Financial Statements – Page 6

PSAF – L2 – Q11.1- Preparation and Presentation of Financial Statements for Central Government

Prepare 2023 financial performance statement for Republic of Zamara Consolidated Fund.

Question

(a) Prepare the Republic of Zamara Consolidated Fund Account: Statement of financial performance for the year ended 31st December 2023.

(b) Prepare the Republic of Zamara Consolidated Fund Account: Statement of financial position as at 31st December 2023.

(d) Prepare the Kwevadum District Assembly: Statement of financial position as at 31st December 2024.

(e)Prepare the Kwevadum District Assembly: Statement of changes in net assets for the year ended 31st December 2024.

Answer

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Tags: Central Government, Consolidated Fund, Expenses, Financial Statements, IPSAS, Non-Tax Revenue, Public Sector Accounting, Revenue, Statement of Financial Performance, Surplus
Level: Level 2

Topic: Preparation and Presentation of Financial Statements for Central Government

PSAF – L2 – Q10.3 – International public sector accounting standards

Account for the treatment of a property reclassified as investment property in 2024 financial statements of the National Retirement Oversight Agency.

Question

The National Retirement Oversight Agency acquired a property on 1 January 2021 at a cost of GHc40,000,000 and immediately occupied it as office premise. On acquisition, it was estimated to have a useful life of 50 years. Subsequent to its acquisition, the asset was measured at depreciated cost until 1 October 2024 when management decided to use the building mainly for rentals. Following this decision, the property was fair valued at GHc38,000,000. The National Retirement Oversight Agency adopted the fair value model for subsequent measurement. At 31 December 2024, it was fair valued at GHc39,000,000.

Required:

Account for the treatment of this property in the 2024 financial statements of The National Retirement Oversight Agency.

Answer

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Tags: Depreciation, Fair value gain, Fair value model, Financial Statements, Investment property, IPSAS 16, IPSAS 17, Non-current Assets, Property reclassification, Public Sector Accounting
Level: Level 2

Topic: International Public Sector Accounting Standards

PSAF – L2 – Q10.2 – International public sector accounting standards

Prepare financial statement extracts for a new technology acquisition by the Office of Business Registry for 2023 and 2024, considering delayed deployment.

Question

The Office of Business Registry has successfully acquired a new technology that will transform the landscape of business registration in the Republic of Zamara and make the Republic of Zamara a preferred destination for business.

The cost of the technology is GHc375 million. Professional advisers charged GHc5 million for providing advice in the acquisition of the technology which was estimated to have a useful life of 20 years effective from 1 January 2023.

Delay for the construction of the supporting infrastructure meant that the new technology could not be deployed until 1 January 2024.

Required:

Show extracts of the financial statements of the Office of Business Registry for the years ending 31st December 2023 and 2024.

Answer

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Tags: Amortization, Capitalization, Depreciation, Financial Statements, Intangible assets, IPSAS, Non-current Assets, Public Sector Accounting, Statement of Financial Position, Technology acquisition
Level: Level 2

Topic: International Public Sector Accounting Standards

PSAF – L2 – Q10.1 – Revaluation of Assets

Show financial statement extracts for Kumawu District Assembly's building revaluation at 31 December 2024 under IPSAS.

Question

Kumawu District Assembly revalues its buildings and decides to incorporate the revaluation into the financial statements. The following information has been made available:
a) Extract from the statement of financial position at 31 December 2023

Buildings at cost	GHc’000
Buildings at cost	300,000
Accumulated Depreciation	(93,000)
Carrying amount	207,000

b) Depreciation has been provided at 2% per annum on a straight-line method.
c) The building is revalued at 30 June 2024 at GHc276 million. There has been no change in the remaining estimated future life of the buildings.
Required:
Show the relevant extracts from the financial statements at 31 December 2024.

Answer

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Tags: Asset Accounting, Buildings, Depreciation, Financial Statements, IPSAS 17, Public Sector, Revaluation, Revaluation Reserve, Statement of Financial Performance, Statement of Financial Position
Level: Level 2

Topic: International Public Sector Accounting Standards

PSAF – L2 – Q9.3 – Employee Benefits

Show financial statement extracts for Ministry of Transport and Infrastructure's defined benefit plan for 2024 per IPSAS 39.

