CR – Mar 2023 – L3 – Q1 – Consolidated Financial Statements

Prepare a consolidated statement of financial position for Abuakwa Group as at 31 December 2021.

Question

Below are statements of financial position of three companies: Abuakwa, Tanoso, and Kwadaso as at 31 December 2021:

Statements of Financial Position as at 31 December 2021

	Abuakwa (GH¢ million)	Tanoso (GH¢ million)	Kwadaso (GH¢ million)
Non-current assets
Tangible assets	358.0	169.5	120.0
Investments	170.0	6.5	–
Total Non-current assets	528.0	176.0	120.0
Current assets	264.0	172.0	116.0
Total assets	792.0	348.0	236.0

Equity and Liabilities

	Abuakwa (GH¢ million)	Tanoso (GH¢ million)	Kwadaso (GH¢ million)
Equity
Share capital – Ordinary shares (GH¢2 each)	180.0	50.0	30.0
Preference shares (GH¢2 each)	–	40.0	13.0
Retained earnings	330.0	66.0	56.0
Other reserves	50.0	23.0	8.0
Total equity	560.0	179.0	107.0
Current liabilities	232.0	169.0	129.0
Total equity and liabilities	792.0	348.0	236.0

Additional Information:

Abuakwa acquired 20 million shares in Tanoso on 1 January 2019. The consideration, which has been correctly accounted for, was settled by Abuakwa issuing its own ordinary shares of 7.5 million. The fair value of non-controlling interest of Tanoso at the date of acquisition was GH¢25 million.
The brand name of Tanoso had a fair value of GH¢2 million with a useful life of 5 years. At 31 December 2021, the brand’s recoverable amount was GH¢1.1 million.
Abuakwa acquired 10.5 million shares in Kwadaso on 31 December 2019. Abuakwa satisfied this consideration by deferring cash payment for a year.
Kwadaso’s net assets were uplifted by GH¢3 million on a non-depreciable land.
Tanoso acquired 1.5 million shares of Kwadaso for immediate cash consideration of GH¢6.5 million.
On 1 January 2021, Tanoso sold machinery to Abuakwa at a 20% profit on cost. Abuakwa depreciates this type of machinery at 10% per annum.
Goodwill in Tanoso was impaired by 10%.
Trade payables in Abuakwa include GH¢7 million due to foreign suppliers, with an unaccounted exchange loss of GH¢2 million.

Required:
Prepare the consolidated statement of financial position as at 31 December 2021 for the Abuakwa Group. (All figures should be stated in nearest GH¢0.1 million).

Answer