Answer the following questions based on the report of LTT Aquaculture SdnBhd..
1. Describe the nature of the business of LTT Aquaculture SdnBhd..
The nature of business for LTT Aquaculture SdnBhd is rearing fresh water fish.
2. Identify 6 resources of the business considered as assets from an accounting point of view. Explain why these resources are considered as assets of the business.
a) Empurau fish (1.5kg and above) - This is considered as current asset as they are selling this to generate profit
b) Brood stock (8 kg) - This is considered as non-current asset as it helps to generate more resources
c) Farm - This is considered as property, plant & equipment
d) Special effect concrete pond system - This is…show more content… This company will have a profit, but will not have the cash receive because it will be transformed into another asset which will be generated more resources.
Accounting information would be useful to help LTT management to make decision?
• Return on investment (ROI) might be useful where the management can estimate the return that could acceptably on the investment that they have initiated for 3 years.
• Future cash flow would also give an indicator on how much inflow and outflow.
4. How would money spent on developing the land, maintenance of the ponds and feeding empuraus be treated as? (Use the accounting equation to figure out the answer).
Cash spending transaction can be illustrated as per below:
Answer: A = L + OE
1. + Develop Land - Capital (cash)
2. - Cash - Pond maintenance
3. - Cash - Feeding
1 - LTT using cash from capital to develop land thus capital will reduce and asset will increase. Concept of accounting equation where resource (develop land) must come from source (capital).
2 - Owners equity comprised of three elements. They are capital, profit/loss and operating expenses. It this case, pond maintenance and feeding empurau will reduce cash from asset.
5. Several potential buyers have visited the farm and were impressed and