Question

As at 31st December 2023, the following balances were outstanding in respect of employee pensions which are determined based on a formula that considers number of years of service and the best last six months remuneration of the employee:

GHC million
Pension plan assets	65
Pension liabilities	85

During the year ending 31st December 2024, the following transactions occurred:

GHC million
Transfers into the investments of the scheme	15
Pension payments made	29
Investments liquidated to support pension payments	11
Current service cost	10
Cost resulting from improvement to the plan formula	6

At 31st December 2024, the present value of pension liabilities was computed at GHc127 million (using a discount rate of 15%) and the fair value of plan assets estimated at GHc98 million.

Required:
You are required to show extracts of the financial statements in respect of employee benefits for the year ended 31st December 2024.

Answer

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Tags: Actuarial Difference, Cash Flow, Defined Benefit Plan, Employee Benefits, Financial Statements, IPSAS 39, Pension Expense, Pension Liability
Level: Level 2

Topic: International Public Sector Accounting Standards

PSAF – L2 – Q9.2 – Leases

Classify a lease for Keta District Hospital as finance or operating per IPSAS 13/43 criteria.

Question

Based on the information provided, this lease arrangement falls under the category of a finance lease according to IPSAS 13/43: Leases.
To classify a lease as a finance lease, the following criteria are typically considered:

Transfer of ownership: If the lease transfers ownership of the asset to the lessee by the end of the lease term.
Bargain purchase option: If the lessee has the option to purchase the asset at a price lower than the asset’s fair value.
Lease term: If the lease term is for a major part of the economic life of the asset.
Present value of lease payments: If the present value of lease payments amounts to substantially all of the asset’s fair value.
Specialized nature: If the asset is so specialized that only the lessee can use it without major modifications.

In this case, Keta District Hospital:

The lease term (4 years of primary lease period with an indefinite secondary lease period at peppercorn rent) covers a substantial portion of the asset’s useful life (10 years).
The present value of the lease payments is likely to cover a substantial part of the fair value of the asset.
The Assembly retains almost all risks and rewards of ownership (e.g., paying repair, maintenance, and insurance costs).

Therefore, the lease qualifies as a finance lease, meaning the equipment will be recorded as an asset with a corresponding liability for future lease payments. (B)

Prepare the extracts of the final accounts with regards to the lease of the equipment in accordance with IPSAS 43: Leases for the year ended 31st December 2024.
There are four steps in answering this question and these are:

Calculate the lease liability and right-of-use asset
Calculate depreciation on the right-of-use asset
Determine the lease liability and interest expense for 2024
Extract the financial statements

Calculation of lease liability and right-of-use asset
Since the lease is a finance lease, Keta District Hospital will recognize both a right-of-use asset and a lease liability at the inception of the lease. The lease liability is initially measured as the present value of the lease payments over the primary period, discounted using the interest rate implicit in the lease (15%). The present value of the lease payment is as follows:

Year	Lease payment (GHc)
2022	2,000,000
2023	2,000,000
2024	2,000,000

Answer

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Tags: Depreciation, Finance Lease, Financial Statements, Interest Expense, IPSAS 43, Lease Liability, Leases, Right-of-Use Asset
Level: Level 2

Topic: International Public Sector Accounting Standards

FA – L1 – Q101 – Statement of cash flows

Prepare a statement of cash flows for StarPharma Ltd for the year ended 30 June 20X9 using the indirect method.

Question

The financial statements of StarPharma Ltd, a limited liability company that operates in the pharmaceuticals sector, at 30 June were as follows.

