ACC2233 - Suggested answers to the previous posting

For SHA Berhad

Statement of Profit and Loss SOCI

Statement of Financial Position SOFP

Notes to the accounts  Notes

PPE Notes PPE Notes

These are only the suggested answers and still debatable....

ACC2233 - MFRS 101 Presentation of Financial Statements - Exercise

Assalamualaikum and dear students,

Attached is the exercise for the above topic. Download the documents for our discussion in class.

SHA Berhad - MFRS 101

ACC2232 - Inventory Valuation

Try this....

Puteri trading company involved in the marketing of computer gadgets using “Nabilla” as the brand name. Samihah is a trained accountant was called to advise the management which method should the company adopt for inventory valuation. The following information regarding the inventory valuation for the month of August 2017 is as below.

• Aug. 01: Beginning inventory, 600 units @ RM5 each each.
• Aug. 10: Sold 400 units @ RM12 each.
• Aug. 11: Purchased 1,600 units @ RM6 each.
• Aug. 15: Sold 1,000 units @ RM12.50 each.
• Aug. 20: Purchased 1,000 units @ RM6.50 each.
• Aug. 27: Sold 600 units @ RM13.50 each.

Puteri had decided to apply the two inventory valuation method, that are First-in-First-Out (FIFO) and Weighted Average (WA).

BUS1233 - SOCI/SOFP exercises

Assalamualaikum and dear students,

Please go to postings dated 19 January 2018 and 13 February 2018 for your further exercises on that topic. This is considered to be your carrymarks exercise.

ACC2233 - MFRS Presentation begins.....

Assalamualaikum and dear students,

You may refer to the following link and there are thousands of links in Google too...so these may help you a little bit.

MFRS 108

https://prezi.com/eh6hpcb3nqwz/mfrs-108/

http://hanafarhanaa.blogspot.my/2015/09/mfrs-108-accounting-policies-changes-in_25.html

https://www.scribd.com/document/133762835/MFRS-108

MFRS 110

https://prezi.com/eclbth1wsrtg/mfrs-110-event-after-the-reporting-period/

https://www.slideshare.net/kimraeKI/chap-9-mfrs110afterreportingperiod

http://hanafarhanaa.blogspot.my/2015/09/mfrs-110-events-after-reporting-period.html

MFRS 116

https://www.youtube.com/watch?v=YYLsDyXL7d4

https://www.youtube.com/watch?v=vSVGaTxBUmU

https://drive.google.com/open?id=14eCagubqq93tELggPfK4CPB1pQ3hRptR

https://drive.google.com/open?id=19TrNk2f3TvMoDwQSFLeccyOkuzwyyd1i9elWEiFc_t8

MFRS 133

https://prezi.com/lzttwdzlog1g/mfrs-133-eps/

https://www.slideshare.net/KhairulSyahmiZamri/mfrs-133-04-2015

https://drive.google.com/open?id=147uJHlRZfZLyJhe3ea8u_eRghFJi1R3L

MFRS 137

https://prezi.com/-dfvpqpfnucv/mfrs-137/

https://www.scribd.com/document/372508082/L10-MFRS-137

http://hanafarhanaa.blogspot.my/2015/09/mfrs-137-provisions-contingent.html

MFRS 138

https://prezi.com/uo3xlj4u-dck/mfrs-138-intangible-asset/

https://www.youtube.com/watch?v=YBLNJFRbM_4

https://drive.google.com/open?id=1AUlESA9zWxmTG1tHHyDCtfGKnNE7aE_t

Hi Tea at Cilantro - Diploma In Accounting - ACC2233

Assalamualaikum and greetings to my beloved students of Diploma In Accounting from International Islamic College Malaysia.

I would like to express my gratitude and appreciation for attending the Hi Tea at Cilantro Culinary Academy recently. No words can describe how happy I am seeing you guys there even though I was not able to make it due to my work commitment. I was pretty sure and believed you had such a wonderful afternoon there and here are some pictures of you guys below;

ACC2236 - Activity Based Costing (ABC)

Here is one hell of a good video on ABC. It is quite long but it is worth it. The explanation is much more clearer and the example is good.

How about this?

