Question

Emerald Industry Bhd (EM Bhd) is a public listed company established in 2000. The company was incorporated in Malaysia, involved in dairy farming, manufacturing and distributing of dairy products.

The following balances are for the year ended 30 June 2019.

	Note	Dr	Cr
		RM’000	RM’000
Land (at revaluation)		11,000
Buildings (at revaluation)		32,000
Accumulated depreciation as at 1 July 2018:
Buildings			3,840
Revaluation reserve (land)			450

You are required to record all transactions below in the form of journal entry to the related statements and notes to disclose the movement in the company’s property, plant and equipment (if applicable) for the year ended 30 June 2019.

The following notes are related to the balances given above:

The building was revalued for the first time on 1 July 2015 where the revaluation result in a deficit of RM150,000. The remaining useful life of the building for on 1 July 2015 was 25 years. The building was revalued on 1 July 2018 at RM32,500,000.

The land was also revalued for the first time on 1 July 2015 at a surplus. The fair value of the land drop to RM10,000,000 on 30 June 2018, but was never recorded by the company.

The land is not depreciated. The motor vehicles, and fixtures and fittings are depreciated on straight line basis at 10% per annum.

Answer 1

Journal entries in the books of Emerald industry Bhd(EmBhd) for the year end 30-06-2019

Date	pariculars	debit (RM'000)	credit (RM'000)
1-07-2018	buildings A/c    Dr To depreciation A/c   (Being depreciation on 1st July 2018 was credited to buildings A/c)	3840	3840
30-06-2019	capital reduction A/c     Dr To buildings A/c (Being increase of building value was be debited to buildings A/c)	3340	3340
30-06-2019	capital reduction A/c Dr To land A/c (Being land was revealed on the date as mentioned above)	1000	1000
	COMBAINED ENTRY OF CAPITAL REDUCTION A/C: Capital reduction A/c     Dr To buildings A/c To land A/c (Being incremental value would be debited to capital reduction A/c)	4340	3340 1000

Working notes:

Building A/c

Date	particulars.	RM' (000)	Date	particulars	RM'(000)
1-06-2018	To balance b/d	325000	1-7-2018	By depreciation A/c	3840
30-06-2019	To capital reduction A/c	3340	30-6-2019	By balance c/d	32000000
	Total	35840000		Total	35840000