	20X9		20X8
	GH¢000	GH¢000	GH¢000	GH¢000
Assets
Non-current assets
Property cost	22,000		12,000
Depreciation	(4,000)		(1,000)
Plant and equipment		18,000		11,000
Cost	5,000		5,000
Depreciation	(2,250)		(2,000)
		2,750		3,000
		20,750		14,000
Current assets
Inventories	16,000		11,000
Trade receivables	9,950		2,700
Cash and cash equivalents	–		1,300
		25,950		15,000
Total assets		46,700		29,000
Equity and liabilities
Capital and reserves
Equity capital		3,000		3,000
Accumulated profits		16,200		3,800
		19,200		6,800
Non-current liabilities
Loan		6,000		10,000
Current liabilities
Operating overdraft	11,000
Trade payables	8,000		11,000
Income tax payable	1,800		1,000
Accrued interest	700		200
		21,500		12,200
Total equity and liabilities		46,700		29,000

Statement of profit or loss (extracts)
Operating profit
Financing cost (Interest)
Profit before tax
Income tax expense
Net profit for the year

Equipment of carrying amount GH¢250,000 was sold at the beginning of 20X9 for GH¢350,000. This equipment had originally cost GH¢1,000,000.
In recent years, no dividends have been paid.

Required
Prepare a statement of cash flows, under the indirect method, for the year ended 30 June 20X9.

Answer

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Tags: Cash Flows, Depreciation, Financial Statements, Financing Activities, Indirect Method, Investing Activities, Operating Activities, Statement of Cash Flows, Working Capital
Level: Level 1

Topic: IAS 7: Statement of cash flows

FA – L1 – Q99 – Statement of Cash Flows

Prepare a statement of cash flows for Nordex Limited for 20X9 using financial statements and non-current asset details.

Question

The following information has been extracted from the draft financial information of Nordex Limited.

Statement of Profit or Loss for the Year Ended 31 December 20X9

GH¢’000	GH¢’000
Sales revenue	1,350
Administration costs	(346)
Distribution costs	(246)
Operating profit	758
Interest expense	(110)
Profit before tax	648
Taxation	(208)
Profit after tax	440
Dividends paid	(120)
Retained profit for the year	320

Statements of Financial Position

	31 December 20X9		31 December 20X8
	GH¢’000	GH¢’000	GH¢’000	GH¢’000
Non-current assets		1,145		957
Current assets
Inventory	157		142
Receivables	203		184
Cash and cash equivalents	41		10
	401	401	336	336
Total assets		1,546		1,293
Equity and liabilities
Equity
Share capital	200		200
Revaluation surplus	170		100
Retained earnings	604		404
	974	974	704	704
Non-current liabilities
Loans		350		450
Current liabilities
Trade payables	43		43
Taxation	29		36
Accruals	150		100
	222	222	179	179
Total equity and liabilities		1,546		1,293

Note on Non-Current Assets

	Land and Buildings	Machinery	Fixtures & Fittings	Total
	GH¢’000	GH¢’000	GH¢’000	GH¢’000
Cost or Valuation
At 31 December 20X8	830	470	197	1,497
Additions	–	43	55	98
Disposals	–	(18)	–	(18)
Adjustment on revaluation	70	–	–	70
At 31 December 20X9	900	495	252	1,647
Depreciation
At 31 December 20X8	(90)	(270)	(180)	(540)
Charge for the year	(10)	(56)	(8)	(74)
Disposals	–	12	–	12
Adjustment on revaluation	100	–	–	100
At 31 December 20X9	0	(314)	(188)	(502)
Carrying Amount
At 31 December 20X8	740	200	17	957
At 31 December 20X9	900	181	64	1,145

You have been informed that included within distribution costs is GH¢4,000 relating to the loss on a disposal of a non-current asset.

Required
Prepare a statement of cash flows for Nordex Limited for the year ended 31 December 20X9.

Answer

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Tags: Cash Flows, Depreciation, Dividends, Financial Statements, Financing Activities, Investing Activities, Non-current Assets, Operating Activities, Statement of Cash Flows, Taxation
Level: Level 1

Topic: IAS 7: Statement of cash flows

FA – L1 – Q98 – Statement of cash flows

Prepare a statement of cash flows for Tango Limited for 20X9 using the direct method, based on provided financial statements.

Question

The following information has been extracted from the financial statements of Tango Limited for the year ended 31 December 20X9.

Statement of profit or loss for the year ended 31 December 20X9

GH¢	GH¢
Sales
Cost of sales
Gross profit
Loss on disposal of non-current asset	(4,000)
Wages and salaries	(137,000)
Other expenses (including depreciation GH¢46,000)	(193,000)
Interest charges	(19,000)
Profit before tax
Tax on profit
Profit after tax

The asset disposed of had a carrying amount of GH¢31,000 at the time of the sale.

Extracts from the statements of financial position:

	At 1 January 20X9	At 31 December 20X9
	GH¢	GH¢
Non-current assets	157,000	142,000
Inventory	42,000	45,000
Receivables	43,600	51,000
Cash and cash equivalents	4,000	11,200
Trade payables	45,000	41,000
Taxation payable	10,000	12,000
Interest payable	3,000	2,000

Note on non-current assets

	Land and buildings	Machinery	Fixtures & fittings	Total
	GH¢000	GH¢000	GH¢000	GH¢000
Cost or valuation
At 31 December 20X8	830	470	197	1,497
Additions	–	43	55	98
Disposals	–	(18)	–	(18)
Adjustment on revaluation	70	–	–	70
At 31 December 20X9	900	495	252	1,647
Depreciation
At 31 December 20X8	(90)	(270)	(180)	(540)
Charge for the year	(10)	(56)	(8)	(74)
Disposals	–	12	–	12
Adjustment on revaluation	100	–	–	100
At 31 December 20X9	0	(314)	(188)	(502)
Carrying amount:
At 31 December 20X8	740	200	17	957
At 31 December 20X9	900	181	64	1,145

You have been informed that included within distribution costs is GH¢4,000 relating to the loss on a disposal of a non-current asset.

Required
Prepare a statement of cash flows for Tango Limited for the year ended 31 December 20X9.

Answer

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Tags: Cash Flow Analysis, Direct Method, Financial Statements, Financing Activities, Interest Payments, Investing Activities, Non-current Assets, Operating Activities, Statement of Cash Flows, Taxation
Level: Level 1

Topic: IAS 7: Statement of cash flows

FA – L1 – Q96 – Preparation of accounts from incomplete records

Prepare statement of profit or loss and financial position for Kofi's business for 20X9 using incomplete records.

Question

Kofi is in business but does not keep proper books of account. In order to prepare his income and expenditure account for the year ended 31 December 20X9 you are given the following information.

| | 1 Jan 20X9 | 31 Dec 20X9 | | | GH¢000 | GH¢000 | | Inventory on hand | 1,310 | 1,623 | | Receivables | 268 | 412 | | Payables for goods | 712 | 914 | | Payables for expenses | 116 | 103 |

In addition you are able to prepare the following summary of his cash and bank transactions for the year.

| Cash account | | | | | — | GH¢000 | — | GH¢000 | | Balance 1 January | 62 | Payments into bank | 3,050 | | Shop takings | 4,317 | Purchases | 316 | | Cheques cashed | 200 | Expenses | 584 | | | | Drawings | 600 | | | | Balance 31 December | 29 | | | 4,579 | | 4,579 |

| Bank account | | | | GH¢000 | | Balance 1 January | 840 | Cash withdrawn | 200 | | Cheques from customers | 1,416 | Purchases | 2,715 | | Cash paid in | 3,050 | Expenses | 519 | | | | Drawings | 400 | | | | Delivery van (purchased 1 September) | 900 | | | | Balance 31 December | 572 | | | 5,306 | | 5,306 |

In addition Kofi says that he had taken goods for personal consumption and estimates that those goods cost GH¢100,000.
In considering accounts receivable Kofi suggests that a provision is to be made of 5% of amounts due after writing off a specific irrecoverable debt of GH¢30,000.
Depreciation on the delivery van is to be recognised at 20% per annum.

Required:
Prepare the statement of profit or loss and a statement of financial position at 31 December 20X9.