I'm also doing this. So, if you need one...yippi me

First download the app from the apps store and install it.

Check out Yippi for your smartphone. Download it today from 

https://yippi.app.link/piFmwXuSHL

Introducing new social apps in town. I'll be migrating to this platform as my social chatting device replacing the wonder whatsapp, it's very new and of course lots to improve but somehow I found it interesting. I'll be leaving WhatsApp slowly and surely. Do join me and there's a lot to tell in yippi. It's not MLM, it's free.!

Referral: fm04

Add friend: fadhilmazlan

BUS1233 - Journal, Ledgers and Trial Balance exercises

Assalamualaikum,

As I said earlier, this blog is meant for you. You have to browse and look for the notes and I will not tell you any further. I'm just guiding you and the rest is up to you.

For this time only....

http://bloggerfadhil.blogspot.my/2017/08/bus1233-acc1231-self-learning_4.html

ACC2233 - Impairment of Trade receivables

Impairment of trade receivables

Publication date: 2014-02-28 21:11:16

A valuation allowance on trade receivables are covered by those of them for which there is a high probability that it will be paid off. Often it is assumed that if there are no overdue receivables, it is no problem with them being received and there shall be no further historical analysis conducted in respect of their possible impairment. However, write-downs on receivables should also refer to receivables that are not overdue, because some of them may become uncollectible in the future.

The value of receivables should be established taking into account the probability of payment. It is required to record allowance for impairment in respect of:

1. receivables from debtors in liquidation or bankruptcy - the amount of receivables not covered by the guarantee or other collateral, reported to the liquidator or official receiver in bankruptcy proceedings,
2. receivables from debtors in the event of dismissal of the bankruptcy petition, if the debtor's assets are not sufficient to cover the costs of the bankruptcy proceedings - the full amount due,
3. claims disputed by the debtor and the debtor payment of arrears, and the assessment of economic and financial situation of the debtor and payment by the contractual amount is not probable - to the extent not covered by the guarantee or other collateral,
4. receivables equivalent to amounts of booster charges in relation to which an impairment allowance - in these amounts until they received or written off,
5. receivables past due or not past with a significant probability of defaults, according to the kind of business or client structure - the amount of reliably estimated impairment, including a kind of a general allowance for bad debts.

Impairment losses on receivables should be based on historical data, setting the first copy of the percentage (ratio), for the calculation of the allowance, and on that basis - a copy of the quota.

For more information on how to calculate the copy can be found on our free e - training.

The adopted method of determining the allowance for uncollectible accounts should be specified in the accounting policy. It should also be consistently applied in subsequent accounting periods.

Impairment losses on receivables are charged to other operating expenses or financial expenses (debit entry) - depending on the type of claims covered by the allowance. The corresponding entry (credit entry) is posted to your account Impairment of receivables (in analytical account of the counterparty).

taken from: http://24ivalue.com/blog/entry/id/187/Impairment-of-trade-receivables

ACC2236 - Absorption vs Variable Costing

See this also...very interesting

ACC2236 - Variable Costing

Variable costing

Variable costing is a methodology that only assigns variable costs to inventory. This approach means that all overhead costs are charged to expense in the period incurred, while direct materials and variable overhead costs are assigned to inventory. There are no uses for variable costing in financial reporting, since the accounting frameworks (such as GAAP and IFRS) require that overhead also be allocated to inventory. Consequently, this methodology is only used for internal reporting purposes. However, it is quite commonly used in this role, where variable costs are used to:

• Conduct breakeven analysis to determine the sales level at which a business earns a zero profit.
• Establish the lowest possible cost at which a product can be sold.
• Formulate internal financial statements into a contribution margin format (which must be adjusted before they can be issued to outside parties).

When variable costing is used, the gross margin reported from a revenue-generating transaction is higher than under an absorption costingsystem, since no overhead allocation is charged to the sale. Though this does mean that the reported gross margin is higher, it does not mean that net profits are higher - the overhead is charged to expense lower in the income statement instead. However, this is only the case when the level of production matches sales. If production exceeds sales, absorption costing will result in a higher level of profitability, since some of the allocated overhead will reside in the inventory asset, rather than being charged to expense in the period. The reverse situation occurs when sales exceed production.

