Topic: Consolidated Financial Statements (IFRS 10)

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CR – Mar 2025 – L3 – Q4 – Business Valuation

Calculate share value for Gogomi LTD using net assets, price-earnings, and dividend yield methods.

Question

a) Gogomi LTD, a privately owned joint venture, produces a range of equipment for the oil and gas industry in Ghana. One of the venturers, Oman Pension Funds (OPF), who holds one-third of Gogomi LTD’s ordinary shares, has decided to sell all of its holdings. This plan forms part of measures OPF is using to redirect focus of its investment strategy by replacing its equity assets with fixed-income holdings. OPF would therefore like to know the current value of its shareholdings to guide it during any negotiation with a potential buyer.
The following draft financial statements (together with the additional information) should be used to estimate the share value:

Draft statement of profit or loss of Gogomi LTD for the year ended 31 August 2024

	GH¢000
Revenue	115,500
Cost of sales	(80,300)
Gross profit	35,200
Selling and distribution	(12,300)
Administrative expenses	(8,550)
Profit before tax	14,350
Tax	(2,030)
Profit after tax	12,320

Draft statement of financial position of Gogomi LTD as at 31 August 2024

	GH¢000
Assets
Non-current assets:
Properties	52,400
Plant and equipment	53,300
Current assets	35,300
Total assets	141,000
Equity and liabilities
Capital and reserves
Ordinary shares @ GH¢2 each	24,000
10% Irredeemable preference shares @ GH¢1.50 each	6,000
Retained earnings	57,500
Non-current liabilities	38,080
Current liabilities	15,420
Total equity and liabilities	141,000

Additional information:

Included in properties is an office building whose fair value has been measured by a valuation specialist at GH¢25 million. This value compares to a book value of GH¢19.5 million. Plant is not yet adjusted for a required reversal of GH¢2 million impairment charge previously written off to profit or loss account against an item of plant. On 28 August 2024, Gogomi LTD bought an item of equipment and paid GH¢15.2 million, net of 5% withholding tax, to the equipment dealer. Management have expensed the associated withholding tax (already paid to the local tax office) within the income statement.
Included in receivables is an amount of GH¢4.4 million owed by a customer who has fallen into an unexpected, serious financial difficulty. As a consequence, expert assessment indicates that Gogomi LTD will have to wait until 31 August 2025 to receive the full amount in a single payment.
Gogomi LTD’s current ordinary dividend cover computed, based on the above draft accounts, is 4. Preference dividends have been fully paid.
A comparable quoted firm’s price-earnings ratio and dividend yield are 7.2 and 4.52% respectively. No adjustment should be made to these ratios, if they are used in any computations.
Applicable cost of capital is 10%.

Required:
Determine a range of values to be placed on each ordinary share of Gogomi LTD using:
i) Net assets basis
ii) Price-earnings basis
iii) Dividend yield basis

b) For the purpose of consolidation, a parent must consolidate all controlled entities. However, there is an exemption that applies to investment entities.

Answer

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Tags: Consolidation, Financial Reporting, IFRS 10, Investment Entities
Level: Level 3

Topic: Consolidated Financial Statements (IFRS 10)
Series: MAR 2025

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).

Answer

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Tags: Consolidated Cash Flows, Discontinued Operations, Dividends, Group Transactions, IAS 7, IFRS 10, Impairment, Non-Controlling Interest, Share Issues, Statement of Cash Flows
Level: Level 3

Topic: Consolidated Financial Statements (IFRS 10)
Series: MAR 2025

CR – Nov 2024 – L3 – Q4b – Consolidation and Financial Reporting

Discuss the appropriate reporting figures a parent company should include in its consolidated financial statements when its subsidiaries have different reporting dates.

Question

A parent company has a year-end of 31 December 2023. One of its subsidiaries has a year-end of 30 June 2023, and another has a year-end of 30 September 2023.

Required:
What figures should the parent include in its consolidated financial statements in respect of these subsidiaries?

