- 20 Marks
CR – Mar 2025 – L3 – Q1 – Consolidated Cash Flows
Prepare Pato Aluworks Group's consolidated cash flow statement for 2024, including reconciliation note, using indirect method.
Question
Pato Aluworks Group (Pato) is an aluminium processing and casting entity that supplies high quality aluminum coils to both local and foreign markets. Pato has 3 subsidiaries namely Asanka, Jaritan and Topoya and one associate Dosi all of which it acquired several years ago. The Group’s Consolidated Statement of Profit or Loss Account for the year ended 31 December 2024 and Consolidated Statement of Financial Position as that date are set out below:
Consolidated Statement of Profit or Loss for the year ended 31 December (extract)
| 2024 | 2023 | |
|---|---|---|
| GH¢ | GH¢ | |
| Profit from operations | 651,150 | 640,496 |
| Impairment reversal/(loss) | 2,500 | (1,250) |
| Finance costs | (52,000) | (40,825) |
| Share of profits of associate | 127,575 | 108,439 |
| Profit before tax | 729,225 | 706,860 |
| Income tax expense | (145,800) | (123,930) |
| Profit for the year (continuing operations) | 583,425 | 582,930 |
| Profit for the year (discontinued operations) | 102,375 | |
| Profit for the year | 685,800 | 582,930 |
| Attributable to: | ||
| Owners of Pato | 571,725 | 485,966 |
| Non-controlling interest | 114,075 | 96,964 |
| 685,800 | 582,930 |
Consolidated Statement of Financial Position as at 31 December
| ASSETS | 2024 | 2023 |
|---|---|---|
| Non-current assets | GH¢ | GH¢ |
| Property, plant and equipment | 2,283,350 | 2,212,875 |
| Intangible assets | 22,000 | – |
| Investment in associate | 418,275 | 404,550 |
| 2,723,625 | 2,617,425 | |
| Current assets | ||
| Trade and other receivables | 170,325 | 200,025 |
| Cash and cash equivalents | 46,125 | 32,625 |
| 216,450 | 232,650 | |
| Total assets | 2,940,075 | 2,850,075 |
| EQUITY AND LIABILITIES | ||
| Equity | ||
| Ordinary share capital (GH¢0.50 shares) | 495,000 | 315,000 |
| Share deals account | 112,500 | 45,000 |
| Retained earnings | 1,491,750 | 1,518,975 |
| Attributable to the equity holders of Pato | 2,099,250 | 1,878,975 |
| Non-controlling interest | 315,450 | 339,300 |
| 2,414,700 | 2,218,275 | |
| Non-current liabilities | ||
| Lease Liabilities | 239,100 | 300,000 |
| Employee benefit obligations | 42,150 | 37,500 |
| Current liabilities | ||
| Trade and other payables | 90,000 | 118,800 |
| Due to related parties | 1,125 | – |
| Income tax payable | 153,000 | 175,500 |
| 244,125 | 294,300 | |
| Total equity and liabilities | 2,940,075 | 2,850,075 |
Additional information:
i) Pato owns 60% in Jaritan. The goodwill attributable to Pato arising on acquisition was GH¢67,500. The carrying value of Jaritan’s identifiable net assets (excluding goodwill arising on acquisition) in the group consolidation financial statements is GH¢180,000 at 31 December 2024. The recoverable amount of Jaritan is expected to be GH¢230,000 and no impairment loss had been recorded up to 31 December 2023.
ii) Pato sold all of its 75% shareholding in Asanka for cash during the year end December 31, 2024. As at December 31, 2023, all of the goodwill acquired in the business combination with Asanka had been written off. The profit from discontinued operations in the consolidated income statement above relates wholly to the sale of the shares in Asanka and can be analysed as follows:
| GH¢ | |
|---|---|
| Profit before tax | 93,150 |
| Income tax expense | (14,400) |
| Profit on disposal | 23,625 |
| 102,375 |
The net assets of Asanka at the date of disposal were as follows:
| GH¢ | |
|---|---|
| Property, plant and equipment | 421,875 |
| Trade and other receivables | 31,275 |
| Cash and cash equivalents | 3,375 |
| Trade and other payables | (19,012) |
| 437,512 |
iii) On 31 March 2024 Pato issued 100,000 ordinary shares for cash. This was followed by a bonus issue on 30 September 2024, utilising the share deals account. The consolidated statement of changes in equity for the year shows that all group companies paid ordinary dividends during the year.
iv) Depreciation of GH¢395,100 was recognised during the year ended 31 December 2024. In addition to the property, plant and equipment disposed of through the sale of Asanka, plant with a carrying amount of GH¢126,000 was sold for cash of GH¢135,000.
v) Trade and other payables include GH¢11,250 (2023: GH¢6,750) of unpaid interest due on the bank loan.
Required:
Prepare a consolidated statement of cash flows for Pato for the year ended 31 December 2024, including a note reconciling profit before tax to cash generated from operations, using the indirect method. (A note showing the effects of the disposal of Asanka is not required).
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