Question Tag: Depreciation

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IA – OCT 2022 – L1 – Q6 – Depreciation Concepts and Calculations

Explain depreciation-related concepts and compute depreciation and net book value for solar equipment using straight-line method.

Question

a. Briefly explain the following concepts used in Accounting:

i. Depreciation

ii. Depreciable amount

iii. Net book value

iv. Straight line depreciation

v. Reducing balance depreciation

(10 marks)

b. The Managing Director of Agana Limited located at the Manya Krobo Municipality is uncomfortable with the impasse between the Municipality and the Electricity Company of Ghana. As such she decided to install solar equipment for her company. She purchased the equipment on 4th July 2021 at a cost of GH¢ 520,000. The estimated useful life of the asset is 10 years with a residual value of GH¢ 35,000. The company’s policy is to provide for a full year’s depreciation regardless of the date of purchase. You are required to:

i. Compute the rate of depreciation for the solar equipment using the straight-line method (2 marks)

ii. Compute the depreciation for the year 2021 using the straight-line method (4 marks)

iii. Compute the Net present value of the asset as at 31st December 2021 (4 marks)

(Total: 20 marks)

Answer

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Tags: Depreciable Amount, Depreciation, Depreciation Rate, Net Book Value, Net Present Value, Reducing Balance Depreciation, Straight Line Depreciation
Level: Level 1

Topic: reducing balance methods (IAS 16)
Series: OCT 2022

IA – OCT 2022 – L1 – Q1 – Preparation of Financial Statements from Trial Balance

Prepare the Income Statement for the year ended 31/12/2021 and the Statement of Financial Position as at 31/12/2021 for Kolikoli Enterprise using the given trial balance and additional information.

Question

The following trial balance was extracted from the ledger of Kolikoli Enterprise as at 31/12/21.

	Dr GH¢000	Cr GH¢000
Buildings at cost	750,000
Plant at cost	350,000
Provision for depreciation as at 1/1/2021 On buildings		100,000
Provision for depreciation as at 1/1/2021 On plant		190,000
Purchases	2,250,000
Sales		3,022,000
Stocks 01-01-2021	250,000
Discounts	40,000	24,000
Returns	11,000	75,000
Wages and salaries	294,000
Bad debts written off	23,000
Other expenses	114,000
Debtors	190,000
Creditors		180,000
Bank and Cash	8,000
Drawings	20,000
Provision for doubtful debts		2,500
Capital		706,500
Total	4,300,000	4,300,000

The following additional information is also made available:
a) Stocks at 31/12/2021 were valued at GH¢210,000
b) Wages and salaries accrued amounted to GH¢4,000
c) Other expenses prepaid amounted to GH¢1,500
d) Provision for doubtful debts is to be made at 2% of debtors at 31/12/2021
e) Depreciation for the year is to be provided as follows:
• Buildings 2% on cost
• Plant 25% reducing balance method

You are required to prepare the following:
i. Income Statement for the year ended 31/12/2021; and
ii. Statement of Financial Position as at 31/12/2021
[20 marks]

Answer

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Tags: Adjustments, Depreciation, Income Statement, Provisions, Sole Trader, Statement of Financial Position, Trial Balance
Level: Level 1

Topic: Sole Trader
Series: OCT 2022

CIBG – FRPA 2022 – L3 – Q1B – Easy Way Limited Financial Statements

Prepare the statement of comprehensive income and statement of financial position for Easy Way Limited as at 31 December 2021 using the given trial balance and additional information.

Question

EASY WAY LIMITED

The list of balances of Easy Way Limited shows the following balances at 31st December 2021.

Dr GH¢000	Cr GH¢000
Share capital (600,000 shares)	320
General reserve	20
Accumulated profit 1 January 2021	50
Inventory (goods for resale) at 1 January 2021	60
Revenue	1,000
Purchases	540
Purchases returns	26
Sales returns	28
Carriage outwards	28
Warehouse wages	80
Sales representatives salaries	60
Administrative wages	40
Warehouse plant and equipment cost	126
Accumulated depreciation — 1 January 2021	50
Delivery vehicle hire	20
Goodwill	100
Distribution expenses	10
Administrative expenses	30
Directors’ salaries (charge to administrative expenses)	30
Rental income	16
Trade receivables	330
Cash at bank	60
Trade payables	60
1,542	1,542

The following additional information has been provided: (1) Inventory of goods for resale at 31 December 2021 amounted to GH¢100,000. (2) Annual depreciation on warehouse plant and equipment of GH¢32,000 should be provided. (3) Income tax expense for 2021 amounts to GH¢50,000. (4) The recoverable amount of goodwill was GH¢90,000.

You are required to prepare: a) the company’s statement of comprehensive income for the year to 31 December 2021; and b) a statement of financial position at that date in accordance with IAS 1: Presentation of Financial Statements. (20 marks)

Answer

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Tags: Depreciation, Goodwill Impairment, IAS 1, Statement of Comprehensive Income, Statement of Financial Position, Tax Expense
Level: Level 3

Topic: Financial Statements - Form and Content
Series: OCT 2022

ITA – APR 2023 – L1 – Q1 – Trial Balance and Financial Statements Preparation

Prepare Income Statement and Statement of Financial Position from given trial balance with additional adjustments.

