Subject: FINANCIAL REPORTING

Search 500 + past questions and counting.

FR – Nov 2024 – L2 – Q5d – Revenue Recognition under IFRS 15

Analyzing distinct performance obligations in a software contract under IFRS 15.

Question

Togbah LTD (Togbah), a software developer, enters into a contract with a customer to transfer the following:

Software licence
Installation service (includes changing the web screen for each user)
Software updates
Technical support for two years

Togbah sells the above separately. The installation service is routinely performed by other entities and does not significantly modify the software. The software remains functional without the updates and the technical support.

Required:
Explain whether the goods or services promised to the customer are distinct in terms of IFRS 15: Revenue from Contracts with Customers

Answer

Find Related Questions by Tags, levels, etc.

Tags: Contractual Performance Obligations, Financial Reporting Standards, IFRS 15, Revenue Recognition, Software Licensing
Level: Level 2

Topic: Financial Reporting Standards and Their Applications
Series: Nov 2024

FR – Nov 2024 – L2 – Q5c – Revenue Recognition under IFRS 15

Assessing whether goods and services in a contract are distinct under IFRS 15.

Question

Togbah LTD (Togbah), a software developer, enters into a contract with a customer to transfer the following:

Software licence,
Installation service (includes changing the web screen for each user),
Software updates, and
Technical support for two years.

Required:
Explain whether the goods or services promised to the customer are distinct in terms of IFRS 15: Revenue from Contracts with Customers.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accounting Standards, Contracts with Customers, IFRS 15, Performance Obligations, Revenue Recognition
Level: Level 2

Topic: Financial Reporting Standards and Their Applications
Series: Nov 2024

FR – Nov 2024 – L2 – Q5b – Ethical Issues in Government Grants

Identification of ethical issues in recording a government grant and recommended corrective actions.

Question

Dahn is a Chartered Accountant who works for a large Pharmaceutical Company, Nimely Company Ltd (Nimely), as an Assistant Financial Controller. The Financial Controller of Nimely is also a Chartered Accountant with more than ten years of experience.

During the year, Nimely received a vehicle worth GH¢800,000 from the government to support its operations. According to the Government Official who presented the vehicle to the management of Nimely, the company has been compliant in filing and paying its taxes.

At the year-end, the Financial Controller passed the following entry in the Tally Software of Nimely Company Ltd:

Dr	Vehicle	GH¢800,000
Cr	Income	GH¢800,000

Dahn explained to the Financial Controller that the grant should be treated in line with the provisions of IAS 20: Accounting for Government Grants and Disclosure of Government Assistance. It is the company’s policy that such grants should be treated as deferred income.

The Financial Controller agreed that the treatment should have been in line with IAS 20, but mentioned that the entries should not be changed since the current treatment may help them meet their profit targets.

It is Nimely’s policy to depreciate its vehicles at a rate of 25% per annum on a straight-line basis.

Required:

i) Identify the ethical issues involved.
ii) Recommend the appropriate actions to be taken by Dahn.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Ethics, Financial Integrity, Government Grants, IAS 20, Professional Conduct
Level: Level 2

Topic: Professional and Ethical Issues in Financial Reporting
Series: Nov 2024

FR – Nov 2024 – L2 – Q5a – Barriers to Harmonisation of Accounting Standards

Identifying five barriers to the harmonisation of accounting standards across different countries.

Question

Harmonisation of accounting standards is a topical issue and is needed due to the increasing globalisation and competitiveness of governments and services. Harmonisation ensures reliable and high-quality financial reporting. However, not all countries have been able to harmonise their accounting standards in line with the International Financial Reporting Standards.

Required:
State FIVE barriers to the harmonisation of accounting standards faced by these countries.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accounting Standards, Barriers, Compliance, Harmonisation, IFRS, International Accounting
Level: Level 2

Topic: Corporate Reporting and Compliance
Series: Nov 2024

FR – Nov 2024 – L2 – Q4b – Financial Performance Assessment of Acquisition Targets

Assessment of financial performance and position of Suah LTD and Nagbe LTD to assist Dukuly LTD in an acquisition decision.

