Ltt Aquaclture -Group Report

Presentation 1: Group Task

Q1: Describe the nature of the business of LTT Aquaculture Sdn. Bhd.

It’s a separate entity business between the owner and the company whereby if anything happen to the business, owner doesn’t have to bear with the lost of the company.

It’s an aquaculture business where empurau will be the source of sales to the company and currently the owner is planning to expand the business and market it to more overseas countries

Looking at the large scale of the company, and the money that the MD is going to expand through various channel, it looks like the company acquired some of the intellectual properties or expertise in this area.

Q2: 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.

• The Empurau’s (Fingerlings)

The empurau are the asset. They make use of it for generating profits by selling it.

• Broodstock

As a resource to breed more fingerlings. The broodstock are the pool of resources.

• RM 5 Millions

Owner’s Equity. Current asset for the business.

• The special effect concrete Pond

The place for the Empurau’s to grow. Equipped with filtration system and custom – made ozone processors to improve the oxygen level in the water.

• The Farm’s Infrastructure.

Falls under property, plant and equipment. The non-current asset.

• LTT Aquaculture Sdn Bhd

Asset’s legal entity.

Q3. Every year, the company intends to invest RM1 million per year for the next three years and plough back its profits to fund expansion of the farm’s infrastructure.

Is profit cash? Explain.

Profit is the financial return or reward that entrepreneurs achieve given the risk they take. In this case, the profit gained are turn to investment to fund expansion of the farm’s infrastructure. The Company then intends to invest another RM1 million every year on top of the profit gained.

In this case, is profit cash? Yes and No.

Yes. Because revenue gained from the sales of empuraus (fingerlings or brood stock) minus with the expenses of nurturing the empuraus from fingerlings to the brood stock are in the form of cash.

No. because the profit gained throughout the years of nurturing the empuraus is in the form of knowledge. These profits are not considered as in the form of cash but assets.

What accounting information would be useful to help LTT management make such a decision?

Making a decision whether to invest on the farm’s infrastructure is a big deal for the company. Below are a few accounting information that would be useful to help LTT management make the decision.