Question Tag: Profit or Loss

Search 500 + past questions and counting.

  • Filter by Professional Bodies

  • Filter by Subject

  • Filter by Series

  • Filter by Topics

  • Filter by Levels

  • 15 Marks

FA – Nov 2024 – L1 – Q1 – Partnership Financial Statements

Prepare the profit or loss and appropriation account and financial position statement for a partnership at retirement and admission of partners.

Atsu, Baba, and Chawe are in partnership, providing management services, sharing profits in the ratio 5:3:2 after charging annual salaries of GH¢18,000 each. Current accounts are not maintained. On 30 June 2024, Atsu retired.

Dua was admitted on 1 July 2024 to the partnership and is entitled to 30% of the profits of the current partnership, with the balance being shared equally between Baba and Chawe.

The previous partnership trial balance as of 30 June 2024 was as follows:

Description GH¢ GH¢
Capital accounts – Atsu 12,519
Capital accounts – Baba 65,844
Capital accounts – Chawe 33,618
Trade receivables 138,615
Inventories at 1 July 2023 6,000
Operating expenses 419,166
Investment 300
Bank overdraft 33,510
Trade payables 52,218
Revenue 565,296
Total 663,543 663,543

Additional Information:

  1. Inventory remains at GH¢6,000.
  2. Full provision is required for an irrecoverable debt of GH¢3,450.
  3. Adjustments agreed by partners:
    • The investment is to be included at GH¢4,500.
    • Goodwill, which remains in the books, is valued at GH¢72,000.
  4. On 1 July 2024, GH¢30,000 due to Atsu was transferred to Dua. The balance due to Atsu is to be repaid over three years, commencing on 1 July 2024.
  5. Dua introduced cash of GH¢22,500 to the partnership.

Required:
i) Prepare the statement of profit or loss and appropriation account of the previous partnership for the year ended 30 June 2024 and a statement of financial position at that date. (9 marks)
ii) Prepare the statement of financial position for the current partnership as of 1 July 2024. (6 marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – Nov 2024 – L1 – Q1 – Partnership Financial Statements"

  • 15 Marks

CR – May 2019 – L3 – Q6 – Presentation of Financial Statements (IAS 1)

Discuss reclassification adjustments and integrated reporting objectives and challenges.

Dangogo Plc. has adopted IFRS in the preparation and presentation of its financial statements in line with Financial Reporting Council of Nigeria requirements. During deliberations on their financial statements for the year ended 31 March, 2019 the directors of Dangogo Plc. found the distinction between profit or loss and other comprehensive income confusing. This is the case with many other preparers or users of financial statements in Nigeria who seem to be unclear about the relationship between profit or loss and other comprehensive income (OCI). They blame the conceptual framework for Financial Reporting and IAS 1 regarding the confusing nature of re classification. The emergence of integrated reporting holds promises for better reporting, but preparers are equally uncertain about whether the International Integrated Reporting Councils (IIRC) or Integrated Reporting (IR) Framework constitutes suitable criteria for report preparation.

a. Discuss the nature of a re-classification adjustment and the arguments for and against allowing re-classification of items to profit or loss. (6 Marks)

bi. Discuss the objectives of integrated reporting and key components (content elements) of integrated reports. (6 Marks)

ii. Comment on any concerns which could limit the Framework’s suitability for assessing the performance and prospects of an entity. (3 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "CR – May 2019 – L3 – Q6 – Presentation of Financial Statements (IAS 1)"

  • 30 Marks

CR – Nov 2020 – L3 – Q1 – Consolidated Financial Statements (IFRS 10)

Prepare consolidated profit or loss, financial position, cash flow benefits explanation, and share disposal accounting for a group structure.

Statements of financial position as at December 31, 2019

Statement of profit or loss for the year ended December 31, 2019

Statement of changes in equity (extract) for the year ended December 31,
2019

Additional Information:

  1. Haba owns 80% of Suka‘s shares, purchased in 2016 for N20.5 million cash, when Suka’s retained earnings balance was N7 million.
  2. In 2014, Haba purchased 60% of Zara‘s shares by issuing shares with a nominal value of ₦6.5 million at a premium of N6.5 million. At acquisition, Zara‘s retained earnings were N3 million, and the fair value of net assets was N24 million. Any undervaluation was attributed to land still held as of December 31, 2019.
  3. Inventory at December 31, 2019, includes goods Zara and Suka purchased from Haba valued at ₦5.2 million and N3.9 million, respectively. Haba aims for a 30% profit margin on cost. Total sales from Haba to Zara and Suka were N8 million and N6 million, respectively.
  4. Haba and Suka each proposed dividends before year-end of N2 million and N2.5 million, respectively. These have not been accounted for yet.
  5. Haba conducted annual impairment tests on goodwill per IFRS 3 and IAS 36. The estimated recoverable amount of goodwill was N5 million in 2016 and N4.5 million in 2019.