Question

Dukuly LTD, a public entity, has been expanding through acquisitions. It is assessing two potential acquisition targets, Suah LTD and Nagbe LTD, both operating in the same industry.

The financial statements of Suah LTD and Nagbe LTD for the year ended 30 September 2024 have been provided, along with a set of financial ratios calculated for Suah LTD.

Required:
Using the calculated ratios for Nagbe LTD from Question 4a, assess the relative financial performance and financial position of Suah LTD and Nagbe LTD, to assist the directors of Dukuly LTD in making an acquisition decision.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Financial Position, Gearing, Investment Decision, Liquidity, Performance Evaluation, Profitability, Ratio Analysis
Level: Level 2

Topic: Financial Statement Analysis
Series: Nov 2024

FR – Nov 2024 – L2 – Q4a – Financial Ratios and Performance Evaluation

Calculation of key financial ratios for Nagbe LTD to compare with Suah LTD and evaluate financial performance.

Question

Dukuly LTD, a public entity, has been expanding through acquisitions. It is assessing two potential acquisition targets, Suah LTD and Nagbe LTD, which operate in the same industry. The indicative price for acquiring either entity is GH¢12 million.

The financial statements for Suah LTD and Nagbe LTD are provided as follows:

Statement of Profit or Loss for the year ended 30 September 2024

Item	Suah LTD (GH¢’000)	Nagbe LTD (GH¢’000)
Revenue	25,000	40,000
Cost of Sales	(19,000)	(32,800)
Gross Profit	6,000	7,200
Distribution & Admin Expenses	(1,250)	(2,300)
Finance Costs	(250)	(900)
Profit Before Tax	4,500	4,000
Income Tax Expense	(900)	(1,000)
Profit for the Year	3,600	3,000

Statement of Financial Position as at 30 September 2024

Item	Suah LTD (GH¢’000)	Nagbe LTD (GH¢’000)
Non-Current Assets	4,800	10,300
Current Assets	4,800	8,700
Total Assets	9,600	19,000
Equity	2,600	5,600
Non-Current Liabilities	5,000	9,200
Current Liabilities	2,000	4,200
Total Equity & Liabilities	9,600	19,000

Additional Information:

Carrying Amount of Plant Assets:
- Suah LTD: GH¢4,800,000
- Nagbe LTD: GH¢2,000,000

The following ratios for Suah LTD are provided:

Ratio	Suah LTD
Return on Capital Employed (ROCE)	62.5%
Net Asset Turnover	3.3 times
Gross Profit Margin	24.0%
Profit Margin (Before Interest & Tax)	19.0%
Current Ratio	2.4:1
Inventory Holding Period	31 days
Trade Receivables Collection Period	31 days
Trade Payables Payment Period	24 days
Gearing Ratio	65.80%
Acid Test Ratio	1.6:1

Required:
Using the financial statements provided, calculate the corresponding ratios for Nagbe LTD to compare with Suah LTD.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Efficiency, Financial Statement Interpretation, Gearing, Investment Decision, Liquidity, Profitability, Ratio Analysis
Level: Level 2

Topic: Financial Statement Analysis
Series: Nov 2024

FR – Nov 2024 – L2 – Q3 – Financial Statements Preparation

Preparation of Fahnbulleh LTD’s Statement of Comprehensive Income and Statement of Financial Position using IFRS.

Question

Fahnbulleh LTD (Fahnbulleh) is a well-known company manufacturing thrill rides. During the current economic climate, Fahnbulleh has experienced some difficulties and has had to close down its Merry Go Round division.

The company’s trial balance as at 31 October 2023 is as follows:

Account Description	Dr (GH¢’000)	Cr (GH¢’000)
Revenue		1,296,000
Cost of Sales	546,480
Distribution Costs	127,080
Administrative Expenses	142,560
Investment Income		28,080
Investment Property	270,000
Interest Paid	17,280
Income Tax	10,800
Property, Plant & Equipment (PPE) – Carrying Value at 1 Nov 2022	1,620,000
Inventories (31 October 2023)	108,000
Trade Receivables	135,000
Bank	64,800
Payables		43,200
Deferred Tax (1 Nov 2022)		75,600
8% Loan Note		432,000
Ordinary Share Capital (GH¢1 per share)		540,000
Retained Earnings (1 Nov 2022)		605,520
Totals	3,031,200	3,031,200

Additional Information:

Revenue Adjustments:
- Revenue includes VAT of GH¢72 million.
Property, Plant & Equipment (PPE):
- A building with a carrying value of GH¢54 million was revalued on 1 November 2022 to GH¢72 million.
- The building had an estimated useful life of 25 years when purchased, and this has not changed after the revaluation.
- All other PPE should be depreciated at 20% per annum (reducing balance method).
- All depreciation should be charged to cost of sales.
Closure of the Merry Go Round Division (Discontinued Operations):
- Closure Date: 1 October 2023
- Division’s Results (1 Nov 2022 – 1 Oct 2023):
Item GH¢’000

Revenue 58,800

Cost of Sales 38,700

Distribution Costs 12,240

Administrative Expenses 11,880
- The division’s net assets were sold at a loss of GH¢19.2 million, recorded in cost of sales.
Investment Property Revaluation (IAS 40):
- Investment property value increased by 5%, which should be incorporated into the financial statements.
Income Tax and Deferred Tax (IAS 12):
- The estimated income tax provision for the year: GH¢140.4 million.
- Deferred tax liability should be adjusted for temporary differences (GH¢129.6 million) at a 25% tax rate.
Damaged Inventory (IAS 2):
- Inventory worth GH¢46 million was damaged.
- It can be reconditioned at a cost of GH¢12 million and sold for GH¢52 million.
- Appropriate adjustments should be made.

Item	GH¢’000
Revenue	58,800
Cost of Sales	38,700
Distribution Costs	12,240
Administrative Expenses	11,880

Required:

Prepare and present the Statement of Comprehensive Income for the year ended 31 October 2023 and the Statement of Financial Position as at 31 October 2023 for Fahnbulleh LTD.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Depreciation, Financial Statements, IFRS, Revaluation, Statement of Comprehensive Income, Statement of Financial Position, Trial Balance
Level: Level 2

Topic: Preparation of Financial Statements
Series: Nov 2024

FR – Dec 2022 – L2 – Q2d – Structured Entities

Justify whether Wesseh LTD qualifies as a structured entity under IFRS 12.

Question

Under IFRS 12: Disclosure of Interests in Other Entities, a structured entity is defined as one designed so that voting or similar rights are not the dominant factor in deciding who controls the entity.

Wesseh LTD is an entity set up by a sponsoring bank to hold specific mortgages, securitised by that bank. The operation of Wesseh LTD is governed by an operating agreement that sets out the managerial structure and rules of operation.

Required:
Justify whether the above would meet the definition of a structured entity.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Control, Corporate Reporting, Disclosure, IFRS 12, Operating Agreement, Structured Entity
Level: Level 2

Topic: Financial Reporting Standards and Their Applications
Series: Nov 2024

FR – Nov 2024 – L2 – Q2c – Intangible Assets and Their Measurement

Determining the correct accounting treatment for various intangible assets in Dolo LTD's financial statements, including licensing, software, and book rights.

Question

Question:

Dolo LTD, a market leader in the pharmaceutical industry, incurred the following expenditures during the financial year ended 31 December 2023:

Expenditure Item	Amount (GH¢’000)	Additional Information
Licence to operate in the pharmaceutical industry (10-year validity from January 2023)	200	Intangible asset
Costs incurred in setting up a website for a new product	20	The website will be developed in 2024
Purchase of 295 personal computers on 1 July 2023 (three-year useful life)	840	Excludes software costs
Windows operating system (for 295 PCs)	530	Perpetual software license
Microsoft Office software (for 295 PCs)	24	Three-year software license
Induction training for new staff	430	Staff training for new hires
Book rights purchased from another entity a few years ago	90	The rights have an indefinite useful life
Independent valuation of book rights as of 31 Dec 2023	240	Valued by an independent expert

Dolo LTD’s policy is to use the revaluation model for intangible assets where a market valuation is available.

Required:
Determine the carrying amount of intangible assets at 31 December 2023, in accordance with IAS 38 – Intangible Assets and IFRS.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Amortization, Capitalization, IAS 38, Intangible Assets, Licensing, Revaluation Model, Software Costs, Valuation
Level: Level 2

Topic: Financial Reporting Standards and Their Applications
Series: Nov 2024

FR – Nov 2024 – L2 – Q2b – Events After the Reporting Period

Accounting treatment of a court ruling after the reporting period and its impact on Mulba LTD’s financial statements.

Question

As a Trainee Financial Accountant working for Mulba LTD, a technology business, you have been asked by the Financial Controller to provide guidance on how to account for a variety of transactions that took place after the company’s fiscal year ended on December 31, 2023.

Mulba LTD was sued by a customer who was dissatisfied with the quality of a product delivered in June 2023. The court case was heard in late October 2023, but the judgment was delivered on 8 January 2024, ruling in favor of Mulba LTD. The ruling awarded the company legal costs of GH¢20,000 to cover solicitor’s fees.

The legal costs were paid by the customer to Mulba LTD on 12 January 2024.

Mulba LTD was doubtful of winning the case and had previously made a provision in its financial statements for the year ended 31 December 2023 as follows:

Account	Debit (GH¢)	Credit (GH¢)
Legal Fees – Administrative Expenses	25,000	–
Cost of Sales	35,000	–
Provisions – Current Liabilities	–	60,000

Required:
In accordance with IAS 10: Events after the Reporting Period, advise the management of Mulba LTD on the proper accounting treatment of the above issue to ensure that the financial statements are prepared in compliance with IFRS.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Adjusting Events, Contingent Liabilities, Financial Statements, IAS 10, Legal Provisions, Non-adjusting Events, Provisions
Level: Level 2

Topic: Events After the Reporting Period (IAS 10)
Series: Nov 2024

FR – Nov 2021 – L2 – Q6b – Property, Plant, and Equipment (IAS 16)

Analyze the non-current assets register for Olugbenga Nigeria Limited and compute the total carrying amount.

Question

The following information was extracted from the non-current assets register of Olugbenga Nigeria Limited for the year ended March 31, 2021.

Also, during the year, goodwill acquired from business combination amounted to N102 million. The year-end impairment test on the goodwill revealed a loss of N82 million.
Annual amortisation charge on the internally generated development costs and software
licences are based on their estimated useful life of 10 years and 15 years respectively.
The accumulated amortisations on the disposal were N110million and N40million for
development cost and software licences respectively.

Required:
Prepare a summary of the non-current assets register for Olugbenga Nigeria Limited as at March 31, 2021, showing the carrying amount of each class of asset.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Development Costs, Goodwill, Non-current Assets, Software Licences
Level: Level 2

Topic: Property, Plant, and Equipment (IAS 16)
Series: NOV 2021

FR – Nov 2021 – L2 – Q6a – Property, Plant, and Equipment (IAS 16)

Explain research and development concepts and identify conditions for recognizing development costs as intangible assets.

Question

An internally-generated intangible asset is an asset created by a company through its own efforts and by its nature does not exist physically.

Required:
a. i. Explain the terms: Research and Development and state TWO examples each. (4 Marks)
ii. Development costs must be recognized as an intangible asset if only some conditions can be satisfied. Identify FIVE such conditions. (5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Conditions for Recognition, Development, Intangible Assets, Research
Level: Level 2

Topic: Property, Plant, and Equipment (IAS 16)
Series: NOV 2021

FR – Nov 2021 – L2 – Q5 – Statement of Cash Flows (IAS 7)

Prepare a statement of cash flows using the indirect method and analyze current ratios and overdraft reasons for Dongo Limited.

Question

Dongo Limited statement of profit or loss for the year ended December 31, 2020:

Item	N’000
Revenue	420,000
Cost of goods sold	(99,000)
Gross profit	321,000
Administrative cost	(140,800)
Operating profit	180,200
Investment income	8,100
Interest paid	(17,120)
Profit before taxation	171,180
Income tax expense	(37,000)
Profit for the year	134,180

Dongo Limited statement of financial position as at December 31,

Additional information:
(i) During the year ended December 31, 2020; other comprehensive income was nil.
(ii) A dividend of N85,870,000 was paid during the year ended December 31, 2020.
(iii) There was no disposal of non-current assets during the year.

You are required to:
a. Prepare the statement of cash flows using the indirect method under IAS 7. (10 Marks)
b. Calculate the company’s current ratio as at the year ended December 31, 2019 and 2020. (2 Marks)
c. State THREE technical reasons which accounted for the company’s rise in overdrafts for the TWO years.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cash Flows, Current Ratio, Financial Statements, Overdraft Analysis
Level: Level 2

Topic: Statement of Cash Flows (IAS 7)
Series: NOV 2021

FR – Nov 2021 – L2 – Q4 – Presentation of Financial Statements (IAS 1)

Calculate and analyze financial ratios for Onye Nigeria Plc for the years 2019 and 2020.

Question

Below are the statements of financial position of Onye Nigeria Plc as at October 31, 2020, and an extract from the statement of profit or loss for the year ended on that date.

Onye Nigeria Plc
Statement of Financial Position as at October 31, 2020

Item	2020 (N’000)	2019 (N’000)
Non-current assets
Property, plant and equipment	8,325	6,435
Current assets
Inventories	2,880	2,205
Trade receivables	5,535	4,860
Cash and bank	360	540
Total Assets	17,100	14,040
Equity and Liabilities
Equity
Ordinary share capital	3,600	3,600
Retained earnings	5,603	3,938
Non-current liabilities
10% loan notes	3,600	2,700
Current liabilities
Trade payables	3,375	3,105
Bank overdraft	495	360
Taxation	135	90
Accrued expenses	292	247
Total Equity and Liabilities	17,100	14,040

Onye Nigeria Plc
Extracts from Statement of Profit or Loss for the Year Ended October 31

Item	2020 (N’000)	2019 (N’000)
Revenue	50,400	43,875
Cost of sales	(38,070)	(30,713)
Profit before taxation	2,093	1,440

Additional information:

The profit before tax is after charging:

Item 2020 (N’000) 2019 (N’000)

Depreciation 1,620 1,620

Interest on loan note 360 270

Interest on bank overdraft 68 41

Audit fees 54 45

Item	2020 (N’000)	2019 (N’000)
Depreciation	1,620	1,620
Interest on loan note	360	270
Interest on bank overdraft	68	41
Audit fees	54	45

The latest industry average ratios are as follows:

Ratio	Industry Average
ROCE	18.50%
Net profit margin	4.73%
Gross profit margin	35.23%
Assets turnover	3.91 times
Current ratio	1.90:1
Quick ratio	1.27:1
Trade receivables period	52 days
Trade payables period	49 days
Inventory turnover	18.30 times
Gearing ratio	32.71%

Required:
a. Calculate the above ratios of Onye Nigeria Plc for the years 2019 and 2020. (10 Marks)
b. Analyze the performance and liquidity of Onye Nigeria Plc for the year 2020. (5 Marks)
c. Comment on the limitations of using accounting ratios in financial statement analysis. (5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Current Ratio, Financial Ratios, Net Profit Margin, Performance Analysis, ROCE
Level: Level 2

Topic: Presentation of Financial Statements (IAS 1)
Series: NOV 2021

FR – Nov 2021 – L2 – Q3c – Inventory Accounting (IAS 2)

Enumerate the disclosure requirements for inventories under IAS 2 in financial statements.

Question

IAS 2 – Inventories sets out the requirements to be followed when accounting for inventories.

Required:
Enumerate seven disclosure requirements for inventories to be shown in the notes to the financial statements.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Financial Statements, IAS 2, Inventory Disclosure, Notes to Financial Statements
Level: Level 2

Topic: Inventory Accounting (IAS 2)
Series: NOV 2021

FR – Nov 2021 – L2 – Q3b – Revenue from Contracts with Customers (IFRS 15)

Explain the core principles of IFRS 15 for recognizing revenue from contracts with customers.

Question

IFRS 15 – Revenue from Contracts with Customers sets out principles to be applied in order to report useful information to users of financial statements about the nature, amount, timing, and uncertainty of revenue and cash flows arising from a contract with a customer.

Required:
(i) Explain the core principles upon which IFRS 15 is based. (2 Marks)
(ii) Briefly explain the five-step model involved in the application of the core principles. (5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Core Principles, IFRS 15, Performance Obligations, Revenue Recognition, Transaction Price
Level: Level 2

Topic: Revenue from Contracts with Customers (IFRS 15)
Series: NOV 2021

FR – Nov 2021 – L2 – Q3a – Accounting Policies, Changes in Accounting Estimates, and Errors (IAS 8)

Discuss the three bases of accounting on which transactions are recognized and measured.

Question

There are three bases of accounting on which transactions are recognized and measured.

Required:
Discuss these three bases of accounting.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accounting Bases, Accruals, Break-up Basis, Cash Basis
Level: Level 2

Topic: Accounting Policies, Changes in Accounting Estimates, and Errors (IAS 8)
Series: NOV 2021

FR – Nov 2021 – L2 – Q2 – Consolidated Financial Statements (IFRS 10)

Prepare a consolidated statement of profit or loss and other comprehensive income for Okechukwu Group for the year ended December 31, 2019.

Question

The statements of profit or loss and other comprehensive income of Okechukwu and its subsidiary, Ogenta Limited, for the year ended December 31, 2019, are presented below:

Item	Okechukwu Plc (N’000)	Ogenta Ltd (N’000)
Revenue	487,500	330,800
Cost of sales	(304,500)	(258,300)
Gross profit	183,000	72,500
Investment income	26,300	10,200
Distribution cost	(24,050)	(13,370)
Administrative expenses	(40,625)	(21,120)
Finance costs	(10,500)	(9,860)
Profit before tax	134,125	38,350
Income tax expense	(33,800)	(13,000)
Profit for the year	100,325	25,350
Other comprehensive income	23,880	10,440
Total comprehensive income	124,205	35,790

Additional information:

Okechukwu Plc acquired 300 million of the ordinary shares issued by Ogenta Limited for N428 million.
During the year ended December 31, 2019, Okechukwu Plc invoiced goods worth N80 million to Ogenta Limited. It is the policy of Okechukwu Plc to invoice goods at cost plus 33⅓%. Three-quarters of these goods are yet to be sold by Ogenta Limited at the year-end.
Extracts from the books of Ogenta Limited at the date of acquisition reveal the following capital structure:
- Issued ordinary shares of 50 kobo each: N200 million
- General reserves: N80 million
- Retained earnings: N52.5 million
The fair value of the non-controlling interests at the acquisition date amounted to N92.5 million.
An impairment test on the goodwill of Ogenta Limited conducted on December 31, 2019, indicated that the goodwill should be written down by N3.2 million.
On the acquisition date, the fair value of net assets of Ogenta Limited was equal to their carrying amount, except for land and building and office equipment, which had fair values of N5 million and N1.5 million, respectively, in excess of their carrying amounts. The group non-current assets are depreciated at the rate of 10% per annum on a straight-line basis and charged to administrative expenses.
Ogenta Limited paid a total of N20 million as dividends to all its shareholders for the year ended December 31, 2019. Okechukwu Plc has accounted for the dividend received.
The finance cost of Ogenta Limited includes N2 million paid to Okechukwu Plc as interest on a loan. Okechukwu Plc has recognized the amount as interest received.

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

Answer

Find Related Questions by Tags, levels, etc.

Tags: Consolidation, Fair Value Adjustments, Goodwill Impairment, Intra-Group Sales, NCI, Subsidiary
Level: Level 2

Series: NOV 2021

FR – Nov 2021 – L2 – Q1b – Impairment of Assets (IAS 36)

Explain how an entity should identify and account for impairment of assets under IAS 36.

Question

Under IAS 36 – Impairments of Assets:

Required:

To briefly explain how an entity should identify and account for the impairment of assets.

