Reference no: EM133189442

Question 1 - MedTech Pte Ltd is a leading supplier of medical equipment to the local hospitals. On 1 January 20X8, RJ Hospital signed an agreement to purchase a CT Scanner from MedTech at a bundle price of $300,000. The purchase comes with consumables and a free CT Scanner Operator Training Course. The CT Scanner and consumables were delivered on the same day. On 14 January 20X8, RJ Hospital sent 4 clinical technicians for the CT Scanner Operator Training Course.

Additional information:

Standalone selling price of the CT Scanner = $280,000

Standalone selling price of the consumables. = $36,000

Standalone selling price of CT Scanner Operator Training Course = $4,000

Required - Using the 5-step model under FRS 115 Revenue from Contracts with Customers, illustrate how MedTech should account for the contract. Provide the necessary journal entries.

Question 2 - HSL Pte Ltd is a leading manufacturer of semiconductor components for the electronics industry. On 3 February 20X1, the company purchased an equipment costing $200,000 to make a specialized component. The company paid $10,000 for the costs of site preparation and $5,000 for installation and commissioning. As no technician in the company were trained to operate the equipment, the company spent an additional $4,000 to send four technicians for training. The equipment can only be operated by trained qualified technician.

Required - Interpret how the above amounts will be dealt with in the financial statements of HSL Pte Ltd for the year 20X1.

Question 3 - KLE Pte Ltd owns a building which it has been using as a head office. The building was purchased on 1 January 20X1 for $10 million. The building had a useful life of 40 years and zero residual value. The company adopts the revaluation model for the accounting of the building. When an item of PPE is revalued, the company treats accumulated depreciation by eliminating against the gross carrying amount of the assets and the net amount restated to the revalued amount of the asset.

20X2 was a difficult year and the company tried to cut costs. On 1 July 20X2, KLE moved its head office to its factory and rented out the head office building. KLE policy is to use the fair value model for investment property.

The FVLCS of the building was $10.53 million on 31 December 20X1.

The FVLCS of the building was $9.895 million on 1 July 20X2.

The FVLCS of the building was $9.5 million on 31 December 20X2.

The building was sold for $9.9 million on 2 August 20X3.

Required - Illustrate the accounting for the building by preparing journal entries, including narratives for the year 20X1, 20X2 and 20X3.

Question 4 - On January 1, 20X1, Beltnet Pte Ltd issued a 4-year bonds at a price of $622,837. The premium of the bonds was $22,837. Interest would be paid annually on 31 December. The bonds carried a coupon rate of 3% and the market interest rate was 2%.

Required -

(a) Present the journal entries for the year 20X1. Round up your answers to the nearest whole number.

(b) If the market interest was 4% instead of 2%, determine the price of the bonds to be issued. Workings must be clearly shown. Round up the answer to the nearest whole number.

Question 5 - On 1 January 20X1 Soon Huat Supplies Pte Ltd paid $50,000 for the development of its website to promote the company's products. The web-based system comes with an interactive feature for its customers to place orders online. The company believed the system would have a six-year life and amortised the cost accordingly. However, the system did not work as expected and customer usage declined significantly after the first year because of ongoing system problems resulting in inaccurate orders. The company revised the useful life to four-life and account for it as a change in accounting estimate. At the end of the second year, the company concluded that the entire $50,000 expenditure was worthless from the beginning and decided to write it off retrospectively as a correction of error.

Required - From the analysis of the information given above, determine and discuss the appropriate accounting treatment according to the applicable Singapore Financial Reporting Standards.