Requirements:

a. Prepare the consolidated statement of profit or loss for the year ended December 31, 2019.
(10 Marks)

b. Prepare the consolidated statement of financial position as at December 31, 2019.
(10 Marks)

c. Explain the benefits to external users of including a statement of group cash flows in the annual report.
(10 Marks)

d. At December 31, 2019, Hard plc owned 90% of Spark Limited’s shares. The net assets of Spark in Hard Group’s consolidated financial statements amounted to N800 million, with no asset revaluation.

On January 1, 2020, Hard sold 80% of its Spark equity for N960 million cash, and the fair value of Hard’s remaining Spark shares is N100 million.

Required: Explain how the Spark share disposal should be accounted for in Hard Group’s consolidated financial statements.
(10 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "CR – Nov 2020 – L3 – Q1 – Consolidated Financial Statements (IFRS 10)"

  • 13 Marks

FR – May 2021 – L2 – Q3b – Impairment of Assets (IAS 36)

Prepare a statement of profit or loss for Wizkid Bottling Company Plc showing continuing and discontinued operations.

Wizkid Bottling Company Plc specializes in the production of alcoholic wine known as Blue Bull and a soft drink called “Wiz-Cola,” operating two divisions: Blue Bull and Wiz-Cola. Due to high labor costs and raw material shortages for wine production, the Blue Bull division has incurred significant operating losses. Management decided to close down the Blue Bull division and drew up a plan to discontinue its operations.

On February 1, 2019, the Board of Directors of Wizkid Bottling Company Plc approved and immediately announced the formal plan.

The following figures are available for the current and prior year ending March 31:

2019 2018
Blue Bull Wiz-Cola Blue Bull Wiz-Cola
Revenue 235,000 1,570,000 250,000 1,250,000
Cost of sales 175,000 505,000 200,000 450,000
Admin. expenses 35,000 311,000 25,000 255,000
Distribution costs 20,000 186,500 10,000 157,500
Other operating 15,000 124,500 10,000 102,500
expenditure
Taxation expense (3,000) 130,500 1,500 85,000

Additional Information:

  • Severance pay of N42.5 million was incurred between February 1, 2019, and March 31, 2019.
  • An evaluation of the recoverability of assets in the Blue Bull Division in terms of IAS 36 led to recognizing an impairment loss of N9.5 million, which is included in other operating expenses above.

Required:

i. Draft the statement of profit or loss for Wizkid Bottling Company Plc for the years ended March 31, 2019, and 2018, in compliance with IFRS 5, showing continuing and discontinuing operations.
(10 Marks)

ii. List additional disclosures required by IFRS 5 for the discontinued operations in the financial statements for the year ended March 31, 2019.
(3 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FR – May 2021 – L2 – Q3b – Impairment of Assets (IAS 36)"

  • 20 Marks

FR – May 2024 – L2 – SA – Q3 – Consolidated Financial Statements

Preparation of consolidated financial statements, calculation of goodwill, and non-controlling interest.

Olu Nigeria PLC has a subsidiary, Oba Limited, which it acquired on January 1, 2022. The financial statements of the companies are detailed below:

Statements of Profit or Loss for the year ended September 30, 2022

Additional Information:

  1. Olu PLC acquired its 70% interest in Oba Limited through a share exchange of three shares in Olu PLC for every five shares in Oba Limited. At the acquisition date, the shares of Olu PLC were sold at ₦8.10 each on the Nigerian Exchange (NGX). The parent company has not recorded this share issue in its books.
  2. At the acquisition date, the fair value of Oba Limited’s assets equaled their carrying amounts except for an item of plant, which had a fair value of N30,000,000 above its carrying amount. This fair value increase has not been adjusted in Oba Limited’s books. The plant’s remaining life at acquisition was five years.
  3. During the year, Oba Limited transferred goods worth N40,000,000 to Olu PLC. These goods were invoiced at cost plus 25%, and only a quarter of them were sold by Olu PLC at year-end.
  4. Included in the other income was N6,550,000 received from Oba Limited as interest paid on a loan granted by Olu PLC. The loan was fully repaid before September 30, 2022.
  5. An impairment test revealed a goodwill impairment of N28,000,000 at the acquisition date.
  6. It is the group’s policy to value non-controlling interests at fair value. The prevailing market price per ordinary share of Oba Limited at January 1, 2022, was ₦5.05.
  7. The gain on the revaluation of property arose from an independent valuation of the group’s property in September 2022.
  8. Administrative expenses of Oba Limited included N10,000,000 paid as management fees to Olu PLC, and the income has been duly recorded in Olu PLC’s books.
  9. Income and expenses accrue evenly over the period.

Required:

a. Prepare the consolidated statement of profit or loss and other comprehensive income for Olu Group for the year ended September 30, 2022. (12 Marks)

b. Calculate the goodwill on acquisition and the non-controlling interest at the reporting date. (4 Marks)

c. IFRS 10 – Consolidated Financial Statements states that a parent must present consolidated financial statements for its investments in subsidiaries.