Example

Mark works as an accountant at a leading manufacturing company that produces equipment for pediatric private practice. He is asked to calculate the operating income using the direct costing and the absorption costing methods and compare them. Under the direct costing method, Mark calculates the variable cost of goods sold at 50% of sales to find the product margin, and he deducts the variable expenses to find the contribution margin.

Hence, the fixed manufacturing overheads are allocated against sales during the period in which they are incurred. Also, variable costs comprise of direct materials, direct labor, and variable manufacturing overheads. After deducting the fixed costs from the contribution margin, Mark finds that the company’s operating income is $100,000.

Under the absorption costing method, Mark calculates the cost of goods sold at 70% of sales to find the gross margin, and he deducts the operating expenses (which are the sum of variable expenses and fixed expenses under the indirect costing method), to find that the company’s operating income is $100,000.

Hence, with both methods, he arrives at the same conclusion, but the difference is in the way each method allocates the fixed manufacturing overheads on the income statement.

Summary Definition

Define Variable Costing: Variable costing means a method of accounting for production expenses where all variable costs are included in the product cost during the period.

taken from: https://www.myaccountingcourse.com/accounting-dictionary/variable-costing

ACC2236 - Absorption Costing

Absorption Costing

Absorption Costing Definition

Absorption costing is defined as a method for accumulating the costs associated with a production process and apportioning them to individual products. This type of costing is required by the accounting standards to create an inventory valuation that is stated in an organization's balance sheet.

A product may absorb a broad range of fixed and variable costs. These costs are not recognized as expenses in the month when an entity pays for them. Instead, they remain in inventory as an asset until such time as the inventory is sold; at that point, they are charged to the cost of goods sold.

Absorption Costing Components

The key costs assigned to products under an absorption costing system are:

• Direct materials. Those materials that are included in a finished product.
• Direct labor. The factory labor costs required to construct a product.
• Variable manufacturing overhead. The costs to operate a manufacturing facility, which vary with production volume. Examples are supplies and electricity for production equipment.
• Fixed manufacturing overhead. The costs to operate a manufacturing facility, which do not vary with production volume. Examples are rent and insurance.

It is possible to use activity-based costing (ABC) to allocate overhead costs for inventory valuation purposes under the absorption costing methodology. However, ABC is a time-consuming and expensive system to implement and maintain, and so is not very cost-effective when all you want to do is allocate inventory to be in accordance with GAAP or IFRS.

You should charge sales and administrative costs to expense in the period incurred; do not assign them to inventory, since these items are not related to goods produced, but rather to the period in which they were incurred.

Absorption Costing Steps

The steps required to complete a periodic assignment of costs to produced goods is:

1. Assign costs to cost pools. This is comprised of a standard set of accounts that are always included in cost pools, and which should rarely be changed.
2. Calculate usage. Determine the amount of usage of whatever activity measure is used to assign overhead costs, such as machine hours or direct labor hours used.
3. Assign costs. Divide the usage measure into the total costs in the cost pools to arrive at the allocation rate per unit of activity, and assign overhead costs to produced goods based on this usage rate.

Overhead Absorption

Absorbed overhead is manufacturing overhead that has been applied to products or other cost objects. Overhead is usually applied based on a predetermined overhead allocation rate. Overhead is overabsorbed when the amount allocated to a product or other cost object is higher than the actual amount of overhead, while the amount is underabsorbed when the amount allocated is lower than the actual amount of overhead.

For example, Higgins Corporation budgets for a monthly manufacturing overhead cost of $100,000, which it plans to apply to its planned monthly production volume of 50,000 widgets at the rate of $2 per widget. In January, Higgins only produced 45,000 widgets, so it allocated just $90,000. The actual amount of manufacturing overhead that the company incurred in that month was $98,000. Therefore, Higgins experienced $8,000 of underabsorbed overhead.

In February, Higgins produced 60,000 widgets, so it allocated $120,000 of overhead. The actual amount of manufacturing overhead that the company incurred in that month was $109,000. Therefore, Higgins experienced $11,000 of overabsorbed overhead.

Absorption Costing Problems

Since absorption costing requires the allocation of what may be a considerable amount of overhead costs to products, a large proportion of a product's costs may not be directly traceable to the product. Direct costing or constraint analysis do not require the allocation of overhead to a product, and so may be more useful than absorption costing for incremental pricing decisions where you are more concerned with only the costs required to build the next incremental unit of product.

It is also possible that an entity could generate extra profits simply by manufacturing more products that it does not sell. This situation arises because absorption costing requires fixed manufacturing overhead to be allocated to the total number of units produced - if some of those units are not subsequently sold, then the fixed overhead costs assigned to the excess units are never charged to expense, thereby resulting in increased profits. A manager could falsely authorize excess production to create these extra profits, but it burdens the entity with potentially obsolete inventory, and also requires the investment of working capital in the extra inventory.

Similar Terms

Absorption costing is also known as full absorption costing or full costing.

taken from: https://www.accountingtools.com/articles/2017/5/4/absorption-costing

Types of Absorption Costing systems

There are three different types of Absorption Costing systems:

Job Order Costing

The cost calculation is assigned to the product in batches (a non-recurring collection of several production units) and LOTS (production unit, linked to the serial numbers of a product).

Process Costing

The cost calculation is systematically assigned to the product because there are not batches or LOTS.

Activity Based Costing (ABC)

Activity Based Costing (abc): the cost calculation is assigned from cost items to the finished product. The use of Absorption Costing could be particularly critical for small organizations that often lack financial reserves. These companies cannot afford to take losses or to sell products without an insight into the accounting of the overhead.

Example: a clothing manufacturer may not just consider the costs of wool and labour for the manufacturing of a jumper, but he may also consider the costs of the knitting machines, the factory in which the machines are installed, the operating costs of the machines, insurance and other types of overhead costs, etcetera.

Looking at the above mentioned example, Absorption Costing could be required to determine the overhead costs of the enterprise. The more items one plant can produce, the lower the costs will be of these items, especially the overhead costs. If the factory starts producing other items or products, it is possible to spread and reduce the overhead costs even further.

Absorption Costing example

Organization X solely produces and sells product Y. The following financial information about product Y is known:

• Sales price per piece: 50 euro
• Direct material costs per product: 8 euro
• Direct labour costs per product: 5 euro
• Variable production overhead costs per product: 3 euro

Detailed information with respect to the months of March and April

	March	April
Production of product Y	500	380
Sales of product	300	500

There was no initial stock in March. The fixed overhead costs are now budgeted at 4,000 euro a month and have been absorbed per production. A regular production is 400 pieces per month.

Additional costs:

• Fixed costs for sales: 4,000 euro per month
• Fixed costs for the administration: 2,000 euro per month
• Variable costs for sales (commission): 5% of the sales proceeds

Step 1: Calculation of full production costs per product

Description	costs
Direct material costs per product	8 euro
Direct labour costs per product	5 euro
Variable production overhead costs per product	3 euro
Fixed production overhead costs (4,000 euro/400 pieces)	10 euro +
Full production costs per product	26 euro

Step 2: Calculation of stock value and production

Month	Initial stock	Production	Closing stock
March	0	500 pieces x 26 euro = 13.000 euro	200 pieces x 26 euro = 5.200 euro
April	200 pieces x 26 euro = 5.200 euro	380 pieces x 26 euro = 9.880 euro	80 pieces x 26 euro = 2.080 euro

Step 3: uner / over absorbed fixed production overhead costs

	March	April
Actual fixed production overhead costs	4.000 euro	4.000 euro
Fixed production overhead costs based on >actual production	5.000 euro	3.800 euro
under/ over absorbed	1.000 euro over	200 euro under

Step 4: Absorption costing profit calculation

		March		April
Sales		15.000 euro		25.000 euro
Less sales costs – Initial stock – Production – Closing stockonder/ over absorbed Gross profits	0 euro 13.000 euro 5.200 euro (7.800 euro)   +1.000 euro	8.200 euro	5.200 euro 9.880 euro 2.080 euro (13.000 euro) -200 euro	11.800 euro
Less costs– Variable costs for sales (commission) – Fixed administration costs – Fixed sales costs	750 euro 2.000 euro 4.000 euro – 6.750 euro		1.250 euro 2.000 euro 4.000 euro – 7.250 euro
Net profit		1.450 euro		4.550 euro

taken from: https://www.toolshero.com/financial-management/absorption-costing/

BUACC3714 - Strategy Maps

An example for you to think!

