Tutorial 8 N 9 - Held For Sale Additional.docx

FACULTY OF BUSINESS, MANAGEMENT AND SOCIAL SCIENCES BFI1101 FINANCIAL ACCOUNTING AND REPORTING MAY 2015 SEMESTER

Tutorial 8 and 9

Question 1 On 1 July x4, an entity committed to dispose a plant. The carrying value of the plant was RM500,000 and the current market price of the plant is RM600,000 but it would cost the entity RM20,000 to dispose the plant. Required Show how the plant should be measured on 31 July x4.

Question 2 On 1 December x4, a plant of Ray had a carrying value of RM250,000, but its carrying value was remeasured to RM245,000. On classification as held for sale, the fair value less cost to sell was RM230,000. On 1 March x5, the fair value less cost to sell was: (a) RM240,000 (b) RM255,000 Required Show how the plant should be measured on 1 December x4 and 1 March x5.

Question 3 Rainbow operates in the travel industry and specialised in selling holiday packages through the internet and travel agencies. In the current year x4, the business brought in by the travel agencies had been poor and the company has decided to terminate selling holiday packages through travel agencies. The following is the company’s summarised statements of comprehensive income results for the years ended: 31.12.x4

Revenue

31.12.x3

Internet

Travel agents

Total

Total

RM

RM

RM

RM

50,000

28,000

78,000

80,000

(36,000)

(33,000)

(69,000)

(64,000)

Gross profit/(loss)

14,000

(5,000)

9,000

16,000

Operating expenses

(2,000)

(3,000)

(5,000)

(4,000)

Taxation

(3,000)

500

(2,500)

(4,000)

9,000

(7,500)

1,500

8,000

Cost of sales

Profit after tax

The result for the travel agencies for the year ended 31 December x3 were: revenue RM38 million, cost of sales RM30 million, operating expenses RM3 million and taxation RM1.5 million. Required Prepare the extract Statement of Comprehensive Income for Rainbow for the year ended 31 December x4 together with its comparatives.