Explain the accounting treatment for each of the event

Assignment Help Financial Accounting

Reference no: EM133004290

The following material events have occurred after the financial year ended 31 March 2021:

(i) Gem has been struggling to sell its sportswear after being hit by the Covid-19 pandemic since March 2020 that has prompted all non-essential businesses to close. However, Gem was able to move its business online and have been successful in generating revenue except for 2 categories of stocks that were sold at below cost.

Details are as follows:

This class of inventory was sold on 15 April 2021 for only RM20 per unit, due to damage caused by its mishandling during transportation on 20 March 2021. As such, the product was valued at its net realisable value of RM22 per unit at year end 31 March 2021, the lower of cost and net realisable value.

(ii) Gem announced a 1 for 1 rights issue of shares aiming at raising RM5 million to finance its investment into a new online database and distribution system on 3 May 2021

(iii) Despite the slowdown in the overall economic situation in the current year, the company recorded an increase in profits for the financial year ended 31 March 2021. As such, the directors have decided to declare a dividend of 5 sen per share on 10 May 2021 to its 10 million equity shareholders.

Problem1 : Explain the accounting treatment for each of the above events in accordance with IAS 10/MFRS 110 and include in your answer a draft of the disclosure note that should be incorporated into the financial statements or the journal entries (without narration) if it requires adjustments to the financial statements.

Reference no: EM133004290

Questions Cloud

What does the company expect to collect from customers : What does the company expect to collect from its customers as of December 31, 2017 ($ millions)? What is common-size trade receivables, net, at year-end 2018?

What is the budgeted cost per service for X-rays : Assume a traditional (simple) costing system that they currently use. What is the budgeted cost per service for X-rays, ultrasounds, CT scans, and MRIs

Show the allocation of the impairment loss of the hotel cash : High Tower Sdn. Bhd., Show the allocation of the impairment loss (if any) of the hotel cash generating unit of HT for the year ended 31 March 2021.

What is the NPV of the app : You then think you can make $450,000 per year for 7 years starting two years from today. This amount will then increase by 5% per year forever. What is the NPV

Explain the accounting treatment for each of the event : Explain the accounting treatment for each of the above events in accordance with IAS 10/MFRS 110 and include in your answer a draft of the disclosure

Define for gem period to which ias events after reporting : Define for Gem the period to which IAS 10/MFRS 110 Events after the reporting period relates and distinguish between adjusting and non-adjusting event

What is the earliest date that revised amounts : What is the earliest date that revised amounts are required to be included on the statements of financial position as a result of this policy change

BTW1042 Malaysian Business Law Assignment : BTW1042 Malaysian Business Law Assignment Help and Solution, Monash University - Assessment Writing Service

What is the value of the two companies : XYZ Company is offered to purchase ABC Company with EPS of Php12 and P/E ratio of 5; What is the value of the two companies

User Account

All Pages