Question

The following trial balance was extracted from the ledger of Adtrack Enterprise as at 31/12/21.

Dr Cr GHe00 GHe00 Motor Vehicle at cost 350,000 700,000 Factory Building at cost 700,000 On Motor Vehicle On Factory Building Purchases and sales 5,250,000 250,000 Stocks 1/1/2022 290,000 290,000 Discounts 190,000 324,000 Returns 31,1,000 274,000 Wages and salaries 654,000 654,000 Bad debts written off 500,000 500,000 Other expenses 450,000 450,000 Debtors and creditors 1,1,900,000 1,1,900,000 Bank and Cash 900,000 900,000 Drawings 560,000 560,000 Provision for doubtful debts 75,500 75,500 Capital 10,057,000 10,057,000 The following additional information is also made available: a) Stocks at 31/12/2022 were valued at GHe $450,000,000$ b) Wages and salaries accrued amounted to GHe $9,560,000$ c) Other expenses prepaid amounted to GHe $1,800,000$ d) Provision for doubtful debts is to be made at $7 %$ of debtors at 31/12/2022 e) The factory plant and machinery was leased under an operating lease for a period of 7 years with a yearly payment of GHe $12,200,000$. This has not been paid for the year ended 31/12/2022. f) Depreciation for the year is to be provided as follows:

Factory Building $2 %$ on cost
Motor Vehicle $25 %$ reducing balance method

You are required to prepare: i. Income Statement for the year ended 31/12/2022 (10 marks) ii. Statement of Financial Position as at 31/12/2022

(Total: 20 marks)

Answer

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Tags: Adjustments, Depreciation, Income Statement, Provisions, rial Balance, Statement of Financial Position
Level: Level 1

Topic: Accounting Records
Series: APR 2023

FRPA – APRIL 2023 – L3 – Q1 – Financial Statements Preparation, Conceptual Framework, and Intangible Assets

Prepare the statement of profit or loss and other comprehensive income and the statement of financial position for ANG Ltd based on the given trial balance and additional information; explain the objective of general-purpose financial reporting and the terms relevance and faithful representation; define intangible assets, explain recognition criteria, and state disclosure requirements under IAS 38.

Question

A
The following is the trial balance of ANG Ltd, a trading company, as of 30 September 2022:

Debit	Credit
GH¢’000	GH¢’000
Sales
Inventory	3,150
Cost of sales	35,500
Selling & distribution expenses	5,600
Administration expenses	8,540
Loan Note interest paid	110
Bank interest	85
Investment income
Leasehold building at valuation – 1 Oct 2021	14,000
Plant and equipment – cost/depreciation	13,750
Computer equipment – cost/depreciation	7,200
Motor vehicles – cost/depreciation	1,500
Trade receivables	17,900
Bank
Trade payables
500,000 Ordinary shares
8% Loan notes (2019 – 2023)
Revaluation surplus
General reserve
Retained earnings – 1 Oct 2021
107,335	107,335

The following additional information is made available:
i. The company paid ordinary dividends of GH¢2.2 per share on 31 January 2022 and GH¢2.6 per share on 30 June 2022. The dividend payments are included in administrative expenses in the trial balance.
ii. Provision is to be made for a full year’s interest on the Loan notes.
iii. non-current assets:
• Depreciation of Property, plant and equipment is to be provided on the following bases:

Plant and equipment – 10% on cost
Computer equipment – 25% on cost
Motor vehicles – 20% on reducing balance.
• No depreciation has yet been charged on any non-current asset for the year ended 30 September 2022.
• ANG Ltd revalues its buildings at the end of each accounting year. On 30 September 2022, the relevant value to be incorporated into the financial statements is GH¢14,100,000.
• The building’s remaining life at the beginning of the current year (1 October 2021) was 25 years. ANG Ltd does not make an annual transfer from the revaluation reserve to retained earnings in respect of the realization of the revaluation surplus. Ignore deferred tax on the revaluation surplus.
iv. Estimated corporate income tax payable on the profit for the year is GH¢3,500,000.

You are required to:
Prepare the following financial statements of ANG Ltd. for publication in accordance with International Financial Reporting Standards (IFRS):
a. Statement of profit or loss and other comprehensive income for the year ended 30 September 2022 and.
b. Statement of financial position as of 30 September 2022.
c. Show clearly all relevant workings.

B
I. What is the objective of general-purpose financial reporting?
II. The IASB’s Conceptual Framework for Financial Reporting states that “If financial information is to be useful, it must be relevant and faithfully represent what it purports to represent.” Explain the terms Relevance and Faithfully Representation.

C
The accounting treatment of intangible assets is prescribed by IAS 38 Intangible Assets. You are required to:
i. Define intangible asset under IAS 38 Intangible Assets.
ii. Explain the recognition criteria for intangible assets.
iii. State 5 disclosure requirements of Intangible Assets under IAS 38.

