,357

(19,330,000/28)
CR Accumulated Depreciation 690,357
DR Accumulated Depreciation – 1,380,714

Building [(19,330,000/28) x 2 years]
CR Building 1,380,714
D.
Cost/Valuation Land Building Motor Vehicle

Balance at 1 January 2021 1,000,000 3,000,000
Addition 150,000
Disposal (1,000,000) (1,200,000)
Balance at 31 December 2021 1,800,000 150,000
Accumulated depreciation
Balance at 1 January 2021 750,000
Charge for the year 115,000 13,500
(62,500 + 52,500) W1 ([150,000-15,000)/10]
Disposal (325,000)
2|P age
(300,000 + 25,000) W2
Balance at 31 December 2021 540,000 13,500
Carrying amount as at 31 0 1,260,000 136,500

December 2021
W1 – 1/1/2021 ---------------------------1/6/2021------------------------31/12/2021
5/12 6/12
RM3,000,000 RM1,800,000 (RM3,000,000 -RM1,200,000)
Depreciation charge = RM3,000,000 x 5% x 5/12 = RM62,500
RM1,800,000 x 5% x 7/12 = RM52,500
------------------------
RM115,000
W2 – Working for accumulated depreciation for disposed asset:
RM1,200,000 x 5% x 5 years = RM300,000
RM1,200,000 x 5% x 5/12 = RM25,000
-------------------
RM325,000
Question 2
A.
i. Non-investment Property
ii. (Bonus mark)
iii. Investment Property
iv. Investment Property
v. Non-investment Property
B.
a.
LongTong Bhd
Statement of Profit or Loss (extract) for the year ended 31 December 2021
Other income - Fair Value Gain of Investment Property 2,000,000
Expenses
3|P age
Depreciation Property, Plant and Equipment 250,000
(RM10,000,000/20 years X 6/12)
Statement of Financial Position (extract) as at 31 December 2021
Non-Current Asset RM
Property, Plant and Equipment 12,000,000
Equity
Asset Revaluation Reserve 2,250,000
(RM12,000,000-[RM10,000,000-RM250,000])
b. Explain the accounting treatment in relation to the above as at 1 July 2021 and as at 31 December
2021.
On 1 July 2021, the building will be classified as MFRS116 building as there was a change in use from
rented out property to owner-occupied property. The accounting treatment in accordance with
MFRS140 Investment Property is to measure the owner-occupied property at its deemed cost of fair
value RM 10,000,000 on the date of transfer. RM2,000,000 (RM10,000,000-RM8,000,000) being the
difference of fair value at the date of transfer and prior year fair value is recognised as gain in fair
value√ of investment property in the statement of profit or loss. The building is then depreciated
over the remaining useful life of 20 years. The depreciation of the building for the year ended 31
December 2021 is RM250,000 (RM10,000,000/20 x 6/12).
On 31 December 2018, there is revaluation of MFRS116 Building. There is surplus on revaluation of

MFRS116 of RM2,250,000 since the fair value is RM12,000,000 at its carrying amount is RM9,750,000.
This surplus on revaluation is credited to the asset revaluation reserve.
4|P age

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FAR270 COMMON TEST 1

SEM MAC-AUG 2022

(ii) Initial cost of new computer on 1 July 2021

B (i) Carrying amount of the machinery at 30 June 2021

Dr Accumulated Depreciation 150,000

ii. Accounting treatment for land

On 31 December 2021, there is a surplus on revaluation of RM2,200,000(RM5,000,000 –

iii. Journal Entries

DR Depreciation Building 690,357

DR Accumulated Depreciation – 1,380,714

Cost/Valuation Land Building Motor Vehicle

Carrying amount as at 31 0 1,260,000 136,500

RM3,000,000 RM1,800,000 (RM3,000,000 -RM1,200,000)

Depreciation charge = RM3,000,000 x 5% x 5/12 = RM62,500

RM1,800,000 x 5% x 7/12 = RM52,500

W2 – Working for accumulated depreciation for disposed asset:

RM1,200,000 x 5% x 5 years = RM300,000

RM1,200,000 x 5% x 5/12 = RM25,000

ii. (Bonus mark)

iii. Investment Property

iv. Investment Property

Other income - Fair Value Gain of Investment Property 2,000,000

(RM10,000,000/20 years X 6/12)

Statement of Financial Position (extract) as at 31 December 2021

Property, Plant and Equipment 12,000,000

Asset Revaluation Reserve 2,250,000

On 31 December 2018, there is revaluation of MFRS116 Building. There is surplus on revaluation of

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