Question7 The following trial balance for the year ended 30 June 2017 relates to

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Question7 The following trial balance for the year ended 30 June 2017 relates to Lian Bhd which manufactures automobile spare parts. Debit RM000 Credit RM'000 Administrative expenses Bank 156 Intangible assets 270 69 inventory as at 30.06.2017 Cost of sales Distribution cost Ordinary shares dividend Ordinary share of RM1 each Interest on bank borrowings Freehold property-at valuation 1 July 016 Freehold property revaluation reserve 1 July 016 Plant and equipment- at cost Plant and equipment-acc depreciation at 1 July 2016 Long term loan Investment property 60 600 25 500 200 98 78 1.180 Retained earnings at 1 July 2016 Tax paid Trade payables and 615 150 367 Trade receivables TOTAL 98 3,084 3,084 Additional information: i. The freehold property had a remaining useful life of 20 years at 1 July 2016. The company's policy is to revalue its property at the end of each year. The fair value of the freehold property at 30 June 2017 was RM526,000. i. On 1 July 2016, an item of plant was disposed for RM35,000 cash. The proceeds have been treated as sales revenue by Jet Li Bhd. The plant is still included in the above trial balance figures at its cost of RMS5,000 and depreciation of RM25.000 (to the date of disposal). All plant is depreciated at 20% per annum using straight line method. i Depreciation expenses are charged to administrative expenses. iv. Intangible assets included capitalised development expenditure of RM84,000 (less accumulated amortisation. The development cost was incurred on 1 July 2014 and should be amortised over 5 years. The remaining intangible assets have indefinite useful lives. v. During the year, a new research and development project commenced incurring RM22,000 for research cost and RM21,000 for development cost. The development cost is qualified to be capitalised and should be amortised over 7 years. Both costs have been paid but have not been recorded in the books of accounts. vi. The investment property is measured based on the fair value model. The fair value is estimated at RM759.000 as at 30 June 2017 Required Prepare a Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2017 for Lian Bhd together with a Statement of Financial Position as at that date in a format suitable for publication. (Show all workings) (30 marks)

Explanation / Answer

LIAN BHS Statement of Profit and Loss for the year ended June 30 2017 Amount Particulars RM '000 Revenue 1180 Investment Property Appreciation 69 Total 1249 Operating Expenses Administrative Expenses 190.6 Cost of Sales 520 Distribution Cost 60 Interest on Bank Borrowing 253 tax paid 150 1173.6 Net Income 75.4 Balance Sheet As at June 30 2017 RM'000 RM'000 Assets Current Assets Bank 388 Inventory 69 trade receivables 98 555 Non Current Assets Intangible Assets 186 Freehold Property 526 Less Depreciation -26 500 Equipment 43 Less Depreciation -27.6 15.4 Investment Property 690 Add Appreciation 69 759 Total Assets 2015.4 Liabilities Current Liabilities Trade payables and Provisions 367 Non Current Liabilities Amortisation of Intangibel Assets 84 Less Accumulated Depreciation -1 Less Development Cost Amortised -3 80 Equity Ordinary Share of RM1 each 600 Retained earnings 615 Add Net Income 75.4 690.4 Freehold Property Revaluation Reserve 200 Long term loan 78 Total Liabilities and Equity 2015.4

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