Answer

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Tags: Comprehensive Income, Conceptual Framework, Depreciation, Disclosure, Faithful Representation, Financial Position, FRS, IAS 38, Intangible Assets, Profit or Loss, Recognition, Relevance, Revaluation Surplus
Level: Level 3

Topic: PLANNING AND ANALYSIS
Series: APR 2023

FRPA – APRIL 2024 – L3 – Q1A – Preparation of Financial Statements for Vandee Oil Ltd

Using the provided trial balance and additional information on inventory, asset purchases, depreciation rates, utilities adjustments, and staff bonuses, prepare the Statement of Profit or Loss for 2023 and the Statement of Financial Position as at 31 December 2023.

Question

Vandee Oil Ltd. has been in business for the past ten (10) years. The following Trial Balance was extracted from the books of Vandee Oil Ltd. for the year ended 2023.

Item	GH¢’000 (Debit)	GH¢’000 (Credit)
Bank	46,200
Petty Cash	4,000
Computer and Accessories	8,370
Furniture and Fittings	10,255
Land and Building	214,000
Office Equipment	12,250
Plant and Machinery	239,400
Inventory	1,900
Staff Loan	5,088
Purchases	355,000
Bank Service Charges	1,300
Business Promotion	1,500
Communication	1,900
Insurance	1,660
Licenses and Permits	6,650
Medical Expenses	155
Printing and Stationery	300
Professional Fees: Legal Fees	500
Repairs: Equipment Repairs	2,600
Salaries	23,050
Electricity	780
Water	280
Vehicle Running Expense	4,560
Trade Payable		25,000
Directors Current Account		320,000
Computer and Accessories: Accumulated Depreciation		3,348
Furniture and Fittings: Accumulated Depreciation		2,050
Land and Building: Accumulated Depreciation		8,560
Office Equipment: Accumulated Depreciation		2,450
Plant and Machinery: Accumulated Depreciation		47,880
Payroll Liabilities		550
Retained Earnings	49,282
Taxation	3,003
Share Capital		10,000
Sales		574,145
TOTALS	993,983	993,983

Additional Information: i) Closing Inventory as at December 2023 amounts to GH¢48,500,000 ii) The following assets were bought during the year 2023. However, these transactions were not recorded in the above Trial Balance:

Computers and Accessories GH¢8,000,000
Fixtures and Fittings GH¢5,000,000
Plant and Machinery GH¢25,000,000 The following are the rates of Depreciation being used by the company, however Depreciation for 2023 is yet to be charged:
Land and Building 1%
Computers and Accessories 20%
Furniture and Fittings 10%
Plant and Machinery 20%
Office Equipment 20% iii) Electricity stated in the Trial Balance include January 2024 Electricity Bill while that of Water represents six (6) months’ payment for the year 2023. iv) Staff bonuses amounting to GH¢15,000,000 was agreed on 31 December 2023 for staff. However, it was paid after the year end.

Answer

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Tags: Accruals, Depreciation, Financial Position Statement, Inventory Valuation, Prepayments, Profit or Loss Statement, Trial Balance
Level: Level 3

Topic: Financial Statements -Form and Content
Series: APR 2024

ATP – Feb 2017 – L3 – Q3 – Pooling System

Explain general features of the pooling system for capital allowances.

Question

You are a Chartered Tax Practitioner and you have been consulted to produce an article for publication in The Tax Collector, the monthly journal of the Ghana Revenue Authority on the topic “The Pooling System of granting allowance as provided in the Income Tax Act, 2015 (Act 896).

Required:

a. Explain the general features of the pool system. (10 Marks)

b. What are conditions expected to be satisfied before the grant of Capital Allowances? (8 Marks)

Answer

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Tags: Capital allowances, Compliance, Depreciation
Level: Level 3

Topic: Income Tax Computation
Series: FEB 2017

FR – Mar 2025 – L2 – Q3 – Preparation of Financial Statements

Prepare Halidu LTD's financial statements for 2024, including comprehensive income, changes in equity, and financial position per IFRS.

Question

The following trial balance relates to Halidu LTD (Halidu) at 30 June 2024:

	GH¢’000	GH¢’000
Revenue		3,120,000
Cost of sales	1,757,400
Distribution costs	45,600
Administration expenses	118,800
Loan interest paid	28,800
Property – cost	1,200,000
Property – depreciation at 1 July 2023		225,000
Plant and equipment – cost	1,011,600
Plant and equipment – depreciation at 1 July 2023		291,600
Licence – cost	240,000
Licence – amortisation at 1 July 2023		96,000
Trade receivables	259,200
Inventory – 30 June 2024	112,800
Bank	78,000
Trade payables		211,200
Share capital (GH¢0.25 each)		420,000
Revaluation surplus		78,000
12% loan note (issued 1 July 2023)		240,000
Taxation	12,000
Retained earnings at 1 July 2023		68,700
	4,774,200	4,774,200