Vision
To be the leading bus company in Kuala Lumpur, known for superior customer services and innovation

Objectives
Achieve a market share of 40% within 5 years
Achieve a return on investment on 10% within 5 years

The strategy map would be like this...you may add if you have other creative ideas...

Discuss...

What about continuous improvements?
Benchmark? Put it in the benchmarking process...

Step 1: Identifying the functions or activities to be benchmarked, and performance measures
Step 2: Selecting benchmark partners
Step 3: Data collection and analysis
Step 4: Establishing performance goals
Step 5: Implementing plans

Think of this, and we will discuss later....

BUACC3714 - Benchmarking

Understanding the Purpose and Use of Benchmarking

J. DeLayne Stroud12

Benchmarking is a way of discovering what is the best performance being achieved – whether in a particular company, by a competitor or by an entirely different industry. This information can then be used to identify gaps in an organization’s processes in order to achieve a competitive advantage. Thus it is important for Six Sigma practitioners to:

• Understand fully the purpose and use of benchmarking.
• Understand the difference between benchmarking and competitor research.
• Gain insight to ensure that benchmarking is in alignment with the company’s management objectives.

Benchmarking as a Tool

Benchmarking is a process for obtaining a measure – a benchmark. Simply stated, benchmarks are the “what,” and benchmarking is the “how.” But benchmarking is not a quick or simple process tool. Before undertaking a benchmarking opportunity, it is important to have a thorough understanding of the company’s guidelines. Some companies have strict guidelines as to what information can be gathered, and whom practitioners can contact to get that information. Depending on the size of the company, practitioners may be surprised at what is readily available in-house.

Benchmarking is not just a matter of making inquiries to other companies or touring and documenting another company’s facilities or processes. When making use of benchmarking, a company should not limit the scope to its own industry, nor should benchmarking be a one-time event.

Benchmarking Versus Competitor Research

While competitor research is neither a better nor a worse practice than benchmarking, the important thing is to understand that there is a difference between the two. Available time and resources will help decide which tool will add the most value. The following table represents experience in dealing with the two practices:

Differences Between Benchmarking and Competitor Research
Benchmarking	Competitor Research
Focuses on best practices	Focuses on performance measures
Strives for continuous improvement	Bandage or quick fix
Partnering to share information	Considered corporate spying by some
Needed to maintain a competitive edge	Simply a “nice to have”
Adapting based on customer needs after examination of the best	Attempting to mirror another company/process

Three Primary Classifications of Benchmarking

Although there are many forms of benchmarking, they can be classified into three categories – internal, competitive and strategic.

About Strategic Benchmarking

Going outside one’s own industry is often challenging for a company. Keep in mind, however, that customer satisfaction is driven by critical-to-quality measures that are similar regardless of the industry.

For example, when considering the metric, “wait time,” it does not matter whether waiting for a car repair at a body shop, or to make a deposit in a bank lobby, customers do not want to wait in long lines. Similarly, whether using a telephone help line of a cable company or of a favorite department store, customers do not want to remain on hold. They want their concerns addressed quickly and efficiently.

In 2004, a leading company identified customer satisfaction to have a benchmark of 92 percent. A key dissatisfier was wait time. The gap between an organization’s current customer satisfaction score and the benchmark of 92 percent represents the ultimate goal to strive for in a multigenerational plan

Bottom line: A lot can be learned from going outside one’s own industry because many customer concerns are the same.

Internal benchmarking is used when a company already has established and proven best practices and they simply need to share them. Again, depending on the size of the company, it may be large enough to represent a broad range of performance (i.e., cycle time for opening new accounts in branches coast to coast). Internal benchmarking also may be necessary if comparable industries are not readily available.

Competitive benchmarking is used when a company wants to evaluate its position within its industry. In addition, competitive benchmarking is used when a company needs to identify industry leadership performance targets.

