QUESTION 1
This is part of the chairman talk in the meeting of board of directors for AAA Bhd company:-
“……….The information is a fundamental tool for decision maker; therefore, we should report information that influences economic decisions on time, and it is relating to the amount and timing of cash flows for predictive and confirmatory purposes. It is important to report information that has a sufficient importance in terms of value and/or nature. Information of our company should be completely in words and amounts; free of any bias, and free from error. The usefulness of the information presented in financial statements can be further improved by providing information for the previous two years in an appropriate manner that differing people can easily understand it and should draw similar conclusions………”
REQUIRED:
The MASB’s Conceptual Framework for Financial Reporting identifies the qualitative characteristics that make accounting information useful. Identify FIVE (5) ingredients/ characteristics of fundamental qualitative characteristics and THREE (3) enhancing quality characteristic from the above quote. Match your answer with the related sentence from the Chairman’s talk.
QUESTION 2
AAA Bhd is a company producing a range of beauty products. At present, AAA Bhd is experiencing cash flow problem.
Recently, AAA Bhd has spent RM 800,000 for research and developing a new type of cosmetic product. However, due to many other factors and competition it is too early for AAA Bhd to predict the success of this research and developing process.
Issue: Whether RM 800,000 cost spent could be capitalized as a company’s asset?
In addition to producing beauty products, AAA Bhd also offers service in organizing corporate event. AAA Bhd signed a contract to arrange a special event for BBB Bhd company. This event will take place next month. The value of this contract is RM 50,000 and 50% of the amount has been settled by BBB...