Answer

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Tags: Consolidation, Financial Statements, IFRS 10, Parent Company, Reporting Period, Subsidiary Reporting
Level: Level 3

Topic: Consolidated Financial Statements (IFRS 10)
Series: Nov 2024

CR – May 2015 – L3 – Q1 – Consolidated Financial Statements (IFRS 10)

Prepare a consolidated statement of financial position for Barewa Group as of 31 May 2013, considering acquisitions and adjustments.

Question

Barewa Plc has two subsidiary companies and one associate. Since the adoption of International Financial Reporting Standards (IFRS) by companies listed on the Nigeria Stock Exchange, Barewa has been preparing its consolidated financial statements in accordance with the provisions of International Financial Reporting Standards (IFRSs).

The draft Statements of Financial Position of Barewa and its two subsidiaries as at 31 May, 2013 are as follows:

Assets	Barewa (N’m)	Megida (N’m)	Mindara (N’m)
Non-current assets
Plant	2,650	2,300	1,610
Investments – Megida	3,000
Investments – Mindara	1,280
Associate (Calamari)	200
Available for sale	510	60	50
Total Non-current assets	7,640	2,360	1,660
Current assets
Inventory	1,350	550	730
Trade receivables	910	450	320
Cash and cash equivalent	1,020	1,000	80
Total Current assets	3,280	2,000	1,130
Total Assets	10,920	4,360	2,790

Equity and Liabilities
Share capital	5,200	2,200	1,000
Retained earnings	2,400	1,500	800
Other components of equity	120	40	70
Total equity	7,720	3,740	1,870
Non-current liabilities
Long-term loans	1,200	150	50
Deferred tax	250	90	30
Total non-current liabilities	1,450	240	80
Current liabilities
Trade payables	1,150	300	600
Current tax payables	600	80	240
Total current liabilities	1,750	380	840
Total Equity and Liabilities	10,920	4,360	2,790

The following information is relevant to the preparation of the group financial statements:

Acquisition of Megida Plc
- Date of Acquisition: 1 June 2012
- Barewa acquired 80% of the equity interest in Megida Plc.
- At the date of acquisition, Megida’s retained earnings were N1.36 billion, and other components of equity amounted to N40 million.
- There had been no new issuance of share capital by Megida since the acquisition date.
- The consideration for the acquisition was N3 billion in cash.
- The fair value of Megida’s identifiable net assets at acquisition was N4 billion, with the excess attributed to an increase in the value of non-depreciable land.
- An independent valuation determined that the fair value of the non-controlling interest (NCI) in Megida on 1 June 2012 was N860 million.
- Barewa’s policy is to measure NCI based on their proportionate share in the identifiable net assets of the subsidiary, not at fair value (full goodwill method).
Acquisition of Mindara Plc
- Date of Acquisition: 1 June 2012
- Barewa acquired 70% of the ordinary shares of Mindara Plc.
- The consideration for the acquisition included:
  - An upfront payment of N1.28 billion.
  - A contingent consideration requiring Barewa to pay the former shareholders 30% of Mindara’s profits on 31 May 2014 for each of the financial years ending 31 May 2013 and 31 May 2014. This arrangement was valued at N120 million as of 1 June 2012 and remains unchanged. It has not been included in the financial statements.
- The fair value of the identifiable net assets at acquisition was N1.76 billion. This included retained earnings of N550 million and other components of equity of N70 million.
- There had been no new issuance of share capital by Mindara since the acquisition date.
- The excess fair value of the net assets was due to an increase in property, plant, and equipment (PPE), which is depreciated on a straight-line basis over seven years.
- The fair value of the non-controlling interest (NCI) in Mindara was N530 million on the acquisition date.
Investment in Calamari Plc
- On 1 June 2011, Barewa acquired a 10% interest in Calamari Plc for N80 million. This was classified as an available-for-sale investment.
- As of 31 May 2012, the value of this investment had increased to N90 million.
- On 1 June 2012, Barewa acquired an additional 15% interest in Calamari for N110 million, achieving significant influence.
- Calamari recorded profits after dividends of N60 million and N100 million for the financial years ending 31 May 2012 and 31 May 2013, respectively.
Equity Instrument Purchase
- On 1 June 2012, Barewa purchased an equity instrument valued at 100 million pesos, classified as available-for-sale.
- Relevant exchange rates:
  - 31 May 2012: N5.1 to 1 peso.
  - 31 May 2013: N5.0 to 1 peso.
- The fair value of the instrument as of 31 May 2013 was 90 million pesos, reflecting an impairment that Barewa has not recorded.
Loan to a Director
- A loan of N10 million to a director has been included in cash and cash equivalents.
- The loan is repayable on demand with no specific repayment date.
- The directors believe that this treatment complies with International Financial Reporting Standards (IFRS), as no IFRS explicitly prohibits showing the loan as cash.
Goodwill Impairment
- There is no impairment of goodwill arising from the acquisitions.