Required:
State FOUR exceptions to this pronouncement. (4 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FR – May 2024 – L2 – SA – Q3 – Consolidated Financial Statements"

  • 16 Marks

FR – Nov 2019 – L2 – Q1b – Presentation of Financial Statements (IAS 1)

Prepare financial statements for Uchena Nigeria Plc, including profit or loss, changes in equity, and financial position.

The Chief Accountant of Uchena Nigeria plc has just forwarded the trial balance of the company to you for review before the preparation of draft financial statements for the year ended December 31, 2018.

The trial balance is as follows:

Description Debit (N’m) Credit (N’m)
Ordinary share capital 43,200
Revenue 125,280
Staff cost 18,720
Leasehold building 21,600
Patent rights 4,320
Work-in-progress (Jan 1, 2018) 9,000
Accum. Depreciation on building (Jan 1, 2018) 4,320
Inventories of finished goods (Jan 1, 2018) 11,160
Consultancy fee 3,168
Directors’ salaries 25,920
Computer at cost (Hardware) 3,600
Accum. Depreciation on computer (Jan 1, 2018) 1,440
Retained earnings (Jan 1, 2018) 8,712
Dividend paid 9,000
Cash and bank 31,680
Trade receivables 30,240
Trade payables 6,624
Sundry expenses 21,168
Totals 189,576 189,576

Additional information:

  1. On January 1, 2018, buildings were revalued to N25,920 million. This has not been reflected in the accounts.
  2. Computer (hardware) is depreciated over five years. Buildings are now to be depreciated over 30 years.
  3. The patent rights relate to a computer software with a 3-year life span.
  4. An allowance for bad debts of 5% is to be created.
  5. Closing inventories of finished goods are valued at N12,960 million. Work-in-progress has increased to N10,080 million.
  6. There is an estimated liability for current tax of N8,640 million, which has not been recognized.

Required:

  1. Prepare a draft statement of profit or loss (analyzing expenses by nature) for the year ended December 31, 2018. (6 Marks)
  2. Prepare a statement of changes in equity for the year ended December 31, 2018. (4 Marks)
  3. Prepare a statement of financial position as at December 31, 2018. (6 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FR – Nov 2019 – L2 – Q1b – Presentation of Financial Statements (IAS 1)"

  • 20 Marks

FR – Nov 2020 – L2 – Q4 – Presentation of Financial Statements (IAS 1)

Prepare the Statement of Profit or Loss and Other Comprehensive Income for Gbenga Nigeria Plc based on provided trial balance.

Gbenga Nigeria Plc trial balance as at December 31, 2019 is shown below:

Item N’000 N’000
Revenue 2,290,125
Administrative expenses 237,150
Selling and distribution expenses 175,200
Legal and professional expenses 81,150
Allowance for receivables 8,625
Inventories – finished goods – 31/12/18 276,750
Work-in-progress – 31/12/18 49,125
Inventories – raw materials at cost – 31/12/18 162,600
Purchases – raw materials 1,125,900
Carriage inwards – raw materials 15,750
Manufacturing wages 375,000
Manufacturing overheads 187,500
Authorised and issued 900,000 ordinary shares of 50 kobo each fully paid 450,000
150,000 8.4% cumulative preference shares of N1 each fully paid 150,000
Revaluation surplus 65,000
Share premium 150,000
General reserve 85,000
Retained earnings – 31/12/18 425,250
Patents and trademarks 323,250
Motor vehicle at cost 112,500
Freehold property at cost 375,000
Leasehold property at cost 112,500
Plant and equipment at cost 225,000
Furniture and fittings at cost 75,000
Amortisation of leasehold property – 31/12/18 22,500
Accumulated depreciation @ 31/12/2018:
– Plant and equipment 102,750
– Furniture and fittings 23,625
– Motor vehicles 37,500
10% loan notes 150,000
Trade payables 146,250
Trade receivables 266,445
Bank overdraft 76,875
Cash 7,680
4,183,500 4,183,500

Additional information:
(i) A gain of N20,000 made on the revaluation of old freehold property during the year is yet to be accounted for.
(ii) Inventories at December 31, 2019 were:

  • Raw materials: N168,900
  • Finished goods: N413,025
  • Work-in-progress: N56,700

(iii) Legal and professional expenses include solicitor’s fees for purchase of new freehold land during the year of N7,500.
(iv) Provision is to be made for full year’s interest on the loan notes.
(v) The leasehold land and buildings are held on a 50-year lease, with 40 years unexpired life left as at the end of December 31, 2018.
(vi) Depreciation for the year is to be charged as follows:

  • Plant and equipment 8% on cost – charged to production
  • Furniture and fittings 10% on cost – charged to administration
  • Motor vehicles 20% on carrying amount – charged 25% to administration and 75% to selling and distribution.

(vii) Income tax on the profit for the year is estimated at N68,900 and is due for payment on February 28, 2020.

Required:
Prepare the statement of profit or loss and other comprehensive income for the year ended December 31, 2019.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FR – Nov 2020 – L2 – Q4 – Presentation of Financial Statements (IAS 1)"

  • 1 Marks

FA – May 2013 – L1 – SA – Q26 – Depreciation Methods and Accounting for Disposals

This question involves calculating the profit or loss on the disposal of a non-current asset.

