Exercise

CHAPTER 5

EXERCISE

1. A __________ balance is typical for Accounts Payable.

2. The balance in Accounts Payable is decreased with a __________ entry.

3. A RM2,000 invoice from a supplier for goods has terms of 1/10, n/30. If RM100 of the goods were

returned to the seller, the amount to be remitted within the discount period is ____________.

4. Bubble Bhd. has been sued by its supplier due to breach of contract. You are required to discuss

whether the liability can be recognized assuming that:

a) It is probable that Bubble Bhd. would be liable for RM400,000 because of this lawsuit.

b) It is not probable that Bubble Bhd. would be liable for RM400,000 because of this lawsuit.

c) It is probable that Bubble Bhd. would be liable, however the legal advisers could not estimate

the liability.

5. For each situation below, discuss how the entity should account for the transactions in accordance

with MFRS 137. Gives reasons for your answer:

a) During the financial year 2018, Vast Pro IT sued its main supplier for RM1.5 million damages

for faulty supply of materials. As at the reporting date, a decision was favor of the entity.

However, the hearing to determine the amount of damages would only be held after the

reporting date.

b) Mashmallow Bhd sold goods with a warranty for repairs due to manufacturing defects within

one year from purchase date. Mashmallow Bhd estimated that the probability of defects will

be 25% and estimated repair cost would be RM800,000.

c) In 2018, an employee of Bengah Bhd sued the company for serious injuries, because of

breach of safety regulations. The claim for the damages amounted to RM600,000. Legal

adviser of Bengah Bhd suggested that the result would be unfavorable to the company. In

addition, legal costs incurred during 2018 amounted to RM100,000.

REVENUE

CHAPTER 6

A c c o u n t i n g F o r R e v e n u e a n d E x p e n s e s

Learning Outcome

a. State the nature of revenue and expenses. b. Provide the discussion on the recognition and measurement of revenues under MFRS 15 (MPERS : Section 23) c. Provide the discussion on the recognition and measurement of expenses. d. Show the presentation of revenues and expenses in financial statements.