The following notes are relevant:
i) Halidu made credit sales for GH¢196 million on a sale or return basis and this is currently included in revenue in the trial balance. At 30 June 2024 customers who had not paid for the goods, had the right to return GH¢62.4 million of them. Halidu applied a mark-up on cost of 30% on all these sales. In the past Halidu’s customers have sometimes returned goods under this type of agreement.
ii) On 1 July 2023, Halidu revalued its property to GH¢1,440 million, of which GH¢360 million relates to the land. This property was acquired 10 years ago at a cost of GH¢1,200 million which included GH¢300 million for the land. The building had an estimated life of 40 years when it was acquired and this has not changed as a result of the revaluation. Depreciation is charged on a straight line basis. The revaluation has not yet been recorded in the books. Halidu has a policy of transferring any excess depreciation to retained earnings.
iii) During the year, Halidu sold some plant that cost GH¢120 million on 1 December 2020. The proceeds of this sale were GH¢72 million and these have been credited to cost of sales. No other entries have been made relating to the disposal. Plant and equipment is to be depreciated on the reducing balance basis at a rate of 20% per annum. Halidu charges a full year’s depreciation in the year of acquisition and none in the year of disposal.
iv) The licence is being amortised on the straight line basis at a rate of 20% per annum. All depreciation and amortisation is to be charged to cost of sales.
v) The directors have estimated the provision for income tax for the year ended 30 June 2024 at GH¢76.2 million. The balance of taxation in the trial balance relates to over/under provision of tax in the previous year. The only deferred tax consequence relates to those mentioned in note (ii) above. The company pays tax on profit at the rate of 25%.
vi) Halidu intends to dispose of a major line of its business operations in the course of the year. At the date the held for sale criteria were met, the carrying amount of the assets and liabilities comprising the line of business were:

	GH¢’000
Plant and equipment	138,000
Trade receivables	9,000
Trade payables	7,000

It is anticipated that Halidu will realise GH¢135 million for the business. No entries have yet been made in respect of this information.

Required:
Prepare and present a statement of comprehensive income, a statement of changes in equity and a statement of financial position at 30 June 2024 in a form suitable for presentation to the shareholders and in accordance with the requirements of International Financial Reporting Standards (IFRS).

Answer

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Tags: Depreciation, Financial Statements, Held for Sale, IFRS, Revaluation, Statement of Changes in Equity, Statement of Comprehensive Income, Statement of Financial Position, Taxation
Level: Level 2

Topic: Preparation of Financial Statements
Series: MAR 2025

PSAF – Mar 2025 – L2 – Q1- Preparation and presentation of financial statements for covered entities

Prepare the Statement of Financial Performance for Hamile Teaching Hospital for 2023 per IPSAS and related regulations.

Question

The Trial Balance below relates to Hamile Teaching Hospital, a public hospital.

Trial Balance for the year ended 31 December 2023
	Debit	Credit
	GHc’000	GHc’000
Government subvention		100,750
Out-patient services fees		35,000
In-patient services fees		40,000
Development Partner grants (ii)		16,000
Established position salaries	62,000
Casual Labour	5,600
Contract appointment (local and foreign)	1,400
Limited engagements	200
Rent (iii)	500	150
Insurance	340
Consultancy services	120
Conferences, workshops and training	4,500
Purchase of drugs	60,000
Purchase of medical consumables	80,000
Office expenses	20,000
Repairs and maintenance	6,000
Interest on loan	10,000
Pharmacy sales		180,000
Diagnostic		85,000
Mortuary Services		9,400
Cafeteria and Canteen		4,650
Extension services		14,500
Furniture and office equipment (iv)	200,000	40,000
Medical equipment & accessories (iv & v)	420,000	120,000
Motor vehicles (iv)	120,000	20,000
Land and buildings (iv)	300,000	70,000
Bank and Cash	30,000
Receivable from National Health Insurance Scheme (vi)	65,000
Receivable from patients	15,000
Payables		26,000
Loan from foreign Institution (2028) (vii)		350,000
Inventory of drugs	22,000
Inventory of medical consumables	12,000
Accumulated Fund		336,210
Other expenses	13,000
	1,447,660	1,447,660

Additional Information:
i) The hospital prepares its financial statements in accordance with the International Public Sector Accounting Standards (IPSAS), the Public Financial Management Act 2016, (Act 921), the Public Financial Management Regulation 2019, L.I 2378, and the current Chart of Accounts of the Government of Ghana.
ii) The Development Partner grants received from the Health Care Fund, an international organization that provides free medical care to the rural poor and vulnerable individuals, are typically unconditional. However, 40% of this year’s grant is subject to certain conditions, which had not been met as of December 31, 2023.
iii) Rent received in advance during the year amounted to GH¢20,000 while rent owed by the hospital for the year amounts to GH¢300,000.
iv) The hospital charges consumption of fixed assets on straight line basis as follows

Non-current Assets	Estimated Useful Life
Furniture and office equipment	5 years
Medical equipment and accessories	4 years
Motor vehicles	5 years
Buildings	10 years

Land constitutes 30% of the amount of land and building shown in the trial balance.
v) A medical equipment valued at GH¢20,000,000 which is included in the medical equipment and accessories listed on the trial balance, was completely damaged due to consistent power fluctuations. The value of this equipment should be written off.
vi) The hospital submitted a claim of GH¢11,000,000 to the National Health Insurance Scheme for services provided to patients in the last quarter of 2023, but the payment has not yet been received. This transaction has not yet been reflected in the trial balance.
vii) The hospital took a loan of $100,000,000 from Health World Bank on January 1, 2023, when the exchange rate was $1 to GH¢3.50. The exchange rate on 31 December 2023 is $1 to GH¢5.
viii) The inventories on 31 December 2023 were as follows:

Inventory type	Cost	Net Realizable Value	Current Replacement
	GHc’000	GHc’000	GHc’000
Drugs	15,000	16,000	14,000
Medical consumables	10,000	11,000	9,000

Required:
Prepare for Hamile Teaching Hospital:
a) Statement of Financial Performance for the year ended 31 December 2023.

b) Statement of Financial Position as of 31 December 2023.

c) Disclosure notes to the financial statements.

