- 40 Marks
PSAF – May 2021 – L2 – Q1 – Public Sector Financial Statements
Apply IPSAS standards to adjust and analyze financial information for Okuku State University.
Question
Okuku State University is a parastatal under Okuku State, not classified as a Government Business Enterprise (GBE). The following is the statement of financial position for the University as of December 31, 2018:
Statement of Financial Position (as at Dec 31, 2018)
| Item | Cost (₦’million) | Accumulated Depreciation (₦’million) | Carrying Amount (₦’million) |
|---|---|---|---|
| Land and Buildings | 15,000 | 250 | 14,750 |
| Equipment | 1,000 | 100 | 900 |
| Furniture | 800 | 80 | 720 |
| Plant & Machinery | 550 | 50 | 500 |
| Motor Vehicles | 450 | 45 | 405 |
| Total Non-Current Assets | 17,800 | 525 | 17,275 |
| Inventories | 11,000 | – | – |
| Receivables | 15,000 | – | – |
| Bank | 3,000 | – | – |
| Total Current Assets | – | – | 29,000 |
| Total Assets | – | – | 46,275 |
| Non-Current Liabilities | – | – | 30,000 |
| Current Liabilities | – | – | 8,000 |
| Total Liabilities | – | – | 38,000 |
| Net Assets | – | – | 8,275 |
| Reserves | – | – | 8,275 |
Additional Information:
- Office equipment was purchased for ₦150,000,000 from Joko Nigeria Limited, with installation and transportation costing ₦3,000,000. Half was paid during the year, with the remainder in January 2019. The University also acquired a building valued at ₦500,000,000 from a defunct State College.
- The University Teaching Hospital received motor vehicles and laboratory equipment donations worth ₦20,000,000 and ₦50,000,000, respectively, from a UK-based research institute.
- A motor vehicle bought on January 1, 2017, for ₦8,000,000 with a five-year life was sold for ₦4,000,000 at year-end.
- Computers bought in 2017 for ₦1,000,000, with an expected five-year lifespan, were damaged in a fire and written off.
- Land was bought for ₦50,000,000 for constructing a plaza valued at ₦250,000,000, with an estimated 25-year life.
- One building, valued at ₦160,000,000, was damaged by fire, with a post-fire valuation of ₦130,000,000.
- A motor vehicle was acquired on January 1, 2018, for ₦150,000,000.
- The University’s depreciation policy includes full-year depreciation with rates: Motor Vehicle 20%, Building 4%, Furniture 10%, Equipment (including Lab and Computers) 20%, and Plant and Machinery 15%.
Required:
a. Identify FOUR characteristics of Government Business Enterprises (GBEs) as
stated in IPSAS 1 on presentation of financial statements. (2 Marks)
b. Prepare the necessary journal entries to record the above transactions for
the year ended December 31, 2018. (10 Marks)
c. Prepare the adjusted statement of financial position as at December 31,
2018. (20 Marks)
d. Identify and explain FOUR qualitative characteristics of financial reporting as
required by appendix 2 of IPSAS 1 on presentation of financial statements.
(8 Marks)
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