A non-current asset with an original cost of N500,000 and accumulated depreciation of N400,000 was disposed of for N80,000. Calculate the profit or loss on disposal.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – May 2013 – L1 – SA – Q26 – Depreciation Methods and Accounting for Disposals"

  • 15 Marks

FA – May 2014 – L1 – SB – Q6 – Accounting Concepts

Preparation of departmental profit or loss statement and head office statement of financial position.

The following trial balance for the year ended 30 June 2013 was extracted from the books of Dapo Trading Enterprises which operates from the head office and two departments:

Additional Information:
(i) Write off bad debts of N120,000 and increase the provision for doubtful receivables to 5% of the outstanding receivables.
(ii) Depreciate furniture and fittings at 10% per annum.
(iii) Accrue N40,000 for sundry expenses owed at 30 June 2013.
(iv) The values of inventories on hand on 30 June 2013 were: Department X – N2,960,000, Department Y – N1,700,000.
(v) Catalogue in hand was valued at N60,000.
(vi) Inter-departmental transfers were made at cost.
(vii) All expenses are to be allocated between Department X and Y in the proportion of two-thirds and one-third, respectively, except for carriage inwards which is to be apportioned on the basis of purchases.
(viii) Dividend received is to be treated as Head Office income.

You are required to prepare:
a. Departmental Statement of profit or loss showing Department X, Department Y, and Head Office separately for the year ended 30 June 2013.
b. The Head Office Statement of Financial Position as at that date.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – May 2014 – L1 – SB – Q6 – Accounting Concepts"

  • 20 Marks

CR – Nov 2020 – L3 – Q1i – Consolidated Profit or Loss and OCI

Prepare a consolidated statement of profit or loss and other comprehensive income for a parent, foreign subsidiary, and associate, accounting for goodwill impairment, disposal, and foreign currency translation.

Bolga Ltd is a limited liability company in Ghana, which has investments in a number of other companies. The draft statements of profit or loss for Bolga Ltd and its other investments for the year ended April 30, 2020, are given below:

Bolga Ltd Navrongo Ltd Serrekunda Ltd
Revenue GH¢286,000 GH¢136,000 GMD840,000
Cost of sales (GH¢122,000) (GH¢84,000) (GMD504,000)
Gross profit GH¢164,000 GH¢52,000 GMD336,000
Distribution costs (GH¢20,000) (GH¢12,000) (GMD56,000)
Administrative expenses (GH¢46,000) (GH¢20,000) (GMD116,000)
Operating profit GH¢98,000 GH¢20,000 GMD164,000
Investment income GH¢2,000 GH¢4,000 –
Finance costs (GH¢4,000) (GH¢8,000) (GMD12,000)
Profit before tax GH¢96,000 GH¢16,000 GMD152,000
Income tax expenses (GH¢22,000) (GH¢4,000) (GMD36,000)
Profit for the period GH¢74,000 GH¢12,000 GMD116,000

Additional relevant information:
i) Bolga Ltd purchased 80% of Navrongo Ltd’s three million GH¢5 ordinary shares for GH¢12 million two years ago. At the acquisition date, the carrying value of Navrongo’s net assets was GH¢10 million, and this was deemed to be the same as their fair value. The non-controlling interest was measured using the proportion of net assets method. Goodwill on acquisition of Navrongo is not impaired. On 31 October 2019, Bolga Ltd sold one million, four hundred and forty thousand of its shares in Navrongo Ltd for GH¢13 million. The fair value of the interest retained was GH¢19 million. The retained earnings of Navrongo Ltd was GH¢5 million as at April 30, 2019. The only entry posted in Bolga Ltd’s individual financial statements was the GH¢13 million cash received. This was debited to the bank account and the credit posted to the suspense account.

ii) On 1 May 2019, Bolga Ltd acquired 60% of Serrekunda Ltd’s one million GMD1 ordinary shares for GMD284 million. Serrekunda is a Gambian-based company with Gambian Dalasi (GMD) as its currency. The non-controlling interest at acquisition was valued at GMD116 million using the fair value method. At 1 May 2019, the carrying amount of Serrekunda Ltd’s net assets was GMD240 million but the fair value was GMD280 million. The excess in the fair value was due to a brand with a remaining useful economic life of 5 years at the date of acquisition.

