PART 1Bio Beauty Bhd (BB) is a Malaysian company, established in 2010. It sells range of cosmeticproducts for customers in Malaysia and South-East Asian countries. Since its inception, BBhas been very successful. With the increasing orders received by a company, BB has prepareda land site to construct a new warehouse for the company's operation. BB bought a three-acreland with and old factory building in the year 2019 at the price of RM500,000. BB paidRM2,000 for real estate taxes and RM1,500 real estate agent commission fees. The landownership transfer was just completed and an additional cost of RM30,000 was incurred forclearing the site. BB received RM8,000 from the residual value of demolished the old building.In order to ensure the safety of the property, BB incurred a cost totalled RM20,000 forinstallation of fences around the property. The plan has been arranged accordingly to ensurethat the warehouse could be constructed as soon as the site was ready. However, the loanapplied from CNN Bank was rejected and all related construction activities had to betemporarily suspended. BB then made a new loan application with BNN Bank. While waitingfor the loan approval, the management team of BB decided to utilize the site to generateadditional income for the company. The site was rented out for car boot sales activities in themorning and food truck operation at night. In the first month of operation, BB earnedRM80,000 related to rental service revenue and the related costs included RM4,800 for staffsalary, RM2,200 for administration expense and RM3,000 for other expenses. After one monthof operation, the bank loan was approved and BB immediately stopped the site rentingoperation and continued with its initial intention to construct the warehouse. The total cost toconstruct the warehouse, from excavation until completion, was RM880,000 (includingRM3,200 cost of inefficiencies caused by a labour strike). This cost excluded the revenue andexpenses related to the site rental operation. Since the rental revenue and expenses wereincurred on the construction site, Mrs. Tara, the accountant of BB was uncertain whether toinclude these revenue and expenses to the cost of land or cost of the constructed warehouse.You are required to:(а)Analyse the problem(s) faced by BB by referring to the MFRS 116 Property, Plantand Equipment (Hint: Find the related paragraph in the standard).(CTPS Question –Problem analysis)(b)Help the accountant of BB to make a decision related to the above issue(s)(CTPS Question - Generation of solution, evaluation and decision making).2

(A) The main issues which are faced by the Accountant of Bio Beauty Bhd (BB) Whether to include the…

18 Beauty BB) is a roducts for customers in Malaysia and as been very successful. With the increa land site to construct a new warehouse and with and old factory building in M2,000 for real estate taxes and RM wnership transfer was just completed a learing the site. BB received RM8,000 f Bhd Malaysi CO

18 Beauty BB) is a roducts for customers in Malaysia and as been very successful. With the increa land site to construct a new warehouse and with and old factory building in M2,000 for real estate taxes and RM wnership transfer was just completed a learing the site. BB received RM8,000 f Bhd Malaysi CO

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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