Answer

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Topic: Preparation and presentation of financial statements for covered entities
Series: MARCH 2025

PSAF – Nov 2024 – L2 – Q2a – Valuation of Legacy Fixed Assets

Valuation and accounting treatment of legacy fixed assets in compliance with IPSAS.

Question

The Ministry of Indigenous Enterprises has been charged to collect legacy fixed assets data and value them in accordance with International Public Sector Accounting Standards (IPSAS). The Fixed Assets Coordinating Unit (FACU) of the Ministry has collected for valuation the following data for your action:

The Ministry owns a four (4) storey Office Administration block. The average cost per floor is GH¢4,741,256.25. The building was constructed on a land size of 20 plots of land owned by the Ministry. Currently, a plot of land in that area costs GH¢2,500,000. The FACU has measured the sizes of the building as follows:

Length: 87.5 meters
Width: 42.65 meters
Reference Price per Square Meter: GH¢4,432

However, a professional body, the Institute of Architects and Engineers, has given the reference price for the cost of such an office building at an estimated price of GH¢87,965,025. The building has not seen any further facelift ever since. However, a fence wall with a gate to enforce security and secure the land has just been completed in the current year at a cost of GH¢8,970,000 with a lifespan of 50 years.

The year of construction of the office building could not be determined, yet an old watchman who had been there for ages remembers that the building was constructed some 42 years ago, a time when his seventh child was born. It is the decision of the Government of Ghana on the adoption of IPSAS not to take advantage of the three-year exemption period but to account for legacy fixed assets by taking 60% of the reference cost of the legacy assets as the deemed cost, with a reduced lifespan of 30 years.

Required:

i) Calculate the cost of the land and buildings with structures to be brought into the books on the adoption of IPSAS and determine the depreciation chargeable in the first year in respect of these assets. ii) Show the extract of Statement of Financial Position of the Ministry of Indigenous
Enterprises as at that date

Answer

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Tags: Depreciation, Financial Statements, Fixed Assets, IPSAS, Public Sector, Valuation
Level: Level 2

IA – OCT 2022 – L1 – Q6 – Depreciation Concepts and Calculations

Explain depreciation-related concepts and compute depreciation and net book value for solar equipment using straight-line method.

Question

a. Briefly explain the following concepts used in Accounting:

i. Depreciation

ii. Depreciable amount

iii. Net book value

iv. Straight line depreciation

v. Reducing balance depreciation

(10 marks)

i. Compute the rate of depreciation for the solar equipment using the straight-line method (2 marks)

ii. Compute the depreciation for the year 2021 using the straight-line method (4 marks)

iii. Compute the Net present value of the asset as at 31st December 2021 (4 marks)

(Total: 20 marks)

Answer

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Tags: Depreciable Amount, Depreciation, Depreciation Rate, Net Book Value, Net Present Value, Reducing Balance Depreciation, Straight Line Depreciation
Level: Level 1

Topic: reducing balance methods (IAS 16)
Series: OCT 2022

IA – OCT 2022 – L1 – Q1 – Preparation of Financial Statements from Trial Balance

Prepare the Income Statement for the year ended 31/12/2021 and the Statement of Financial Position as at 31/12/2021 for Kolikoli Enterprise using the given trial balance and additional information.

Question

The following trial balance was extracted from the ledger of Kolikoli Enterprise as at 31/12/21.

	Dr GH¢000	Cr GH¢000
Buildings at cost	750,000
Plant at cost	350,000
Provision for depreciation as at 1/1/2021 On buildings		100,000
Provision for depreciation as at 1/1/2021 On plant		190,000
Purchases	2,250,000
Sales		3,022,000
Stocks 01-01-2021	250,000
Discounts	40,000	24,000
Returns	11,000	75,000
Wages and salaries	294,000
Bad debts written off	23,000
Other expenses	114,000
Debtors	190,000
Creditors		180,000
Bank and Cash	8,000
Drawings	20,000
Provision for doubtful debts		2,500
Capital		706,500
Total	4,300,000	4,300,000

You are required to prepare the following:
i. Income Statement for the year ended 31/12/2021; and
ii. Statement of Financial Position as at 31/12/2021
[20 marks]

Answer

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Tags: Adjustments, Depreciation, Income Statement, Provisions, Sole Trader, Statement of Financial Position, Trial Balance
Level: Level 1

Topic: Sole Trader
Series: OCT 2022

CIBG – FRPA 2022 – L3 – Q1B – Easy Way Limited Financial Statements

Prepare the statement of comprehensive income and statement of financial position for Easy Way Limited as at 31 December 2021 using the given trial balance and additional information.

Question

EASY WAY LIMITED

The list of balances of Easy Way Limited shows the following balances at 31st December 2021.