On 30 April 2020, it was determined that goodwill arising on the purchase of Serrekunda Ltd was impaired by GMD16 million. Goodwill impairments are charged as administrative expenses.

iii) On 28 February 2020, Navrongo Ltd paid a dividend of GH¢2 million to its ordinary shareholders.

iv) On 1 June 2019, Bolga Ltd started construction of a new building project and financed this out of its general borrowings. The construction was completed on 30 April 2020 at a total cost of GH¢20 million, excluding interest on borrowings. Bolga Ltd has had the following loans outstanding for the whole financial year:

  • 10% bank loan: GH¢28,000
  • 8% loan notes: GH¢12,000

All the interest for the year has been expensed to the statement of profit or loss. None of the loan notes are held by any other companies within Bolga Ltd.

v) On 1 November 2019, Bolga Ltd granted 20,000 share options to each of its 100 managers. These options will vest on 31 October 2021 if the managers are still employed. However, five managers had left the company by 30 April 2020, and it is expected that another five will leave by 31 October 2021. The fair value of the share options was GH¢3.10 on 1 November 2019, and GH¢10 on 30 April 2020. There have not been any accounting entries posted in relation to this scheme.

vi) The following exchange rates are relevant:

  • GMD: GH¢1
    • May 1 2019: 10.0
    • April 30 2020: 8.0
    • Average for the year ended 30 April 2020: 9.2

Required:
Prepare the consolidated statement of profit or loss and other comprehensive income for the year ended 30 April 2020.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "CR – Nov 2020 – L3 – Q1i – Consolidated Profit or Loss and OCI"

  • 10 Marks

R – Nov 2020 – L2 – Q1a – Consolidated Statement of Profit or Loss

Prepare a consolidated statement of profit or loss for Kingdom Ltd and Paradise Ltd for the year ended 31 December 2019.

Prepare the consolidated statement of financial position for Kingdom Ltd group as at 31
December 2019 (10 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "R – Nov 2020 – L2 – Q1a – Consolidated Statement of Profit or Loss"

  • 10 Marks

FR – Nov 2020 – L2 – Q1a – Consolidated Statement of Profit or Loss

Prepare the consolidated statement of profit or loss and other comprehensive income for Kingdom Ltd Group for the year ending 31 December 2019.

Statement of profit or loss and other comprehensive income for the year ended 31 December 2019 of Kingdom Ltd and Paradise Ltd.

Description Kingdom Ltd (GH¢000) Paradise Ltd (GH¢000)
Revenue 125,200 60,000
Cost of sales (91,600) (48,000)
Gross profit 33,600 12,000
Distribution costs (4,000) (2,400)
Administrative expenses (7,000) (3,600)
Finance costs (400) 0
Profit before tax 22,200 6,000
Income tax expenses (6,200) (2,000)
Profit for the year 16,000 4,000
Other comprehensive income: Gain on revaluation of property 3,000 0
Total comprehensive income 19,000 4,000

Statement of financial position as at 31 December 2019

Description Kingdom Ltd (GH¢000) Paradise Ltd (GH¢000)
Assets
Non-current assets:
Property, plant, and equipment (PPE) 37,400 27,800
10% loan note 2,000 0
Total non-current assets 39,400 27,800
Current assets:
Inventory 8,600 2,400
Trade receivables 9,400 5,000
Bank 0 600
Total current assets 18,000 8,000
Total assets 57,400 35,800

Additional relevant information:
i) Kingdom Ltd acquired 60% of the share capital of Paradise Ltd on 1 April 2019. The purchase consideration was settled by a share exchange transaction of two shares in Kingdom Ltd for every three acquired shares in Paradise Ltd. The share price of Kingdom Ltd at the acquisition date was GH¢3 per share. In addition, Kingdom Ltd will also pay cash consideration of GH¢0.275 on 1 April 2020 for each acquired share in Paradise Ltd. Kingdom Ltd’s cost of capital is 10% per annum. None of the consideration has been recorded by Kingdom Ltd.

ii) The fair values of Paradise Ltd’s net assets and liabilities were equal to their carrying amounts at the date of acquisition with the exception of Paradise’s property, which had a fair value of GH¢8 million above its carrying amount. For the purpose of consolidation, this led to an increase in depreciation charges (in cost of sales) of GH¢200,000 in the post-acquisition period to 31 December 2019. Paradise Ltd has not incorporated the fair value of property increase into its entity’s financial statements.

iii) The policy of Kingdom Ltd group is to value all properties to fair value at each year end. On 31 December 2019, the increase in Kingdom Ltd’s property has already been recorded. However, a further increase of GH¢1.2 million in the value of Paradise Ltd’s property since its value at acquisition to 31 December 2019 has not yet been recorded.

iv) Kingdom Ltd made sales to Paradise Ltd throughout the year 2019 and it had consistently been GH¢600,000 per month. Kingdom Ltd made a mark-up of 25% on all of these sales. A total of GH¢1.2 million (at cost to Paradise) of Paradise Ltd’s inventory at 31 December 2019 had been supplied by Kingdom Ltd during the post-acquisition period.

v) At 31 December 2019, Kingdom Ltd had a trade receivable balance owing from Paradise Ltd of GH¢2.4 million. However, this did not agree to the equivalent trade payable of Paradise Ltd as a result of a payment by Paradise Ltd of GH¢800,000 made in December 2019, which did not reflect in Kingdom Ltd’s bank account until 4 January 2020. Kingdom Ltd’s policy for cash timing differences is to adjust the parent’s financial statements.

vi) Kingdom Ltd on December 2019, accepted a GH¢1 million 10% loan note from Paradise Ltd.

vii) At 31 December 2019, the goodwill that arose on acquisition was impaired by GH¢1 million. Kingdom Ltd has a policy of treating goodwill impairment as part of administrative expense.

viii) It is the policy of Kingdom Ltd group to value the non-controlling interest at fair value. For this purpose, Paradise Ltd’s share price was trading at GH¢2.50 each at the acquisition date.

ix) Assume that all items of income and expenditure accrue evenly throughout the year except where indicated otherwise.

