Financial Accounting Report 400

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APRIL 2011, Q 1 (B) – Answer
KASTURI Bhd
Statement of Comprehensive Income for the year ended 31 March 2011 | | Notes| RM’000|
| Turnover (600,000 – error 5,000)| 2| 595,000|
| Cost of sales (408,000 + dep:LP 5,000 + dep:PPE 19,200)| | (432,200)| | Gross Profit| | 162,800|
| | | |
| Distribution cost| | (29,000)|
W1| Administrative expenses| | (43,900)|
W2| Other operating expenses| | (15,600)|
| Profit from operations| | 74,300|
| Finance cost| | (400)|
| Loss on disposal of plant| | (3,000)|
| Foreign currency transaction gain| | 3,200|
| Profit before tax| 3| 74,100|
| Taxation| 4| (23,200)|
| Profit after tax| | 50,900|
| | | |
| Other comprehensive income:| | |
| Deficit on revaluation of leasehold property| | (9,000)| | Total comprehensive income| | 41,900|
| | | |

KASTURI Bhd
Statement of Changes in Equity for the year ended 31 March 2011 | Ordinary share capital| Revenue reserve| Retained Profit| Total| | RM’000| RM’000| RM’000| RM’000|
Bal b/d| 100,000| 20,000| 49,000| 169,000|
Total comprehensive income| -| (9,000)| 50,900| 41,900| Dividend| | | (13,600)| (13,600)|
Rights issue| | | | 5,000|
Bal c/d| 105,000| 11,000| 86,300| 202,300|

WORKINGS
W1: Administrative cost| RM| W2: Other operating expenses| RM| Bal. as per t. b.| 44,400| Research cost| 2,800|
Audit fee| 100| Development cost| 4,800|
Legal suit*| (800)| Amortisation expense| 8,000|
Legal cost| 200| | 15,600|
| 43,900| | |

*Since outcome of litigation is only 20% (remote), it is not appropriate to provide for damages. The unrecoverable legal costs are a liability as the start of legal action is past event and should be provided in full.

KASTURI Bhd
Statement of Financial Position as at 31 March 2011
| Notes| RM| RM|
Non-current Assets| | | |
Property, Plant and Equipment| 5| | 162,800|
Intangible assets| 6| | 29,600|
| | | |
Current Assets| | | |
Inventories| | 40,000| |
Trade receivable| | 86,200| |
Bank (RI 5,000 – 2,600)| | 2,400| |
| | | 128,600|
Total Assets| | | 321,000|
| | | |
Equity| | | |
Share Capital| 7| | 105,000|
Retained Earnings| | | 86,300|
Other Reserves| | | 11,000|
| | | |
Non-current liabilities| | | |
10% bond Foreign loan (40,000 – 3,200)| | | 36,800|
Deferred tax liability| | | 12,000|
| | | |
Current Liabilities| | | |
Trade payables (57,600 + 200 – 800)| | 57,000| |
Tax payable (22,800 – 10,000)| | 12,800| |
Accrued audit fees| | 100| |
| | | 69,900|
Total Equity and Liabilities| | | 321,000|

NOTES TO THE ACCOUNTS
1. Significant Accounting Policies
(a) Accounting Convention
The accounts are prepared under the historical cost convention modified by revaluation of property.

(b) Inventories
Inventories are valued at the lower of cost and net realisable value.

(c) Research and development costs
Research costs are written off in the year it is incurred. Development costs are deferred if they meet the criteria for capitalisation. Deferred development costs are amortised over… (amortisation methods and useful life or amortisation rates used).

2. Turnover
The turnover represents sales net of discounts, allowances and sales taxes. 3. Profit before tax is derived:
| RM’000|
After charging:| |
Interest on bank overdraft/loan/leasing| 400|
Auditor’s fees| 100|
Provision for legal fees| 200|
Research and development amortised| 8,000|
Research and development cost written-off| 7,600|
Loss on disposal of plant| 3,000|
After crediting:| |
Gain on foreign exchange| 3,200|

4. Taxation
| RM|
Current year tax based on profit| 22,800|
Deferred taxation for the year| 400|
|...
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