Question

The following extracts from the trial balance have been taken from the accounting records of Dagang Berhad as at 30 June 2020:

The following notes are relevant:

(i) Dagang Berhad entered into a contract where the performance obligation is satisfied over time. The total price on the contract is RM12 million, with total expected costs of RM7 million. Progress towards completion was measured at 60% at 30 June 2019 and 70% on 30 June 2020.The correct entries were made in the year ended 30 June 2019, but no entries have been made for the year ended 30 June 2020.Dagang Berhad has a cost of capital of 10% per annum and the discount factor at 10% for one year is 0·9091.

ii) The balance relating to tax in the trial balance relates to the under/over provision from the prior period. The tax estimate for the year ended 30 June 2019 is RM2·3million. In addition to this, there has been a decrease in taxable temporary differences of RM1.5million in the year. Dagang Bhd pays tax at 25% and movements in deferred tax are to be taken to the statement of profit or loss.

(iii) Dagang Bhd issued RM8million 7% convertible loan notes on 1 July 2019. Interest is payable annually in arrears. These bonds can be converted into one share for every RM.5 on 30 June 2021. Similar loan notes, without conversion rights, incur interest at 9%. Dagang Bhd recorded the full amount in liabilities and has recorded the annual payment made on 30 June 2020 of RM0·560 million in finance costs.

iv) Dagang Bhd began the construction of an item of property on 1 July 2019 which was completed on 31 March 2020. A cost of RM30million was capitalised. This included RM2.0million, being a full 12 months interest on a RM20million 10% loan taken out specifically for this construction. On completion, the property has a useful life of 20 years. Dagang Bhd also recorded RM0.375million in operating expenses, representing depreciation on the asset for the period from31 March 2020 to 30 June 2020.

v) On 1 February 2020, Dagang Bhd issued 3 million shares at their full market price of RM2·50. The proceeds were credited to a suspense account.

Required:

Prepare a statement of profit or loss for Dagang Bhd for the year ended 30 June 2020.

Answer 1

SOLUTION
	Prepare a statement of profit or loss for Dagang Bhd for the year ended 30 June 2020
	PARTICULARS	AMOUNT(RM'000)
	REVENUE	53000
	LESS :COST OF SALES	-24000
	LESS : OPERATING EXPENSES	-12500
	ADD : INVESTMENT INCOME	140
	LESS : FINANCE COST	-1200
	LESS : TAXATION	-150
	PROFIT AFTER TAX	15290
	Thank you..