UNIVERSITI TEKNOLOGI MARA

GROUP PROJECT

COURSE : FINANCIAL ACCOUNTING AND REPORTING 4

COURSE CODE : FAR570

SEMESTER : OCTOBER - FEB 2025

INSTRUCTIONS TO STUDENTS

1. This project contains TWO (2) questions.

2. Answer all questions.

3. This project should be done in a group of FOUR (4) students.

4. Each group should not copy another group’s answers. The submitted
assignment will automatically undergo a similarity check. If plagiarism is
detected, marks will be deducted based on the discretion of the examiner.

5. All answers must be hand-written, and detailed workings must be clearly stated.

6. Each group is required to submit by Thursday, Week 14 at the latest. Each

group is advised to keep a copy of the submitted assignment for future
reference.

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 Question 1

Puncak Alam Bhd has the following balances as at 31 December 2024.

Debit Credit
RM'000 RM'000
Turnover 79,570
Cost of sales 31,600
Administration expenses 600
Selling and distribution expenses 550
Non-current asset at cost:
Freehold Land 7,500
Buildings 2,500
Plant and machinery at cost 600
Accumulated depreciation as at 1 January 2024:
Buildings 250
Plant and machinery 150
Investment in equity at Fair Value through Other
90
Comprehensive Income
Investment properties at fair value 7,800
Intangible asset 1,500
Net defined benefit as at 1 January 2024 3,000
Account receivable 44,600
Inventory 12,400
Bank 49,900
Account payable 1,380
Tax paid 5,350
Dividend paid – 10% cumulative preference 100
shares
Ordinary shares of RM1 10,000
10% Cumulative preference shares of RM1 each 2,000
5% Redeemable preference shares of RM1 each 4,000
Deferred tax as at 1 January 2024 700
Retained profits as at 1 January 2024 70,000
Share-based payment reserve as at 1 January 30
2024
Fair value gain on Investment in equity at Fair
Value through Other Comprehensive Income 10
as at 1
January 2024
168,090 168,090

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The following notes are related to the balances given above:

1. All the non-current assets were purchased on 1 January 2019. Depreciation of

the building and, plant and machinery was on a straight-line basis over 50 years
and 20 years respectively. The land is not depreciated. The depreciation on non-
current assets is classified as administrative expenses. For taxation purposes,
the fixtures and fitting are entitled to a 10% initial allowance and a 5% annual
allowance. Land and Buildings are non-allowable assets.

2. The investment properties' fair value as of 31 December 2024 is RM8,500,000.

Puncak Alam Bhd adopts a fair value model for its investment properties.

3. Puncak Alam Bhd's intangible asset is an indefinite-life asset. As at 31 December

2024, its fair value, less cost to sell is RM1,400,000.

4. Puncak Alam Bhd operated a funded defined benefit retirement plan, and based
on the actuarial valuation, past service cost is determined at RM1,000,000. For
the year ended 31 December 2024, the contribution made to the fund is
RM2,000,000, and the current service cost is RM5,000,000. On this date, no
employees have yet to be retired. The expected return on plan assets was 10%,
and the discount rate was 8%. All payments are made at the end of the financial
year. On 31 December 2023, the present value of defined benefit obligation and
fair value plan assets were RM4,000,000 and RM9,000,000, respectively. On 31
December 2024, the present value of defined benefit obligation and fair value
plan assets were RM6,000,000 and RM8,000,000, respectively. The company has
determined that the present value of future economic benefits at 31 December
2024 was RM1,500,000.

5. On 1 January 2023, Puncak Alam Bhd granted 1,000 share options to each of its
100 employees, conditional upon the employees remaining in the company’s
employ until the end of 2025. At the grant date, the fair value of the options is
estimated at RM1.00 each. On 1 January 2023, the company estimated that 12
of the total employees would leave the 3-year period and forfeit their rights to
the share options.

During 2023, no employee left. On 31 December 2023, the company revised its
estimate on the number of employees to leave the company to 10 employees.

During 2024, 3 employees leave. On 31 December 2024, the company revised

the estimate on the number of employees to leave the company to 9 employees.
By 31 December 2025, all the share options will become exercisable.

6. The investment in equity was acquired on 1 Jun 2023 at RM80,000. On 31

December 2023, it was valued at RM90,000. On 31 December 2024, it was sold
for RM92,000. Puncak Alam Bhd measured its equity investment at fair value
through other comprehensive Income, where changes in the fair value are
recognised in other comprehensive income.
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7. On 1 July 2024, the company declared and paid half of the 10% cumulative
preference shares dividend. On 31 December 2024, the company declared a
final dividend for the 10% cumulative preference shares and a 2.5% dividend for
ordinary shares.

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 8. Dividend for 5% redeemable preference shares was still accrued at the year end.

9. On 1 January 2024, the 1,000,000 unit 2% convertible bond was issued at the
issue price of RM1 per unit. Transaction costs that include underwritting fees
were RM500. The bonds can be converted into ordinary shares at any time after
the issue at a conversion price of RM2 per ordinary share. Bonds not converted
by the end of year 5 will be redeemed at the nominal value of RM1 per unit on
maturity. None of the bonds was converted on 31 December 2024. The market
interest rate is 8%. The interest is payable on 31 December over a 5-year term.

Year Present Value at 8% Present Value at 2%

1 0.9259 0.9084
2 0.8573 0.9612
3 0.7938 0.9423
4 0.7350 0.9238
5 0.6806 0.9057

10.The allowance for doubtful debts was provided at the end of 2024, amounting to
RM600,000.

11.The taxable profit for 2024 is RM40,040,527.

12.The income tax rate for 2023 and 2024 is 25%.

Required:

Prepare the following financial statements in a form suitable for publication:

a) Statement of profit or loss and other comprehensive income for the year 31
December 2024. (determine the basic earnings per share and diluted earnings
per share)

b) Statement of changes in equity for the year ended 31 December 2024.

c) Statement of financial position as at 31 December 2024.

Show all workings.

(Total: 80 marks)

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Question 2

The Malaysian Accounting Standards Board (MASB) introduced the Malaysian

Private Entities Reporting Standard (MPERS) in February 2014, marking a significant
milestone in financial reporting for private entities in Malaysia. MPERS is primarily
based on the International Financial Reporting Standard for Small and Medium
Enterprises (IFRS for SMEs) issued by the International Accounting Standards Board
(IASB) in July 2009. It applies to all private entities preparing financial statements
for periods starting on or after January 1, 2016. Adopting MPERS is expected to
enhance accounting quality and produce more valuable and relevant accounting
information in compliance with the MPERS framework.

Required:

a) There are several costs and benefits to consider from the perspective of financial
information providers and users of the financial statements. In accordance with
MPERS, discuss how an entity assesses the cost and benefit consideration.
(5 marks)
b) Determine the recognition and measurement of short-term compensated
absences in accordance with MPERS.
(5 marks)
c) Discuss the distinction between defined contribution plans and defined
benefit plans in accordance with MPERS
(10 marks)

(Total: 20 marks)

Grand Total: 100 marks

END OF QUESTION PAPER