Reference no: EM133045526

Question - The net income of Blackprint Berhad Company for 2019 and 2020 is as follows the following:

2020 (RM) 2019 (RM)

Net income after tax Early 1,440,000 1,350,000

Retained earnings 5,240,400 4,050,000

During the audit at the end of 2020, several issues were identified:

1. On January 1, 2017, the company purchased the patent at a cost of RM900,000. Company policy stipulates patents are amortized over 10 years. Due to changes in technology, in early 2020 the company decided to review the useful life of the patent and found that the remaining useful life was 5 years. The current year's amortization expense has not taken this change into account.

2. The company purchased a machine at a cost of RM588,000 on 1 January 2019. The useful life of the machine is estimated at 8 years with a residual value of RM48,000. The company uses the straight line method to depreciate these machines. To illustrate a more accurate usage pattern, the company decided to change the depreciation method to the diminishing balance method in early 2020. The current year's depreciation expense has not taken into account this change.

3. Inventory records show that the inventory balance at the end of 2019 is overstated by RM210,000.

4. Advertising spending for 2018 is significantly reduced by RM60,000 The corporate tax rate is 24% for all years involved.

Required -

a) Prepare journal entries to take into account the above, assuming that the current year's accounting records have not been closed.

b) Provide comparative information in the statement of movement of retained earnings for the year ended 31 December 2020.

c) Specify ONE (1) examples of adjustments retrospectively and ONE (1) examples of prospective adjustments for Blackprint Berhad Company.