FAR210 Financial Accounting 3 Assignment Group Project 2025-26 | UiTM

FAR210 Assignment Group Project

 INSTRUCTIONS TO CANDIDATES

PREPARATION OF FINANCIAL STATEMENTS FOR PUBLICATION PURPOSES

Latex Mattress Specialist (LMS) Bhd is a company manufacture and supply types of latex mattress in Malaysia. Specifically, the company focus on four types of latex mattress which are natural, synthetic, blended, and hybrid.

The company is incorporated in Malaysia with an authorized share capital of RM20,000,000 consisting of 10,000,000 Ordinary Shares of RM1.00 each and the remaining capital is 5% Preference Shares of RM2.00 each.

The following is the Trial Balance of the company as at 30 June 2025:

As at 30 June 2025, the following information has not been included in the company’s financial statements:

1. The information related to the PPE of the company is as follows:

a. The depreciation of PPE is determined in the following manner:

i. The building is depreciated using the straight-line method with no residual value on a yearly basis.

ii. Plant and machinery are depreciated over its useful life of 10 years on a yearly basis.

iii. Motor vehicles are depreciated at 20% per annum using the reducing balance method on a monthly basis.

iv. The land is not depreciated.

Depreciation for building, plant and machinery is to be treated as administrative expenses and depreciation for motor vehicles is to be treated as selling and distribution expenses.

b. On 1 July 2024, the freehold land and building were revalued at RM16,500,000 and RM6,000,000 respectively. Both revaluation was not yet recorded in the company’s books. On that date, the building has an estimated remaining useful life of 30 years.

c. Due to its increasing production demand, LMS Bhd has decided to purchase a new machine to improve operational efficiency. On 15 July 2024, the company purchased a latex cutting machine Model ZX-4500 from Germany. Below are the costs incurred in acquiring the machine:

Payment for the machine was made via bank transfer on the same date. No accounting entry has been recorded for this transaction.

d. On 6 April 2025, LMS Bhd disposed of one of its delivery vans (motor vehicle) for RM100,000 cash. The van had an original cost of RM220,000 and was acquired on 25 March 2023. The transaction was not recorded in the company’s accounting records.

Required:

i. Explain whether the new machine (Model ZX-4500) can be recognized in LMS Bhd’s books of account as at 30 June 2025 in accordance to Revised MASB Conceptual Framework. (3 marks)

ii. Calculate the initial cost for the new machine (Model ZX-4500) acquired by the company during the year. (4 marks)

iii. Calculate the accumulated depreciation for the disposed delivery van. (4 marks)

iv. Recommend the company on the accounting treatment of derecognition on the disposed delivery van (5 marks)

v. Advise the company on the accounting treatment of the revaluation of land and building on 1 July 2024. (4 marks)

(Total: 20 marks)

2. As at 30 June 2025, a few types of mattresses were remained unsold. Below are the details of the unsold mattress:

Due to the machining defect, 80% of synthetic mattress can only be sold at RM1,000 per unit.

Required:

i. Identify whether the unsold mattress are inventories of LMS Bhd in accordance with MFRS 102 Inventories. (3 marks)

ii. Explain the value of closing inventory as at 30 June 2025 in accordance with MFRS102 Inventories using item by item basis. (Show all workings) (5 marks

(Total: 8 marks)

3. On 6 June 2025, a new customer of LMS Bhd purchased 20 hybrid latex mattresses worth RM66,000. That customer, Teguh Furniture Sdn Bhd (TFSB) offer a 10% promissory notes due in 30 days. LMS Bhd accepted the offer.

In the same month, one of the customers with receivable amount of RM3,300 was declared bankrupt and LMS Berhad has decided to write off this amount. The allowance for trade receivables as at 30 June 2025 is RM45,000.

(Both transactions above have NOT been recorded in the company’s book)

Required:

a. Identify the maturity date and calculate the maturity value of the above promissory notes (use 360 days as number of days in a year). (show relevant workings) (4 marks)

b. Prepare all relevant journal entries for the transaction with TFSB in June 2025. (include adjusting entries and necessary workings) (2 marks)

(Total: 6 marks)

4. LMS Bhd bought one of its main raw materials from Spring King Bhd (SKB). The material is high-carbon steel wire used in most of their mattresses’ On 1 May 2025, the company order those materials amounting to RM160,000. LMS Bhd received them on 25 May 2025 with a credit term 2/10 net 60.

The company made full settlement for the above materials on 2 June 2025 by cheque.

(These transactions have been recorded in the company’s book)

Required:

i. Identify whether the transaction on 1 May 2025 give rise to financial liability in the books of LMS Bhd. (3 marks)

ii. Prepare journal entry to record the payment made by LMS Bhd on 2 June 2025. (3 marks)

(Total 6 marks)

5. At year end, the director proposed and declared a 3% final dividend on ordinary share.

6. Tax expenses to be recognized during the year are RM745,000.

7. During the year, the company provides and accrues the following:

i. Auditors’ fees of RM123,000.

ii.  Directors’ fees of RM240,000.

iii. The balance of dividend for 7% redeemable preference shares.

iv. Sales commission of RM35,000.

Required:

Considering the adjustments from No.1 – 7 and in compliance with Companies Act 2016, MFRS101 Presentation of Financial Statements and other relevant Malaysian Financial Reporting Standards:

a. Prepare the Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2025. (28 marks)

b. Present the Statement of Changes in Equity for the year ended 30 June 2025. (6 marks)

c. Determine the Statement of Financial Position as at 30 June 2025. (14 marks)

d. Prepare the note on property, plant and (12 marks)

(Total: 60 marks)

(GRAND TOTAL: 100)

END OF QUESTIONS

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