CONFIDENTIAL 1 AC/QUIZ/FAR320
UNIVERSITI TEKNOLOGI MARA
QUIZ
COURSE : FINANCIAL ACCOUNTING 5
COURSE CODE : FAR320
SEMESTER : MAC – AUG 23
TIME : 1 HOUR
Recession Bhd has incurred trading losses during each of its last three accountig periods and
is now is severe financial difficulties. Given below is the statement of financial position of
Recession Bhd as at 31 December 2022.
Statement of Financial Position as at 31
December 2022
Non-Current Asset
Land and building 250,000
Plant and machinery 150,000
Motor vehicles 100,000
Current Asset
Inventory 65,000
Trade Receivables 80,000
Bank 15,000
660,000
Equity and liability
700,000 Ordinary shares 700,000
150,000 6% preference shares 150,000
Accumulated Loss (420,000)
10% Debentures 90,000
Bank overdraft 20,000
Directors' loan 40,000
Trade payable 80,000
660,000
Note: Preference dividends are in arrears for three years.
© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL
CONFIDENTIAL 2 AC/QUIZ/FAR320
The directors of Recession Bhd decided to adopt a capital reduction scheme which was then
approved by the court. The capital reduction scheme contained the following provisions:
1. The ordinary shares were to be reduced to 40 cents per share and preference share
reduce by 20 cents per share
2. The existing debenture holders would receive 12% debentures worth RM25 plus 4 new
ordinary shares for every RM30 of 10% debentures presently held
3. The assets were valued as follows
Plant and machinery RM120,000
Motor vehicles RM 80,000
Write-off 5% of the inventory
5% of the Trade Receivable was to be written off
4. The directors’ loan was to be converted to 12% debentures of RM40,000
5. Part of the land and building costing RM50,000 was to be sold at RM75,000. The
proceeds were then to be used to settle all the trade payable who agreed to accept
RM0.90 to RM1 owed to them.
6. The remaining land and buildings were valued at RM260,000
7. The preference shareholders agreed to receive RM20,000 in ordinary shares in full
settlement of preference dividends in arrears
8. The cost of the scheme amounted RM6,000 was paid.
REQUIRED:
1. Find the actual loss suffered by the company
(5 marks)
2. Show journal entries to record the transactions stated in additional information 1 to 8.
(13 marks)
3. Prepare the statement of financial position after the completion of the above scheme
(7 marks)
(Total: 25 marks)
END OF QUESTIONS
© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL
FAR320 : QUIZ (OCT 2023 – FEB 2024)
Red Box Berhad had financial difficulties for the past 4 years due to the economic recession. The
board of directors decided to undertake an internal reconstruction in order to overcome the
problem. Below is the Statement of Financial Position as at 31 December 2023:
Red Box Berhad
Statement of Financial Position as at 31 December 2023
Non-current assets
Land and Building at carrying value 1,020,000
Plant and Machinery at carrying value 370,000
Motor vehicle at carrying value 250,000
1,640,000
Investment in Rania Berhad 800,000
Goodwill 270,000
Current assets
Trade Receivables 300,000
Inventories 230,000
Bank 30,000
3,270,000
Issued and paid up capital
4,000,000 Ordinary shares of RM0.50 each 2,000,000
4,000,000 8% Cumulative preference shares of RM0.50 each 2,000,000
4,000,000
General reserves 410,000
Accumulated loss (1,530,000)
2,880,000
Liabilities
Trade payables 220,000
Directors' loans 170,000
3,270,000
Notes:
1. Preference dividend is 3 years in arrears.
2. The contingent liability of RM180,000 due to claim from one group of employees.
The following scheme of internal reconstruction is sanctioned by the court and agreed by all
parties:
i. The ordinary shares are to be reduced to RM0.30 per share and the cumulative preference
shares are reduced by RM0.25 per share. After reduction, both shares were consolidated
into the original par value.
ii. The preference shareholders have agreed to waive 60% of the dividends due to them and
agreed to accept 2 ordinary at the par value for every RM1.00 of dividend in arrears.
iii. Half of the Trade payables have agreed to be paid in cash of RM0.75 for every RM1.00
owed. The remaining creditors have also agreed to accept 4 ordinary shares for every
RM4.00 accrued to them.
iv. The following assets are to be revalued as follows:
RM
Land and Building 1,500,000
Plant and machinery 520,000
Motor vehicles 200,000
v. The investments are to be sold at profit of 10%.
vi. The contingent liability materialized, and the court ruled that RM100,000 was to be paid
to the group of employees.
Required:
a) Show journal entries to record the transactions stated in additional information ii to vi.
(8 marks)
b) Find the actual loss suffered by the company.
(6 marks)
c) Statement of Financial Position for Red Box Bhd immediately after the completion of the
scheme.
(11 marks)
(Total: 25 marks)
CONFIDENTIAL 1 AC/QUIZ/FAR320
UNIVERSITI TEKNOLOGI MARA
QUIZ
COURSE : FINANCIAL ACCOUNTING 5
COURSE CODE : FAR320
SEMESTER : MAC – AUG 2024
TIME : 1 HOUR
Recession Bhd has incurred trading losses during each of its last three accountig periods and
is now is severe financial difficulties. Given below is the statement of financial position of
Recession Bhd as at 31 December 2022.
Statement of Financial Position as at 31
December 2022
Non-Current Asset
Land and building 250,000
Plant and machinery 150,000
Motor vehicles 100,000
Current Asset
Inventory 65,000
Trade Receivables 80,000
Bank 15,000
660,000
Equity and liability
700,000 Ordinary shares 700,000
150,000 6% preference shares 150,000
Accumulated Loss (420,000)
10% Debentures 90,000
Bank overdraft 20,000
Directors' loan 40,000
Trade payable 80,000
660,000
Note: Preference dividends are in arrears for three years.
There is a contingent liability of RM20,000.
© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL
CONFIDENTIAL 2 AC/QUIZ/FAR320
The directors of Recession Bhd decided to adopt a capital reduction scheme which was then
approved by the court. The capital reduction scheme contained the following provisions:
1. The ordinary shares were to be reduced to 40 cents per share and preference share
reduce by 20 cents per share
2. The assets were valued as follows
Plant and machinery RM120,000
Motor vehicles RM 80,000
Write-off 5% of the inventory
5% of the Trade Receivable was to be written off
3. The accumulated loss are to be written off.
4. Part of the land and building costing RM50,000 was to be sold at RM75,000.
5. The remaining land and buildings were valued at RM260,000
6. The preference shareholders agreed to receive RM20,000 in ordinary shares in full
settlement of preference dividends in arrears
7. The contingent liability is materialized at RM17,500.
REQUIRED:
1. Find the actual loss suffered by the company
(6 marks)
2. Show journal entries to record the transactions stated in additional information 1 to 8.
(10 marks)
3. Prepare extract statement of financial position after the completion of the above
scheme. (showing equity section only)
(4 marks)
(Total: 20 marks)
END OF QUESTIONS
© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL
