- 20 Marks
FR – L2 – Q69 – Presentation of Financial Statements
Question
NOVA BEKASI LIMITED
The list of balances of Nova Bekasi Limited shows the following balances at 31 December 20X5.
| Dr GH₵’000 | Cr GH₵’000 | |
|---|---|---|
| Share capital (600,000 shares) | 320 | |
| General reserve | 20 | |
| Accumulated profit 1 January 20X5 | 50 | |
| Inventory (goods for resale) at 1 January 20X5 | 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 20X5 | 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 |
Additional information
(1) Inventory (goods for resale) at 31 December 20X5 amounted to GH₵100,000.
(2) Annual depreciation on warehouse plant and equipment of GH₵32,000 should be provided.
(3) Income tax for 20X5 should be taken as GH₵50,000.
(4) The recoverable amount of goodwill was only GH₵90,000.
Required
Prepare the company’s statement of profit or loss for the year to 31 December 20X5 and a statement of financial position at that date in accordance with IAS 1 Presentation of Financial Statements.
Answer
(a)
Statement of profit or loss for the year-ended 31 December 20X5
| GH₵’000 | |
|---|---|
| Revenue (1,000 – 28) | 972 |
| Cost of sales (W) | 484 |
| Gross profit | 488 |
| Other operating income | 16 |
| Distribution costs (W) | (230) |
| Administrative expenses (W) | (100) |
| Profit before tax | 174 |
| Income tax expense | (50) |
| Profit for the period | 124 |
(b)
Statement of financial position as at 31 December 20X5
| GH₵’000 | GH₵’000 | |
|---|---|---|
| Non-current assets | ||
| Plant and equipment GH₵ (126 – 50 – 32) | 44 | |
| Goodwill GH₵ (100 – 10) | 90 | |
| 134 | ||
| Current assets | ||
| Inventories (goods for resale) | 100 | |
| Trade receivables | 330 | |
| Cash | 60 | |
| 490 | ||
| Total assets | 624 | |
| Equity and liabilities | ||
| Capital and reserves | ||
| Share capital | 320 | |
| General reserve | 20 | |
| Accumulated profits (50 + 124) | 174 | |
| 514 | ||
| Current liabilities | ||
| Trade payables | 60 | |
| Income tax | 50 | |
| 110 | ||
| Total equity and liabilities | 624 |
Workings
| GH₵’000 | |
|---|---|
| Opening inventory | 60 |
| Purchases | 540 |
| Purchases returns | (26) |
| Carriage outwards | 28 |
| Warehouse wages | 80 |
| Salespersons’ salaries | 60 |
| Administrative wages | 40 |
| Delivery vehicle hire | 20 |
| Distribution expenses | 10 |
| Administrative expenses | 30 |
| Directors’ salaries | 30 |
| Closing inventory | (100) |
| Depreciation | 32 |
| Impairment of goodwill | 10 |
| Cost of sales | 484 |
| Distribution costs | 230 |
| Administrative expenses | 100 |
| GH₵’000 | |
|---|---|
| Cost of sales | 484 |
| Distribution costs | |
| Carriage outwards | 28 |
| Warehouse wages | 80 |
| Salespersons’ salaries | 60 |
| Delivery vehicle hire | 20 |
| Distribution expenses | 10 |
| Depreciation | 32 |
| 230 | |
| Administrative expenses | |
| Administrative wages | 40 |
| Administrative expenses | 30 |
| Directors’ salaries | 30 |
| Impairment of goodwill | 10 |
| 100 |
Emory Walsh International
Institute of Chartered Accountants, West Africa
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