Strategic benchmarking is used when identifying and analyzing world-class performance. This form of benchmarking is used most when a company needs to go outside of its own industry. Six Sigma often uses Hoshin to ensure that all employees are knowledgeable about the strategic direction for the company. Within a company’s Hoshin plan, goals are established relative to benchmarks set by world-class organizations. Often, these benchmarks are obtained from outside industries.

1. Understand the company’s current process performance gaps.This will help decide what needs benchmarking.

2. Obtain support and approval from the executive leadership team. That approval and support will assist with eliminating roadblocks, providing adequate resources and expediting the benchmark-gathering process.

3. Document benchmarking objectives and scope. This is a necessity for any project.

4. Document the current process. Without up-to-date knowledge of the current process:

a. Time and resources can be wasted collecting process documentation and data that already exists.
b. The project may lack focus, purpose and/or depth.
c. Benchmarking visits may appear to be random exercises in information-gathering.
d. The team could select a partner whose performance is actually worse than that of its own organization.
e. Collected benchmarking data will be difficult to compare “apples to apples” in terms of process requirements.

5. Agree on the primary metrics. Benchmarking measurements are used as the basis of many comparisons:

a. To determine the gap between current performance and that of partner organizations.
b. To track progress from the present (with the current process) into the future.
c. To track partners’ progress toward their goals.
d. To determine superior performance with process improvements.
e. To use a measurement systems analysis (MSA):
i. These comparisons will be valid only if everyone participating in the study measures performance in exactly the same way – every time.
ii. It is important to make sure metrics are being established that potential benchmarking partners are probably already tracking or that can be easily derived from existing measurements.

6. The metrics should be put in writing. In particular:

a. What is being measured
b. How the units of measure will be classified.
c. What should be included in the measurement.
d. What should not be included.
e. How to make any necessary calculations.
f. Examples of typical measurements.

7. Agree on what to benchmark. Everyone must be in agreement on what to benchmark prior to any benchmark gathering initiative in order to:

a. Understand gaps of low performers.
b. Understand impact to customers, associates and shareholders.
c. Prioritize and select one to three metrics to benchmark.

8. Develop a data collection plan.

9. Identify research sources and initiate data gathering.

10. Design a screening survey to assist with partner selection. Characteristics of the survey are important:

a. Crisp focus on indicators of excellence
b. Two pages maximum
c. 30 minutes maximum to complete
d. Objective, multiple-choice questions
e. Communicates the plans, objectives and resource requirements for the study
f. Reflects focus areas for subsequent in-depth questionnaires

11. Determine how to contact and screen companies.

12. Design a detailed survey to gather information.

13. Decide if gathered information meets original objectives.

14. Conduct a site visit.

15. Apply the learnings to performance gaps.

16. Communicate to the executive leadership to ensure continued support.

17. Develop a recommended implementation plan with process owner.

18. Know when to update and recalibrate.

External Resources for Benchmarking

Some may find it surprising that there is a world of benchmarking information already gathered and available. While there may be a fee associated with obtaining this information, the fee can easily be offset by the savings in time and resources that come from not having to gather the benchmarking information needed to meet agreed-upon objectives. Here are some available sources:

1. American Productivity & Quality Center (APQC)
2. APQC Knowledge Sharing Network
3. The Benchmarking Exchange
4. Best Practices, LLC & Global Benchmarking Council

Malaysia Productivity Corporation

Four Types of Benchmarking

1. Internal Benchmarking

A comparison of one specific process within your own organisation or across different departments and business units.

Example : Studying and comparing the billing process among various branches / subsidiaries of the company.

2. Competitive Benchmarking

A comparison of a specific process with that of a direct competitor.

Example : Nokia studying customer problem resolve at Samsung.

3. Functional Benchmarking

Focuses on comparison of a specific process externally with a similar one within a broad range of your industry and business line.

Example : Xerox studying warehouse order picking operations at L.L. Bean (is an American privately held mail-order , online, and retail company) to help them improve their parts distribution process.

4. Generic Benchmarking

A comparison of specific processes from unrelated industries or business lines towards identifying innovation.

Example : Municipal Local Authority studying waste management at Henkel International Lubricant.

Few slides and articles I got from other sources....

Chapter 14 - Strategic performance measurement systems

Notes on Chapter 14

Will add to this when I found new sources.....till then, chiow!!