Dr GH¢000	Cr GH¢000
Share capital (600,000 shares)	320
General reserve	20
Accumulated profit 1 January 2021	50
Inventory (goods for resale) at 1 January 2021	60
Revenue	1,000
Purchases	540
Purchases returns	26
Sales returns	28
Carriage outwards	28
Warehouse wages	80
Sales representatives salaries	60
Administrative wages	40
Warehouse plant and equipment cost	126
Accumulated depreciation — 1 January 2021	50
Delivery vehicle hire	20
Goodwill	100
Distribution expenses	10
Administrative expenses	30
Directors’ salaries (charge to administrative expenses)	30
Rental income	16
Trade receivables	330
Cash at bank	60
Trade payables	60
1,542	1,542

Answer

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Tags: Depreciation, Goodwill Impairment, IAS 1, Statement of Comprehensive Income, Statement of Financial Position, Tax Expense
Level: Level 3

Topic: Financial Statements - Form and Content
Series: OCT 2022

ITA – APR 2023 – L1 – Q1 – Trial Balance and Financial Statements Preparation

Prepare Income Statement and Statement of Financial Position from given trial balance with additional adjustments.

Question

The following trial balance was extracted from the ledger of Adtrack Enterprise as at 31/12/21.

Factory Building $2 %$ on cost
Motor Vehicle $25 %$ reducing balance method

You are required to prepare: i. Income Statement for the year ended 31/12/2022 (10 marks) ii. Statement of Financial Position as at 31/12/2022

(Total: 20 marks)

Answer

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Tags: Adjustments, Depreciation, Income Statement, Provisions, rial Balance, Statement of Financial Position
Level: Level 1

Topic: Accounting Records
Series: APR 2023

FRPA – APRIL 2023 – L3 – Q1 – Financial Statements Preparation, Conceptual Framework, and Intangible Assets

Prepare the statement of profit or loss and other comprehensive income and the statement of financial position for ANG Ltd based on the given trial balance and additional information; explain the objective of general-purpose financial reporting and the terms relevance and faithful representation; define intangible assets, explain recognition criteria, and state disclosure requirements under IAS 38.

Question

A
The following is the trial balance of ANG Ltd, a trading company, as of 30 September 2022:

Debit	Credit
GH¢’000	GH¢’000
Sales
Inventory	3,150
Cost of sales	35,500
Selling & distribution expenses	5,600
Administration expenses	8,540
Loan Note interest paid	110
Bank interest	85
Investment income
Leasehold building at valuation – 1 Oct 2021	14,000
Plant and equipment – cost/depreciation	13,750
Computer equipment – cost/depreciation	7,200
Motor vehicles – cost/depreciation	1,500
Trade receivables	17,900
Bank
Trade payables
500,000 Ordinary shares
8% Loan notes (2019 – 2023)
Revaluation surplus
General reserve
Retained earnings – 1 Oct 2021
107,335	107,335

Plant and equipment – 10% on cost
Computer equipment – 25% on cost
Motor vehicles – 20% on reducing balance.
• No depreciation has yet been charged on any non-current asset for the year ended 30 September 2022.
• ANG Ltd revalues its buildings at the end of each accounting year. On 30 September 2022, the relevant value to be incorporated into the financial statements is GH¢14,100,000.
• The building’s remaining life at the beginning of the current year (1 October 2021) was 25 years. ANG Ltd does not make an annual transfer from the revaluation reserve to retained earnings in respect of the realization of the revaluation surplus. Ignore deferred tax on the revaluation surplus.
iv. Estimated corporate income tax payable on the profit for the year is GH¢3,500,000.

Answer

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Tags: Comprehensive Income, Conceptual Framework, Depreciation, Disclosure, Faithful Representation, Financial Position, FRS, IAS 38, Intangible Assets, Profit or Loss, Recognition, Relevance, Revaluation Surplus
Level: Level 3

Topic: PLANNING AND ANALYSIS
Series: APR 2023

FRPA – APRIL 2024 – L3 – Q1A – Preparation of Financial Statements for Vandee Oil Ltd

Using the provided trial balance and additional information on inventory, asset purchases, depreciation rates, utilities adjustments, and staff bonuses, prepare the Statement of Profit or Loss for 2023 and the Statement of Financial Position as at 31 December 2023.

Question

Vandee Oil Ltd. has been in business for the past ten (10) years. The following Trial Balance was extracted from the books of Vandee Oil Ltd. for the year ended 2023.

