Exercises - MFRS 102 Inventories

QUESTION 1

      Hakim Global Ventures Berhad (HGV) is a company dealing with imported continental cars in Pinggiran Batu Caves. The company imported two (2) cars, Keteku and Ketemu. Before the two cars made available for sale, the company decided to modify them and the costs incurred are as below:

	Keterku	Ketermu
Purchase price	220,000	250,000
Import duties	11,000	15,000
Handling/Storage cost	25,000	20,000
Carriage cost to sell	18,000	20,000
Estimated selling price	295,000	300,000

Required:

           State if Keterku and Ketermu are items of inventories for HGV Berhad. 

          

          List THREE (3) conditions that may lead to company writing down its inventories to net realisable value. 

          

          Determine the value of cars to be disclosed in the Statement of Financial Position in accordance with MFRS 102 Inventories.  

          

QUESTION 2

      On 2 April 2018, Safuan Maju Bhd purchased 2 units of machines at a total cost of RM150,000. In addition, the company incurred installation cost of RM15,000, insurance cost of RM12,000 and transportation cost of RM8,000 for both machines. Both machines have a eight-year economic life and a total salvage value of RM25,000. The company uses straight line of depreciation on monthly basis. Safuan Maju Bhd closes its book on 31 December each year.

Required:

a)    Explain the initial cost of the machines to be recognized in the Statement of Financial Position.                                                                                      

b)    Compute the initial cost of the machines.                                              

c)    Calculate the depreciation expense for both machines as at 31 December 2018.

                                                                                                          

QUESTION 3

      Farisha Phone Services (FPS) specializes in buying and selling mobile phones in a small town in the Seri Gombak area. The company is using FIFO method in determining the cost of its inventories. Below are transactions regarding the purchases and sales of mobile phones for the month of June 2018:

Date	Transactions
June 3	Purchased 5 mobile phones at RM500 each
8	Sold 2 mobile phones at RM550 each
15	Purchased 5 mobile phones at RM510 each
20	Sold another 4 mobile phones at RM600 each

Required:

a)    List the components to the cost of inventories as prescribed by MFRS 102 Inventory.

      

b)    State whether the mobile phones are inventory of FPS in accordance with MFRS 102 Inventory.                                                                                    

c)    Prepare a Store Ledger Card to determine the value of mobile phones as at 30 June 2018 using the following format:               

                                  

Date	Receipts			Issues			Balance
	Qty	Price	Amount	Qty	Price	Amount	Qty	Price	Amount