briefing on act3121
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1
Briefing on ACT3121
Contents: Main aspects in the syllabus
Partnership Company Accounts
Past Exam questions Theory section Technical/Calculation section
Q & A Session
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Key areas:
Characteristics Advantages & Disadvantages Partnership Agreement
Partnership
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Key areas: Accounting for Partnership
Partnership Capital Account
Fixed Capital Method vs Fluctuating Capital Method Current Account Appropriation Account Accounting Treatments:
Drawings Interest on drawings Interest on capital Interest on loan Salaries to partners
Cont.
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Comprehensive Example The net profit for the partnership between Azlan and Chong for the year ended 31 December 20X8 was RM28,500. The capital accounts and current accounts for the partnership on 1 January 20X8 were as follow:
Capital accounts:
Azlan RM40,000
Chong RM50,000
Current accounts:
Azlan RM2,160
Chong RM1,500
In the year 20X8, Azlan has withdraws RM2,000 on 31 Mac 20X8. Azlan has been paid RM10,000 for his salary.
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Cont. The contents of the partnership agreement are as follow:
i. Interest on the initial capital is 5% per year
ii. Azlan would be paid RM12,000 per year for his salary
iii. 8% interest per year would be levied on withdrawals by the partners
iv. Azlan and Chong share a profit/loss in a ratio of 2:3
Prepare:
(a) The allocation of profit-loss using Profit-Loss Separation Account or Profit-Loss Separation statement for the year ending 31 December 20X8.
(b) Capital account and current account for each partner
(c) A balance sheet (equity section) as at 31 December20X8
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Key areas: Accounting for Partnership
Changes in Partnership Change in Profit Sharing Ratio Admission of a new partner Retirement/death of an existing partner
Cont.
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If this happened, 2 issues are considered:
Revaluation of assets
Goodwill
Amount is given
Account not to be maintained
Cont.
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Comprehensive Example: Admission Adil and Bistari are partners sharing profits and losses ratio of 3:2
respectively. Their Balance sheet on 30th June 2009 is:
Assets:
Land and buildings RM40,000
Machinery RM16,000
Inventories RM10,500
Debtors RM30,000
Liabilities and Equity:
Creditors RM15,000
Bank overdraft RM6,500
Capital:
Adil RM45,000
Bistari RM30,000
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Cont. On 1 July 2009 Adil and Bistari agreed to accept Cerdik as a new partner. Cerdik has to pay RM25,000 cash including RM5,000 as a premium on goodwill. He is to share 1/6 of the profits and losses. Adil and Bistari will share their profits as before.
The following assets were revalued upon admission of Cerdik as follows:
Land and buildings RM45,000
Inventories RM10,000
Machinery RM14,000
Provisions for doubtful debts is to be 1% on debtors.
Prepare:
(a) Goodwill account (not to be maintained)
(b) Revaluation account
(c) Capital account and current account for each partner
(d) A balance sheet (equity section) as at 1 July 2009
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Key areas:
Types of Companies Advantages & Disadvantages Forming a company
Memorandum of association (MA) Articles of association (AA)
Procedures to issue shares
Company Accounts
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Key areas:
Capital Equity Authorised/Nominal/Registered Capital Unissued Capital Uncalled Up Capital Paid up Capital
Debentures vs Shares
Cont.
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Key areas:
Capital Equity Authorised/Nominal/Registered Capital Unissued Capital Uncalled Up Capital Paid up Capital
Debentures vs Shares
Cont.
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Key areas:
Financial Reporting Framework Regulatory Framework
Companies Act 1965
Financial Reporting Act 1997 & Accounting Standards
Accountants Act 1967
Institutional Framework
MASB
Financial Reporting Foundation
Cont.
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Key areas:
Classes of shares Ordinary share capital vs Preference share capital Types of preference shares
Equity Financing
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Key areas: Issuance of shares
Directors have a number of options when issuing shares:
1. Choose to issue ordinary shares, preference shares or both
2. Issue shares at their par value, at a premium or at a discount
Cont.
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Key areas: Issuance of shares
3. Shares may be issued
I. Payable in full on application
II. Paying a deposit on application and the remainder on allotment
III. Part payment on application, part on allotment and the remainder in one or more installments (or calls)
Cont.
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Key areas: Issuance of shares
Installment Application Allotment Call(s) Forfeiture
Oversubscription Refund Pro-rata
Cont.
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Theory Part:
Normally account to 20% Cover all topics Different level of understanding
Past Exam Questions
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Examples: Partnership
Identify and explain two (2) advantages of a partnership.
(4 marks)
‘There is really no need for a partnership agreement since
all issues are covered in the Partnership Act 1961’. Do
you agree with this statement, explain?
(6 marks)
Cont.
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Examples: Company Accounting
Explain the significance of minimum shares subscription
threshold to company issuing equity shares to public.
(4 Marks)
Discuss the shareholding spread requirements for
Malaysia listed incorporated companies and foreign
companies in Malaysia.
(4 Marks)
Cont.
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Answer Scheme: Company Accounting
Refer to Word File
Cont.
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Technical/Calculation Part:
As shown in previous slides Refer to Word File
Past Exam Questions
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