Required:
a) Prepare the consolidated statement of profit or loss and other comprehensive income for Kingdom Ltd group for the year ended 31 December 2019. (10 marks)

 

 

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FR – Nov 2020 – L2 – Q1a – Consolidated Statement of Profit or Loss"

  • 20 Marks

FR – May 2021 – L2 – Q3 – Statement of Profit or Loss

Prepare financial statements based on the provided trial balance.

The following trial balance relates to Koli Ltd for the year ended 31 December, 2020.

Description Debit (GH¢’000) Credit (GH¢’000)
Sales 128,000
Purchases 75,000
Distribution expenses 8,000
Administrative expenses (Note ii) 22,000
License (Note iii) 5,000
Inventories at 31 December 2019 26,200
Finance costs on a long-term loan 3,000
Income tax (Note iv) 200
Deferred tax (Note iv) 6,000
Dividend paid on equity shares 2,000
Property, Plant and Equipment (PPE) 57,000
Provision for depreciation on PPE 10,790
Trade receivables 52,000
Bank balances 33,790
Trade payables 12,000
Provision for legal costs (Note ii) 10,000
Long-term loan 40,000
Stated capital 50,000
Retained earnings as at 31 December 2019 27,000
Total 283,990 283,990

Additional information:

i) The carrying value of inventories on 31 December 2020 was GH¢23 million.

ii) Administrative expenses include a provision of GH¢10 million for the possible costs of a legal claim lodged against Koli Ltd by one of its customers before 31 December 2020. The directors of Koli Ltd consider that it is probable that Koli Ltd can successfully defend the case, but they are providing for the worst possible outcome on the grounds of prudence. The provision of GH¢10 million is for the amount sought by the customer (GH¢9.6 million) plus the directors’ best estimate of the legal costs incurred in defending the case.

iii) On 1 January, 2020, Koli Ltd paid GH¢5 million for a ten-year export license.

iv) The estimated income tax on the profits for the year to 31 December 2020 is GH¢2.5 million. During the year, GH¢2.2 million was paid in full and in the final settlement of income tax on the profits for the year ended 31 December 2019. The statement of financial position on 31 December 2019 had included GH¢2.4 million in respect of this tax liability. A transfer of GH¢1.4 million is required to increase the deferred tax liability in the statement of financial position; GH¢900,000 of this amount was necessary due to the taxable temporary difference caused by the property revaluation (see note v below).

v) The details of property, plant and equipment are as follows:

Component of PPE Cost (GH¢’000) Accumulated Depreciation (GH¢’000) Carrying Amount (GH¢’000)
Land 12,000 0 12,000
Buildings 18,000 3,240 14,760
Plant and Equipment 27,000 7,550 19,450
Total 57,000 10,790 46,210

Estimate of useful economic life (at the date of purchase) of PPE components:

  • Land: nil (infinite life)
  • Building: 50 years
  • Plant and Equipment: 4 years

Depreciation of property, plant and equipment is allocated as follows:

  • 80% to cost of sales
  • 10% to distribution expenses
  • 10% to administrative expenses

On 1 January, 2020, the directors of Koli Ltd decided to revalue its property (Land and Building) to its market value of GH¢40 million, including GH¢19.5 million for the Land. The original estimate of the useful economic life of the property was still considered valid. The directors wish to make an annual transfer of excess depreciation from the revaluation reserve to realized profits following the revaluation.

Required:
Prepare for Koli Ltd,
a) The Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2020. (8 marks)
b) The Statement of Changes in Equity for the year ended 31 December 2020. (4 marks)
c) The Statement of Financial Position as at 31 December 2020. (8 marks)

(Total: 20 marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FR – May 2021 – L2 – Q3 – Statement of Profit or Loss"

  • 7 Marks

FR – May 2019 – L2 – Q7b – Impairment of Assets (IAS 36)

Preparation of financial statements extracts for intangible assets and associated costs for Soft Solutions Limited.

b. During the year ended 31 December, 2018 Soft Solutions Limited carried out
the following transactions:

  • N720m was spent on developing a new “Microfinance Software” which
    received the approval of software regulatory authority in Nigeria on 1 July,
    2018 and is proving commercially successful.
    The financial controller expects the project to be in profit within 12 months
    of the approval date. The patent was registered with Federal Ministry of
    Trade and Investment on 1 July, 2018; it costs N180m and remains in force
    for three years.
  • On 1 September, 2018 Soft Solutions Limited acquired an up to date list of
    Global Positioning System (GPS) at a cost of N60m and the company has
    been visiting the tracked customers to explain the operations of the new
    microfinance software in rural and urban areas. This is expected to generate
    sales throughout the life-cycle of the microfinance software.
  • A research project was set up on 1 October, 2018 which is expected to result
    in a new banking software called “Recent Bankers”. N24m was spent on
    computer equipment and N48m on staff salaries. The equipment has an
    expected life of four years

