BKAR1013 Financial Accounting and Reporting I

First Semester 2018/2019 (A181)

Kumpulan E

MINI CASE 3

Prepared For:
Dr. Zakiyah Binti Sharif

Prepared By:
OH YING HUI
254475
Mini Case 3
Question 1
A. Current assets are described as the company plans to use up or convert into cash
within one year from the reporting date such as account receivable and bank.
Non-current assets are described as the long-term in nature and usually depreciated
such as Land and Equipment.

B.
Item Land Land Buildings Other
Improvement Accounts
1. RM560,000
(Notes payable)
2. RM560,000.
3. RM50,000.
4. RM60,000.
5. (RM10,000)
6. RM48,000
7. RM315,000.
8. RM60,000.
9. RM40,000.
10. (RM30,000.)
11. RM20,000
12 RM28,000.
13. RM10,000

Question 2:

COSTS RM
Cost of material to construct PQ machine 100,000
Labour cost to construct PQ machine 50,000
Allocated overhead costs 25,000
Allocated financing costs, recognised to be capitalised 16,000
Cost of installation 20,000
Safety inspection costs prior to use 4,000
Total cost of machine PQ 215,000

Question 3:

No. Account Titles Debit Credit

1. Machinery A 78,000
Equipment A 26,000
Cash 104,000
2. Equipment 25,000
Contributed share capital 25,000
3. Equipment 15,000
Account Payable 15,000
Account Payable 15,000
 Cash 15,000
4. Machine (B) 200,000
Notes Payable 200,000
Down Payment 50,000
Cash 50,000
Instalment (48778 x 3.605) 175,845
Cash 175,845

Question 4

(i) Cost of
Land : RM
Purchase
Price 560,000

Demolished Old Building 43,000

Proceed from the sale of old
building (56,000)
Cost of land clearing 37,500

Trees and other landscaping 34,000

618,500

(ii) Cost of Building :

Excavation
Fees 52,100

Architectural design fees 77,900

Building permit fees 4,600

Cost of
construction 430,400

Temporary house for workers 25,000

6-month superintended salary
guarding 25,000

615,000

(iii) Cost of Land Improvement :

Parking lots, streets and side walk 36,700

Fences around the building 50,000

86,700
(b)

Cost allocated to machine :

= (78750 / 90000 ) x 80,000

= RM70,000

Cost of Machine 70,000

Installation cost 18,000
Safety Inspection cost 9,000
Total cost of machine 97,000

Cost allocated to equipment :

= 11250 / 90000 ) x 80,000

= RM10,000

Content Debit (RM) Credit (RM)

Machine 97000
Equipment 10000
Cash 22000

Distributed Share Capital 85000

( Purchased Machine and Equipment)

(c )

Accumulated Depreciation :
= ( 181000 - 15000 ) / 10 x 8

= RM132,800

Cost of Old Crane 181000

(-) Accumulated Depreciation -132800

Book Value 48200

Fair value of old crane 56000

(-) Book Value -48200

Gain on disposal asset 7800

Cash
paid 154000
Fair Value of old crana 56000

Cost of new crane 210000

 Debit
Date Content (RM) Credit (RM)

Jun-16 New crane 210000

Accumulated Depreciation 132800

Old
crane 181000

Cash 154000
Gain on disposal asset 7800
(Exchange old crane to new crane )

Question 5
(a)

RM

Manufacturer's list price 380,000

(-) Trade discount (38,000)

342,000

Delivery charge 6,800

Installation costs 29,600

Start-up and related pre-production
costs 15,000

393,400

Maintenance fees charge, small spare part and the pre-payment of the insurance are considered
as expenses and cannot be treated as a part of assets cost. It only can recognized expenses which
help to make the machine ready to be used as cost of assets, other than that will be recognized
as expenses.

(b)

Cost of Land : RM
 Purchase price 2,800,000

Legal fees 200,000

Cost of Demolition 150,000

Cost of permanent tree planting 50,000

Insurance 24,000

3,224,000

Cost of New factory RM

Land Survey 12,000

Cost of drawing new factory plan 80,000

Insurance 13,000

Building permit fees 10,000

Cost of construction 1,500,000

1,615,000

(c )

Cost of building 15000000

(-) Accumulated Depreciation (3500000)

Book Value 11500000

Fair value of building 20000000

(-) Book Value (11500000)

Gain on disposal asset 8500000

Cost of new building RM

Cash payment 5,000,000

Fair value of old building 20,000,000

25,000,000
 Debit
Content (RM) Credit (RM)

Building (new) 25000000

Accumulated Depreciation 3500000

Building (old) 15000000

Cash 5000000
Gain on disposal asset 8500000