Required

Prepare a consolidated statement of financial position for Barewa Group as of 31 May 2013.

Answer

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Tags: Consolidation, Equity Accounting, Financial Statements, Goodwill Calculation, Group Accounting, Impairment, Non-Controlling Interests, Subsidiary Acquisition
Level: Level 3

Topic: Consolidated Financial Statements (IFRS 10)

CR – Nov 2016 – L3 – SA – Q1 – Consolidated Financial Statements (IFRS 10)

Prepare a Consolidated Statement of Financial Position for Bata Plc and subsidiaries; explain IAS 21 principles for translating foreign subsidiaries.

Question

a. Bata Plc, which operates in the manufacturing sector, has been surviving the challenges operating in the Nigerian economic environment. The draft Statements of Financial Position of Bata Plc and its subsidiaries as at October 31, 2016, are as follows:

Bata	N’million	Jewe	N’million	Gaba	N’million
Non-current assets		Property, plant, and equipment	4,320	360	420
Investments in subsidiaries	1,110	600	–
Financial assets	500	–	–
Total Non-current assets	5,930	960	420
Current assets	1,050	570	540
Total assets	6,980	1,530	960
Equity		Share capital – N1 ordinary shares	2,400	600	300
Retained earnings	3,410	540	390
Other components of equity	450	–	–
Total equity	6,260	1,140	690
Current liabilities	720	390	270
Total liabilities and equity	6,980	1,530	960

Additional Information:

Acquisition of Subsidiaries:
- Bata Plc acquired 60% of the share capital of Jewe Plc on November 1, 2012, and 10% of Gaba Plc on November 1, 2013. The costs of the combinations were N852 million and N258 million, respectively.
- Jewe Plc acquired 70% of the share capital of Gaba Plc on November 1, 2013.
Retained Earnings Balances:

Date	Jewe Plc (N’million)	Gaba Plc (N’million)
November 1, 2012	270	–
November 1, 2013	360	240

Fair Value Adjustments:
- At acquisition dates, the fair value of the net assets was N930 million for Jewe Plc and N660 million for Gaba Plc. The difference in the fair value and book value relates to non-depreciable land.
- The fair value of non-controlling interest (NCI) was N390 million for Jewe Plc and N330 million for Gaba Plc. Bata Plc adopts the full goodwill method under IFRS 3 to account for NCI.
Impairment Testing:
- Jewe Plc suffered an impairment loss of N60 million.
- Gaba Plc did not suffer any impairment loss.
Intra-group Inventory Sales:
- During the year ended October 31, 2016, Bata Plc sold inventory to Jewe Plc and Gaba Plc.
- The invoiced prices of the inventories were N480 million and N360 million, respectively.
- Bata Plc invoices goods to achieve a markup of 25% on cost to all third parties, including group companies.
- At the year-end, half of the inventory sold to Jewe Plc remained unsold, but the entire inventory sold to Gaba Plc had been sold to third parties.
Financial Asset:
- Bata Plc purchased a deep discount bond for N500 million on November 1, 2015.
- The bonds will be redeemed in 3 years for N740.75 million and are carried at amortized cost in line with IAS 39.
- The Accountant has not passed the correct entries to reflect amortized cost valuation at year-end, and the financial asset is shown at N500 million.

