Question 4 30 Marks A The Following Is The Summarized Balance Sheet Of Delinquent Sdn Bhd As At December 31 2021 Del 1 (300.55 KiB) Viewed 27 times
QUESTION 4 (30 Marks) a) The following is the summarized balance sheet of Delinquent Sdn Bhd as at December 31 2021. Delinquent Sdn Bhd is a travel agency offering holiday & travel packages and its business have been in decline for the past 3 years due to the Covid 19 pandemic. RM Tangible Assets (NBV) 24,000 Inventory 5,000 Trade Receivables 30,000 Total Assets 59,000 Issued and fully paid Share Capital Ordinary shares of RM1 each 30,000 6% Preference Shares of RM1 each 12,000 42,000 Accumulated Losses (23,000) 19,000 8% Debentures 15,000 Trade Payables 25,000 Total Equity & Liabilities 59,000 The following external reconstruction scheme was proposed by the directors and agreed by all parties and the necessary approvals obtained. A new company Rescue Bhd. is to be registered with an ordinary share capital of 35,000 shares of RM1 each. Rescue Bhd is to acquire on 2 January 2022 the liabilities and assets of Delinquent Bhd based on the following agreed terms: i) Rescue is to assume Delinquent's debenture liability by issuing to the existing holders' RM13,500 new 5% debentures in Rescue together with one fully paid ordinary shares of par value RM1 in Rescue for every RM10 of debentures held. ii) The Trade Payables of Delinquent to accept RM10,000 in cash and the balance to be satisfied by the issue of RM15,000 ordinary shares in Rescue. iii) The preference shareholders in Delinquent to receive one fully paid ordinary share in Rescue for every 3 shares held in Delinquent. iv) The ordinary shareholders in the Delinquent to receive one fully paid share in Rescue for every 30 shares held. v) Reconstruction costs of RM10,000 is to be borne by Rescue and regarded as part of the purchase consideration. Required: Prepare the Realisation account and Reconstruction account for Delinquent Sdn Bhd after effecting the above external reorganization. (15 marks)
b) You are the Chief Accountant of Triple Bhd, a Malaysian company that has two wholly owned overseas subsidiaries. - Company X is located in Germany. The company assembles computer terminals from materials provided by Triple. Once assembled, the computer terminals are shipped to the Malaysia where Triple sells them. Company Z is located in Taiwan and produces computers using materials supplied by local companies in Taiwan. Company Z sells its computers to customers throughout Southeast Asia. Required: Explain how translation for each of the above two foreign subsidiaries should be dealt with in the consolidated financial statements of Triple Bhd. (10 marks) c) On 15 October 2021, NY Corp, a US company, ordered raw materials for US$20,000 from Liverpool Ltd, a UK company, which immediately accepted the order. The spot exchange rate on this date was 1 Pound Sterling = USD 1.20. NY Corp paid the bill in full on 30 December 2021 and Liverpool Ltd converted this amount into Pounds Sterling at spot exchange rate of 1 Pound Sterling = US$1.28. The year-end exchange rate at 31 December 2021 was 1 Pound Sterling = US$1.25. Required: Compute the foreign currency gain or loss on the December 30 2021 and explain how this amount would be disclosed in the financial accounts of Liverpool Ltd. (5 marks) *** END OF EXAMINATION PAPER
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