Item	GH¢’000 (Debit)	GH¢’000 (Credit)
Bank	46,200
Petty Cash	4,000
Computer and Accessories	8,370
Furniture and Fittings	10,255
Land and Building	214,000
Office Equipment	12,250
Plant and Machinery	239,400
Inventory	1,900
Staff Loan	5,088
Purchases	355,000
Bank Service Charges	1,300
Business Promotion	1,500
Communication	1,900
Insurance	1,660
Licenses and Permits	6,650
Medical Expenses	155
Printing and Stationery	300
Professional Fees: Legal Fees	500
Repairs: Equipment Repairs	2,600
Salaries	23,050
Electricity	780
Water	280
Vehicle Running Expense	4,560
Trade Payable		25,000
Directors Current Account		320,000
Computer and Accessories: Accumulated Depreciation		3,348
Furniture and Fittings: Accumulated Depreciation		2,050
Land and Building: Accumulated Depreciation		8,560
Office Equipment: Accumulated Depreciation		2,450
Plant and Machinery: Accumulated Depreciation		47,880
Payroll Liabilities		550
Retained Earnings	49,282
Taxation	3,003
Share Capital		10,000
Sales		574,145
TOTALS	993,983	993,983

Computers and Accessories GH¢8,000,000
Fixtures and Fittings GH¢5,000,000
Plant and Machinery GH¢25,000,000 The following are the rates of Depreciation being used by the company, however Depreciation for 2023 is yet to be charged:
Land and Building 1%
Computers and Accessories 20%
Furniture and Fittings 10%
Plant and Machinery 20%
Office Equipment 20% iii) Electricity stated in the Trial Balance include January 2024 Electricity Bill while that of Water represents six (6) months’ payment for the year 2023. iv) Staff bonuses amounting to GH¢15,000,000 was agreed on 31 December 2023 for staff. However, it was paid after the year end.

Answer

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Tags: Accruals, Depreciation, Financial Position Statement, Inventory Valuation, Prepayments, Profit or Loss Statement, Trial Balance
Level: Level 3

Topic: Financial Statements -Form and Content
Series: APR 2024

ATP – Feb 2017 – L3 – Q3 – Pooling System

Explain general features of the pooling system for capital allowances.

Question

Required:

a. Explain the general features of the pool system. (10 Marks)

b. What are conditions expected to be satisfied before the grant of Capital Allowances? (8 Marks)

Answer

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Tags: Capital allowances, Compliance, Depreciation
Level: Level 3

Topic: Income Tax Computation
Series: FEB 2017

FR – Mar 2025 – L2 – Q3 – Preparation of Financial Statements

Prepare Halidu LTD's financial statements for 2024, including comprehensive income, changes in equity, and financial position per IFRS.

Question

The following trial balance relates to Halidu LTD (Halidu) at 30 June 2024:

	GH¢’000	GH¢’000
Revenue		3,120,000
Cost of sales	1,757,400
Distribution costs	45,600
Administration expenses	118,800
Loan interest paid	28,800
Property – cost	1,200,000
Property – depreciation at 1 July 2023		225,000
Plant and equipment – cost	1,011,600
Plant and equipment – depreciation at 1 July 2023		291,600
Licence – cost	240,000
Licence – amortisation at 1 July 2023		96,000
Trade receivables	259,200
Inventory – 30 June 2024	112,800
Bank	78,000
Trade payables		211,200
Share capital (GH¢0.25 each)		420,000
Revaluation surplus		78,000
12% loan note (issued 1 July 2023)		240,000
Taxation	12,000
Retained earnings at 1 July 2023		68,700
	4,774,200	4,774,200

	GH¢’000
Plant and equipment	138,000
Trade receivables	9,000
Trade payables	7,000

It is anticipated that Halidu will realise GH¢135 million for the business. No entries have yet been made in respect of this information.

Answer

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Tags: Depreciation, Financial Statements, Held for Sale, IFRS, Revaluation, Statement of Changes in Equity, Statement of Comprehensive Income, Statement of Financial Position, Taxation
Level: Level 2

Topic: Preparation of Financial Statements
Series: MAR 2025

PSAF – Mar 2025 – L2 – Q1- Preparation and presentation of financial statements for covered entities

Prepare the Statement of Financial Performance for Hamile Teaching Hospital for 2023 per IPSAS and related regulations.

Question

The Trial Balance below relates to Hamile Teaching Hospital, a public hospital.

Trial Balance for the year ended 31 December 2023
	Debit	Credit
	GHc’000	GHc’000
Government subvention		100,750
Out-patient services fees		35,000
In-patient services fees		40,000
Development Partner grants (ii)		16,000
Established position salaries	62,000
Casual Labour	5,600
Contract appointment (local and foreign)	1,400
Limited engagements	200
Rent (iii)	500	150
Insurance	340
Consultancy services	120
Conferences, workshops and training	4,500
Purchase of drugs	60,000
Purchase of medical consumables	80,000
Office expenses	20,000
Repairs and maintenance	6,000
Interest on loan	10,000
Pharmacy sales		180,000
Diagnostic		85,000
Mortuary Services		9,400
Cafeteria and Canteen		4,650
Extension services		14,500
Furniture and office equipment (iv)	200,000	40,000
Medical equipment & accessories (iv & v)	420,000	120,000
Motor vehicles (iv)	120,000	20,000
Land and buildings (iv)	300,000	70,000
Bank and Cash	30,000
Receivable from National Health Insurance Scheme (vi)	65,000
Receivable from patients	15,000
Payables		26,000
Loan from foreign Institution (2028) (vii)		350,000
Inventory of drugs	22,000
Inventory of medical consumables	12,000
Accumulated Fund		336,210
Other expenses	13,000
	1,447,660	1,447,660

Non-current Assets	Estimated Useful Life
Furniture and office equipment	5 years
Medical equipment and accessories	4 years
Motor vehicles	5 years
Buildings	10 years

Inventory type	Cost	Net Realizable Value	Current Replacement
	GHc’000	GHc’000	GHc’000
Drugs	15,000	16,000	14,000
Medical consumables	10,000	11,000	9,000

Required:
Prepare for Hamile Teaching Hospital:
a) Statement of Financial Performance for the year ended 31 December 2023.

b) Statement of Financial Position as of 31 December 2023.

c) Disclosure notes to the financial statements.