Answer

Find Related Questions by Tags, levels, etc.

Tags: IAS 36, Impairment, Impairment Loss, Recoverable Amount
Level: Level 2

Topic: Impairment of Assets (IAS 36)
Series: NOV 2021

FR – Nov 2021 – L2 – Q1a – Presentation of Financial Statements (IAS 1)

Prepare the financial statements of United Nigeria PLC including comprehensive income, changes in equity, and financial position as of December 31, 2020.

Question

The trial balance for United Nigeria Plc as at December 31, 2020 is given below:

Additional information:

Inventories at the end of the year were N120,000,000. Included in the closing inventories was a damaged item with a cost of N30,000,000, which has a net realizable value of N18,000,000.
Additional ordinary shares of 50,000,000 were issued and fully paid for at 80 kobo per share, which is yet to be recorded.
Interest on 10% loan notes is outstanding and dividend on 12% preference shares were paid on December 31, 2020. Ordinary shareholders were also paid a dividend of 5 kobo per share.
Allowances for trade receivables are to be increased to 15% per annum. Depreciation is charged on plant and equipment at 15% on reducing balance.
N5,000,000 administrative expenses were outstanding, and N25,000,000 company income tax is estimated for the year. Depreciation is charged to administrative expenses.

You are required to prepare the following:

a. (i) Statement of Comprehensive Income for United Nigeria Plc for the year ended December 31, 2020. (10 Marks)
(ii) Statement of Changes in Equity for the year ended December 31, 2020. (5 Marks)
(iii) Statement of Financial Position as at December 31, 2020. (10 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Topic: Presentation of Financial Statements (IAS 1)
Series: NOV 2021

Subject: FINANCIAL REPORTING

Filter by Professional Bodies

Filter by Subject

Filter by Series

Filter by Topics

Filter by Levels

FR – Nov 2024 – L2 – Q5d – Revenue Recognition under IFRS 15

Analyzing distinct performance obligations in a software contract under IFRS 15.

You're reporting an error for "FR – Nov 2024 – L2 – Q5d – Revenue Recognition under IFRS 15"

FR – Nov 2024 – L2 – Q5c – Revenue Recognition under IFRS 15

Assessing whether goods and services in a contract are distinct under IFRS 15.

You're reporting an error for "FR – Nov 2024 – L2 – Q5c – Revenue Recognition under IFRS 15"

FR – Nov 2024 – L2 – Q5b – Ethical Issues in Government Grants

Identification of ethical issues in recording a government grant and recommended corrective actions.

Required:

You're reporting an error for "FR – Nov 2024 – L2 – Q5b – Ethical Issues in Government Grants"

FR – Nov 2024 – L2 – Q5a – Barriers to Harmonisation of Accounting Standards

Identifying five barriers to the harmonisation of accounting standards across different countries.

You're reporting an error for "FR – Nov 2024 – L2 – Q5a – Barriers to Harmonisation of Accounting Standards"

FR – Nov 2024 – L2 – Q4b – Financial Performance Assessment of Acquisition Targets

Assessment of financial performance and position of Suah LTD and Nagbe LTD to assist Dukuly LTD in an acquisition decision.

You're reporting an error for "FR – Nov 2024 – L2 – Q4b – Financial Performance Assessment of Acquisition Targets"

FR – Nov 2024 – L2 – Q4a – Financial Ratios and Performance Evaluation

Calculation of key financial ratios for Nagbe LTD to compare with Suah LTD and evaluate financial performance.

Statement of Profit or Loss for the year ended 30 September 2024

Statement of Financial Position as at 30 September 2024

Additional Information:

You're reporting an error for "FR – Nov 2024 – L2 – Q4a – Financial Ratios and Performance Evaluation"

FR – Nov 2024 – L2 – Q3 – Financial Statements Preparation

Preparation of Fahnbulleh LTD’s Statement of Comprehensive Income and Statement of Financial Position using IFRS.

Additional Information:

You're reporting an error for "FR – Nov 2024 – L2 – Q3 – Financial Statements Preparation"

FR – Dec 2022 – L2 – Q2d – Structured Entities

Justify whether Wesseh LTD qualifies as a structured entity under IFRS 12.