Required:

Using the above information:
i. Prepare the extract of statement of financial position of Soft Solutions
Limited as at 31 December, 2018. (5 Marks)
ii. Prepare the summary of the cost to be charged to statement of profit or
loss for the year ended 31 December, 2018. (2 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FR – May 2019 – L2 – Q7b – Impairment of Assets (IAS 36)"

  • 20 Marks

FR – May 2018 – L2 – Q2b – Financial Instruments (IAS 32, IFRS 9)

Prepare projected profit or loss extracts under legal and substance form and comment on the effects on company performance

Yo-Yo Products Nigeria Limited manufactures a chemical product that takes a long time to mature for sale. As of April 1, 2017, the product had a cost of N30 million with a fair value of N42 million. It cannot be sold until March 31, 2020. On April 1, 2017, Yo-Yo Products Limited entered into an agreement with Abeokuta Nigeria Limited to sell the product for N36 million, with an option to repurchase it by March 31, 2020, at N47,916,000. By that date, the product could be sold for N60 million. Yo-Yo Products had a loan of N36 million with compound interest for three years, as follows:

Year Interest (N)
1 3,600,000
2 3,960,000
3 4,356,000

The interest rate is the same as the required return by Abeokuta Nigeria Limited.

i. Prepare extracts from Yo-Yo Products Limited’s projected statement of profit or loss for three years to March 31, 2020, using separate calculations for legal form and substance form. (10 Marks)

ii. Comment on the effects these calculations will have on the company’s performance. (4 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FR – May 2018 – L2 – Q2b – Financial Instruments (IAS 32, IFRS 9)"

  • 20 Marks

FR – May 2018 – L2 – Q1a – Consolidated Financial Statements (IFRS 10)

Prepare the consolidated profit or loss and other comprehensive income for Adanna Plc and its subsidiary Ebuka Ltd for the year ended December 31, 2017.

Adanna Plc has a subsidiary, Ebuka Limited. The statement of profit or loss and other comprehensive income for the companies is as follows:

Statement of Profit or Loss and Other Comprehensive Income for the year ended December 31, 2017

Adanna Plc (N’000) Ebuka Limited (N’000)
Revenue 986,546 614,206
Cost of Sales (593,204) (365,903)
Gross Profit 393,342 248,303
Other Income 57,850 12,420
Distribution Costs (69,496) (40,562)
Administrative Expenses (158,624) (95,036)
Other Expenses (32,108) (15,814)
Finance Costs (20,600) (10,220)
Profit Before Tax 170,364 99,091
Income Tax Expense (51,110) (26,727)
Profit for the Year 119,254 72,364
Other Comprehensive Income:
Gain on Revaluation 68,166 29,202
Total Comprehensive Income 187,420 101,566

Additional Information:

  1. Adanna Plc acquired 75% of the issued equity shares of Ebuka Limited three years ago. Goodwill on acquisition was N280 million. The recoverable amount of goodwill at the year-end was N268 million, marking the first time the recoverable amount had fallen below the initial recognition.
  2. During the year, Ebuka Limited invoiced goods worth N300 million to Adanna Plc. A quarter of these goods were included in Adanna Plc’s inventory at the year-end. Ebuka Limited invoices goods at cost plus 25%.
  3. Ebuka Limited’s distribution costs include depreciation of an asset subject to a fair value increase of N155 million on acquisition. The asset is being depreciated on a straight-line basis over ten years.
  4. Adanna Plc’s other income includes an intercompany management charge of N10 million to Ebuka Limited, which was recognized as administrative expenses by Ebuka Limited.

Required: Prepare the Consolidated Statement of Profit or Loss and Other Comprehensive Income for Adanna Plc Group for the year ended December 31, 2017.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FR – May 2018 – L2 – Q1a – Consolidated Financial Statements (IFRS 10)"

  • 20 Marks

FA – May 2018 – L1 – SB – Q3 – Accounting from Incomplete Records

Prepares financial statements from incomplete records of Peju's grocery store after a flood incident.

Peju runs a big grocery store in Ibadan, but many of her accounting records were destroyed by a flood incident close to the end of the financial year of the business. From the records that were retrieved after the incident, the following balances were gathered in respect to her assets and liabilities at the beginning of the year:

In addition, you were informed that:
(i) Inventory was valued at N46,510,000, trade receivables at N20,680,000, and trade payables at N15,430,000.
(ii) Sundry expenses accrued amounted to N370,000 for 2016.
(iii) Depreciation is to be provided as follows: furniture and fittings 10% and motor vehicle 20% on reducing balance method.
(iv) Peju took some groceries from the store costing N2,060,000. She is yet to pay.
(v) Allowances for doubtful debts are raised at the beginning and end of the year at 5%. Bad debts of N600,000 had been written off the trade receivables as at December 31, 2017.
(vi) The insurance policy redeemed was to be used as additional capital.

