Question

b) Discuss the accounting treatment for each of independent events and transactions: On 1 April 2017, Mr. Annuar deposited RM10,000 in a Maybank fixed deposit account. The interest rate was 10% per annum payable on 31 March 2018. Required: How much revenue can Mr. Annuar recognise as interest income on 31 Decemos 2017 based on a time basis? (Show calculations) (CLO1:PLO3:C2)(4 marks) On 1 January 2017, Mr. Faris purchases RM400.000, 2% government bonds that will be repaid at a premium of 25% on redemption. The current market interest rate is 8%. Required: How much interest income should Mr. Faris recognise in 2017 and in 2018 based on a time basis? (Show calculations) (CLO1:PLO3:C2)(6 marks) iii. Mariah Carmen, a singer, has a cut a new compact disc with a recording company. Royalty payable to her is RM10 for every compact disc sold. A total of 500,000 units has been produced but only 200,000 units have been sold. Required: Calculate the royalty income that Mariah Carmen will receive based on accrual basis (Show calculations) (CLOL:PLO3:C2)(2 marks) Maimunah holds 100,000 ordinary shares in Raina Bhd. at the annual general meeting held on 5 May 2018. Dividend proposed for the year of 2016 is 10%. Required: When can Maimunah recognise her dividend income based on the shareholder's right to receive payment? (CLO1:PLO3:C2)(3 marks)

Answer 1

Answer 1

Since interest income to be recorded in time basis, Mr. Annuar has to recognise income for 9months that is from 1 April 2017 to 31 December 2017, calculation as follows RM 10000*10%*9/12= RM 750.

ANSWER 2

Interest income of Mr. Faris be recognised on time basis is

For 2017 RM ,400000*2% = RM 8000

FOR 20180 is RM 400000*2%= RM 8000

ANSWER 3

As per agreement royalty is payable on every disc dold but not on production basis

Royalty income that Mariah Carmen to be recognised will receive is 200,000 units * RM 10= RM 20,00,000

ANSWER 4

As per GAAP, company is owed when it declared its dividend to share holders and share holder has right to receive dividend when declared

Here dividend is proposed at AGM but not yet declared Maimunah can recognise dividend when declares