You're reporting an error for "FR – Dec 2022 – L2 – Q2d – Structured Entities"

FR – Nov 2024 – L2 – Q2c – Intangible Assets and Their Measurement

Determining the correct accounting treatment for various intangible assets in Dolo LTD's financial statements, including licensing, software, and book rights.

You're reporting an error for "FR – Nov 2024 – L2 – Q2c – Intangible Assets and Their Measurement"

FR – Nov 2024 – L2 – Q2b – Events After the Reporting Period

Accounting treatment of a court ruling after the reporting period and its impact on Mulba LTD’s financial statements.

You're reporting an error for "FR – Nov 2024 – L2 – Q2b – Events After the Reporting Period"

FR – Nov 2021 – L2 – Q6b – Property, Plant, and Equipment (IAS 16)

Analyze the non-current assets register for Olugbenga Nigeria Limited and compute the total carrying amount.

You're reporting an error for "FR – Nov 2021 – L2 – Q6b – Property, Plant, and Equipment (IAS 16)"

FR – Nov 2021 – L2 – Q6a – Property, Plant, and Equipment (IAS 16)

Explain research and development concepts and identify conditions for recognizing development costs as intangible assets.

You're reporting an error for "FR – Nov 2021 – L2 – Q6a – Property, Plant, and Equipment (IAS 16)"

FR – Nov 2021 – L2 – Q5 – Statement of Cash Flows (IAS 7)

Prepare a statement of cash flows using the indirect method and analyze current ratios and overdraft reasons for Dongo Limited.

You're reporting an error for "FR – Nov 2021 – L2 – Q5 – Statement of Cash Flows (IAS 7)"

FR – Nov 2021 – L2 – Q4 – Presentation of Financial Statements (IAS 1)

Calculate and analyze financial ratios for Onye Nigeria Plc for the years 2019 and 2020.

You're reporting an error for "FR – Nov 2021 – L2 – Q4 – Presentation of Financial Statements (IAS 1)"

FR – Nov 2021 – L2 – Q3c – Inventory Accounting (IAS 2)

Enumerate the disclosure requirements for inventories under IAS 2 in financial statements.

You're reporting an error for "FR – Nov 2021 – L2 – Q3c – Inventory Accounting (IAS 2)"

FR – Nov 2021 – L2 – Q3b – Revenue from Contracts with Customers (IFRS 15)

Explain the core principles of IFRS 15 for recognizing revenue from contracts with customers.

You're reporting an error for "FR – Nov 2021 – L2 – Q3b – Revenue from Contracts with Customers (IFRS 15)"

FR – Nov 2021 – L2 – Q3a – Accounting Policies, Changes in Accounting Estimates, and Errors (IAS 8)

Discuss the three bases of accounting on which transactions are recognized and measured.

You're reporting an error for "FR – Nov 2021 – L2 – Q3a – Accounting Policies, Changes in Accounting Estimates, and Errors (IAS 8)"

FR – Nov 2021 – L2 – Q2 – Consolidated Financial Statements (IFRS 10)

Prepare a consolidated statement of profit or loss and other comprehensive income for Okechukwu Group for the year ended December 31, 2019.

You're reporting an error for "FR – Nov 2021 – L2 – Q2 – Consolidated Financial Statements (IFRS 10)"

FR – Nov 2021 – L2 – Q1b – Impairment of Assets (IAS 36)

Explain how an entity should identify and account for impairment of assets under IAS 36.

You're reporting an error for "FR – Nov 2021 – L2 – Q1b – Impairment of Assets (IAS 36)"

FR – Nov 2021 – L2 – Q1a – Presentation of Financial Statements (IAS 1)

Prepare the financial statements of United Nigeria PLC including comprehensive income, changes in equity, and financial position as of December 31, 2020.

You're reporting an error for "FR – Nov 2021 – L2 – Q1a – Presentation of Financial Statements (IAS 1)"

Our offerings

Contact Info

Customer

Get In Touch

admin