Answer

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Topic: Preparation and presentation of financial statements for covered entities
Series: MARCH 2025

PSAF – Nov 2024 – L2 – Q2a – Valuation of Legacy Fixed Assets

Valuation and accounting treatment of legacy fixed assets in compliance with IPSAS.

Question

Length: 87.5 meters
Width: 42.65 meters
Reference Price per Square Meter: GH¢4,432

Required:

Answer

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Tags: Depreciation, Financial Statements, Fixed Assets, IPSAS, Public Sector, Valuation
Level: Level 2

Question Tag: Depreciation

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IA – OCT 2022 – L1 – Q6 – Depreciation Concepts and Calculations

Explain depreciation-related concepts and compute depreciation and net book value for solar equipment using straight-line method.

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IA – OCT 2022 – L1 – Q1 – Preparation of Financial Statements from Trial Balance

Prepare the Income Statement for the year ended 31/12/2021 and the Statement of Financial Position as at 31/12/2021 for Kolikoli Enterprise using the given trial balance and additional information.

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CIBG – FRPA 2022 – L3 – Q1B – Easy Way Limited Financial Statements

Prepare the statement of comprehensive income and statement of financial position for Easy Way Limited as at 31 December 2021 using the given trial balance and additional information.

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ITA – APR 2023 – L1 – Q1 – Trial Balance and Financial Statements Preparation

Prepare Income Statement and Statement of Financial Position from given trial balance with additional adjustments.

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FRPA – APRIL 2023 – L3 – Q1 – Financial Statements Preparation, Conceptual Framework, and Intangible Assets

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FRPA – APRIL 2024 – L3 – Q1A – Preparation of Financial Statements for Vandee Oil Ltd

Using the provided trial balance and additional information on inventory, asset purchases, depreciation rates, utilities adjustments, and staff bonuses, prepare the Statement of Profit or Loss for 2023 and the Statement of Financial Position as at 31 December 2023.

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ATP – Feb 2017 – L3 – Q3 – Pooling System

Explain general features of the pooling system for capital allowances.

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FR – Mar 2025 – L2 – Q3 – Preparation of Financial Statements

Prepare Halidu LTD's financial statements for 2024, including comprehensive income, changes in equity, and financial position per IFRS.

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PSAF – Mar 2025 – L2 – Q1- Preparation and presentation of financial statements for covered entities

Prepare the Statement of Financial Performance for Hamile Teaching Hospital for 2023 per IPSAS and related regulations.

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PSAF – Nov 2024 – L2 – Q2a – Valuation of Legacy Fixed Assets

Valuation and accounting treatment of legacy fixed assets in compliance with IPSAS.

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IA – OCT 2022 – L1 – Q6 – Depreciation Concepts and Calculations

Explain depreciation-related concepts and compute depreciation and net book value for solar equipment using straight-line method.

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IA – OCT 2022 – L1 – Q1 – Preparation of Financial Statements from Trial Balance

Prepare the Income Statement for the year ended 31/12/2021 and the Statement of Financial Position as at 31/12/2021 for Kolikoli Enterprise using the given trial balance and additional information.

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CIBG – FRPA 2022 – L3 – Q1B – Easy Way Limited Financial Statements

Prepare the statement of comprehensive income and statement of financial position for Easy Way Limited as at 31 December 2021 using the given trial balance and additional information.

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ITA – APR 2023 – L1 – Q1 – Trial Balance and Financial Statements Preparation

Prepare Income Statement and Statement of Financial Position from given trial balance with additional adjustments.

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FRPA – APRIL 2023 – L3 – Q1 – Financial Statements Preparation, Conceptual Framework, and Intangible Assets

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FRPA – APRIL 2024 – L3 – Q1A – Preparation of Financial Statements for Vandee Oil Ltd

Using the provided trial balance and additional information on inventory, asset purchases, depreciation rates, utilities adjustments, and staff bonuses, prepare the Statement of Profit or Loss for 2023 and the Statement of Financial Position as at 31 December 2023.

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ATP – Feb 2017 – L3 – Q3 – Pooling System

Explain general features of the pooling system for capital allowances.

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FR – Mar 2025 – L2 – Q3 – Preparation of Financial Statements

Prepare Halidu LTD's financial statements for 2024, including comprehensive income, changes in equity, and financial position per IFRS.

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PSAF – Mar 2025 – L2 – Q1- Preparation and presentation of financial statements for covered entities

Prepare the Statement of Financial Performance for Hamile Teaching Hospital for 2023 per IPSAS and related regulations.

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PSAF – Nov 2024 – L2 – Q2a – Valuation of Legacy Fixed Assets

Valuation and accounting treatment of legacy fixed assets in compliance with IPSAS.

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