Required:
a. Calculate the capital as at January 1, 2017. (6 Marks)
b. Prepare the statement of profit or loss for the year ended December 31, 2017. (8 Marks)
c. Prepare the statement of financial position as at December 31, 2017. (6 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – May 2018 – L1 – SB – Q3 – Accounting from Incomplete Records"

  • 20 Marks

FA – Nov 2021 – L1 – SB – Q3 – Trial Balance

This question involves preparing financial statements based on a given trial balance and additional adjustments.

The following balances remained in the books of Chukwu Limited as at December 31, 2020:

Accounts ₦’000
200,000,000 ordinary shares of N1 each 200,000
Cash at bank and in hand 500
Inventory (December 31, 2020) 61,200
Receivables 18,005
Payables 15,009
Gross profit 128,942
General reserves 25,000
Salaries and wages 28,430
Prepayments 600
Bad debts written off 500
Accrued expenses 526
Director’s account (Credit) 2,500
Interest on loan notes (half year) 600
Sundry expenses 4,100
Rates and insurance 1,520
6% loan notes 20,000
Lighting and cooling 1,310
Postage and telephones 800
Motor vehicles (Cost ₦25,000,000) 25,000
Office fittings and equipment (Cost ₦65,500,000) 42,350
Provision for depreciation – Motor vehicles 10,000
Provision for depreciation – Office fittings & equipment 23,150
Profit or loss (January 1, 2020) (Credit) 22,300
Land and buildings (Cost) 239,362

Additional Information:

  1. Office fittings and equipment are to be depreciated at 15% on cost, and motor vehicles at 20% of cost.
  2. Provisions are to be made for:
    • Directors’ fees of N6,000,000
    • Audit fees of N2,500,000
  3. The amount for insurance includes a premium of ₦600,000 paid in September 2020 to cover fire loss for the period September 1, 2020, to August 31, 2021.
  4. A bill for N548,000 in respect of electricity consumed up to December 31, 2020, has not been accounted for.
  5. The directors have recommended:
    • N15,000,000 be transferred to general reserves
    • A 5% dividend on ordinary share capital

You are required to prepare:
a. The trial balance of Chukwu Limited at December 31, 2020. (6 Marks)
b. The statement of profit or loss for the year ended December 31, 2020. (8 Marks)
c. The statement of financial position as at December 31, 2020. (6 Marks)
Note: Ignore taxation.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – Nov 2021 – L1 – SB – Q3 – Trial Balance"

  • 14 Marks

FA – May 2022 – L1 – SB – Q1b – Financial Statements Preparation

Prepare the statement of profit or loss and financial position for Wazobia PLC using the provided trial balance and adjustments.

The following trial balance has been extracted from the books of Wazobia PLC as at December 31, 2020:

Description Dr (₦’000) Cr (₦’000)
Accruals 4,002
Administrative expenses 65,990
24% bank loan repayable 2023 50,000
Cash at bank 4,207
Distribution costs 84,235
Interest 6,000
Inventories at January 1, 2020 73,735
Property, plant and equipment (PPE) at cost 603,950
Accumulated depreciation on PPE 238,932
Purchases 279,168
Retained earnings 207,410
Revenue 531,611
Share capital 100,000
Share premium 46,875
Trade payables 23,253
Trade receivables 84,798
Total 1,202,083 1,202,083

Additional information:
(i) The share capital of the company consists of ordinary shares with a nominal value of ₦1 each.
(ii) The revenue figure in the trial balance includes sales of ₦29,502,000 made on credit on January 1, 2021.
(iii) The inventories at the close of business on December 31, 2020, cost ₦78,815,000. Included in the figure were inventories that cost ₦4,500,000 but could only be sold for ₦1,688,000.
(iv) Electricity bills of ₦1,472,000 relating to December 2020 were not included in the trial balance as the invoice was received after the year-end.
(v) Interest on the bank loan for the last six months of the year was not included in the trial balance.
(vi) The company income tax charge for the year was calculated as ₦12,702,000.

Required:
(i) Prepare the statement of profit or loss and other comprehensive income of Wazobia PLC for the year ended December 31, 2020. (6 Marks)
(ii) Prepare the statement of financial position at December 31, 2020. (8 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – May 2022 – L1 – SB – Q1b – Financial Statements Preparation"

Elevate your professional expertise across key business domains with our comprehensive training programs

Our offerings

Contact Info

  • +233203701923
    +233543919232
  • info@knowsia.com

Customer

Get In Touch

Follow us on our social media and get daily updates.

Facebook-f Twitter Linkedin-in Envelope
Oops!

This feature is only available in selected plans.

Click here to view all plans

Click on the login button below to login if you’re already subscribed to a plan or click on the upgrade button below to upgrade your current plan.

Login
Upgrade Plan

If you’re not subscribed to a plan, click on the button below to choose a plan

Subscribe to a plan