Question

You are required to answer Assignment 1 and Assignment 2. Answer all the questions and show your detailed workings clearly. You have to submit both assignments ONCE only in a single file

ASSIGNMENT 1 Marks Question 1 (CLO 1) Refer the following situations: i. Yahya owns both Grand Telco and Galaxy Supplies. In preparing the financial statements, Yahya has combined the expenses transactions of Grand Telco and Galaxy Supplies. ii. In December 2019, Deco Floor received a customer's order and cash prepayment to install carpet in a new office that would not be ready for installation until March 2020. Deco Floor has recognised the revenue from the customer order in December 2019. ii. Syarikat Atlas is in the process of listing its business in Bursa Malaysia. The accountant of the company has deferred the current year depreciation of RM63,000 to the following year in order to present a higher profit. iv. Syarikat Primrose has disclosed its balance sheet, income statement, owner's equity statement and cash flow statement in its annual report. The company is confident that all the information was necessary without disclosing the notes to the accounts. v. Tune Trading has paid RM300,000 for a piece of land. The land was reported in the balance sheet at the market value of RM500,000. You are required to: Justify the accounting principle that has been violated for each of the above situation. (10)

Answer 1

i) IN this situation the company has violated the princicple of Industry Practices. According to the Industry Practices the company has to report the expense of Grad Telco and Grand supplies seperately in the financial statements.

ii) In the given case Revenue Recognition concept is Violated. According to this concept, the company has to recognise the revenues in the accounting period when it is actually realized and earned but not when the cash is received. Here, Deco Floor has recognized the revenue when he has received the cash even though when he did not really earned it by providing the services.

iii) According to Matching Concept the expenses have to be recognized in the year in which the revenues related to such expenses are earned. Syarikat Atlas has violated this principle by defeering the depreciation to next year to increase the profits.

iv) Syarikat has not disclosed the full information in the foot notes. It has vio;ated Full Disclosure Concept which requires to provide all the neccessary information to the accounts in the footnotes of the financial information which affects the decision making of the financial statement users.

v)Tune Company has recorded the purchase of Land at Fair Market Value rather than at Cost. It has violated the principle of Historical Cost which says to recognise the value of the Asset at its original cost unless it is prudent to recognize at a lower value.