Answer

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Tags: Capital account, Cash Flow, Depreciation, Financial Statements, Incomplete records, Inventory, Payables, Receivables, Statement of Financial Position, Statement of profit or loss
Level: Level 1

Topic: Preparation of accounts from incomplete records

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PSAF – L2 – Q11.1- Preparation and Presentation of Financial Statements for Central Government

Prepare 2023 financial performance statement for Republic of Zamara Consolidated Fund.

PSAF – L2 – Q10.3 – International public sector accounting standards

Account for the treatment of a property reclassified as investment property in 2024 financial statements of the National Retirement Oversight Agency.

PSAF – L2 – Q10.2 – International public sector accounting standards

Prepare financial statement extracts for a new technology acquisition by the Office of Business Registry for 2023 and 2024, considering delayed deployment.

PSAF – L2 – Q10.1 – Revaluation of Assets

Show financial statement extracts for Kumawu District Assembly's building revaluation at 31 December 2024 under IPSAS.

PSAF – L2 – Q9.3 – Employee Benefits

Show financial statement extracts for Ministry of Transport and Infrastructure's defined benefit plan for 2024 per IPSAS 39.

PSAF – L2 – Q9.2 – Leases

Classify a lease for Keta District Hospital as finance or operating per IPSAS 13/43 criteria.

FA – L1 – Q101 – Statement of cash flows

Prepare a statement of cash flows for StarPharma Ltd for the year ended 30 June 20X9 using the indirect method.

FA – L1 – Q99 – Statement of Cash Flows

Prepare a statement of cash flows for Nordex Limited for 20X9 using financial statements and non-current asset details.

FA – L1 – Q98 – Statement of cash flows

Prepare a statement of cash flows for Tango Limited for 20X9 using the direct method, based on provided financial statements.

FA – L1 – Q96 – Preparation of accounts from incomplete records

Prepare statement of profit or loss and financial position for Kofi's business for 20X9 using incomplete records.

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PSAF – L2 – Q11.1- Preparation and Presentation of Financial Statements for Central Government

Prepare 2023 financial performance statement for Republic of Zamara Consolidated Fund.

You're reporting an error for "PSAF – L2 – Q11.1- Preparation and Presentation of Financial Statements for Central Government"

PSAF – L2 – Q10.3 – International public sector accounting standards

Account for the treatment of a property reclassified as investment property in 2024 financial statements of the National Retirement Oversight Agency.

You're reporting an error for "PSAF – L2 – Q10.3 – International public sector accounting standards"

PSAF – L2 – Q10.2 – International public sector accounting standards

Prepare financial statement extracts for a new technology acquisition by the Office of Business Registry for 2023 and 2024, considering delayed deployment.

You're reporting an error for "PSAF – L2 – Q10.2 – International public sector accounting standards"

PSAF – L2 – Q10.1 – Revaluation of Assets

Show financial statement extracts for Kumawu District Assembly's building revaluation at 31 December 2024 under IPSAS.

You're reporting an error for "PSAF – L2 – Q10.1 – Revaluation of Assets"

PSAF – L2 – Q9.3 – Employee Benefits

Show financial statement extracts for Ministry of Transport and Infrastructure's defined benefit plan for 2024 per IPSAS 39.

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PSAF – L2 – Q9.2 – Leases

Classify a lease for Keta District Hospital as finance or operating per IPSAS 13/43 criteria.

You're reporting an error for "PSAF – L2 – Q9.2 – Leases"

FA – L1 – Q101 – Statement of cash flows

Prepare a statement of cash flows for StarPharma Ltd for the year ended 30 June 20X9 using the indirect method.

You're reporting an error for "FA – L1 – Q101 – Statement of cash flows"

FA – L1 – Q99 – Statement of Cash Flows

Prepare a statement of cash flows for Nordex Limited for 20X9 using financial statements and non-current asset details.

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FA – L1 – Q98 – Statement of cash flows

Prepare a statement of cash flows for Tango Limited for 20X9 using the direct method, based on provided financial statements.

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FA – L1 – Q96 – Preparation of accounts from incomplete records

Prepare statement of profit or loss and financial position for Kofi's business for 20X9 using incomplete records.

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