Compound sum of N1: (1 + r)^n

Year	12%	14%
1	1.1200	1.1400
2	1.2544	1.2996
3	1.4049	1.4815
4	1.5735	1.6890

Required:

Prepare a Consolidated Statement of Financial Position for Bata Plc and its subsidiaries as at October 31, 2016. (25 Marks)
Explain to the directors of Bata Plc how the assets, liabilities, income, and expenses of a foreign subsidiary, including the resulting goodwill, are translated for consolidation purposes under IAS 21. (5 Marks)

(Total: 30 Marks)

Answer

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Tags: Consolidation, Exchange Rate Effects, Foreign subsidiary, Goodwill, Group Accounting, Impairment testing
Level: Level 3

Topic: Consolidated Financial Statements (IFRS 10)
Series: NOV 2016

CR – May 2019 – L3 – Q1 – Consolidated Financial Statements (IFRS 10)

Prepare the consolidated statement of financial position for a group with a foreign subsidiary and inter-company transactions as at September 30, 2017.

Question

Oyin Plc. a Nigerian company acquired 960 million equity share capital of Kemy Plc., a foreign subsidiary based in Brazil, on 1 October, 2015 for 1.08 billion Brazilian real (BRL). The functional and presentation currency of Kemy Plc. is the BRL. Since acquisition, Kemy Plc., has operated autonomously of Oyin group.

The statements of financial position of Oyin Plc. and Kemy Plc. as at 30 September, 2017 are as follows:

Additional Information:

It is the policy of Oyin Plc. group to recognize non-controlling interest at acquisition at the proportionate share of the net assets. The retained earnings of Kemy Plc., at the date of acquisition were 390 million BRL.
Kemy Plc. sells goods to Oyin Plc. at cost plus a mark-up of 33 1/3%. At 30 September, 2017, Oyin Plc. held N15 million of the goods. The goods were purchased at an exchange rate of N1 to 5 BRL. On 28 September, 2017, Oyin Plc. sent Kemy Plc., a payment for N15 million to clear the intra-group payables. Kemy received and recorded the cash on 2 October, 2017.
On 1 October, 2016, Kemy Plc. purchased a leasehold building for 375 million BRL, taking out a loan note payable after five years to finance the purchase. The estimated useful life of the building on 1 October, 2016 was 25 years with no estimated residual value. The building is to be depreciated on a straight-line basis. The building was professionally revalued at 450 million BRL on 30 September, 2017 and the directors have included the revalued amount in the statement of financial position.Both companies adopt a policy of revaluation for their properties. There was no difference between the carrying amount and fair value of the property of Oyin Plc. at 30 September, 2017.
Exchange Rates:

Date	BRL to N1
1 October, 2015	6.0
30 September, 2015	5.5
30 September, 2017	5.0
Average for the year to 30 September, 2016	5.2

Required:
Prepare the consolidated statement of financial position of Oyin group at 30 September, 2017.

Answer

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Tags: Consolidation, Financial Statements, Foreign subsidiary, Goodwill, Intra-group Transactions, Non-Controlling Interests, Revaluation, Translation, Unrealized Profits
Level: Level 3

Topic: Consolidated Financial Statements (IFRS 10)

CR – Nov 2014 – L3 – SA – Q1 – Consolidated Financial Statements (IFRS 10)

Prepare a consolidated statement of financial position for Bagat Plc, incorporating details on acquisitions, impairments, and inter-company balances.

Question

Bagat Plc has two subsidiaries (Megat and Mingat) and one associate (Cagat). Since the adoption of IFRS by Government Bagat has been preparing its consolidated financial statements in accordance with the principles of International Financial Reporting Standards (IFRS). The draft Statements of Financial Position of Bagat and its two subsidiaries as at 31 May 2013 are as follows:

Draft Statements of Financial Position as at 31 May 2013

The following information is relevant to the preparation of the group financial statements:

i. On 1 June, 2012, Bagat acquired 80% of the equity interest of Megat Plc. On the date of acquisition, the retained earnings of Megat were N2.72 billion and other components of equity were N80 million. There had been no new issue of capital by Megat since the date of acquisition. The purchase consideration comprised cash of N6 billion whereas the fair value of the identifiable net assets of Megat on this date was N8 billion. The excess of the fair value of the net assets is due to an increase in the value of non-depreciable land. An independent valuer has stated that the fair value of the non-controlling interests in Megat was N1.72 billion on 1 June, 2012. It is the policy of Bagat to measure non-controlling interests on the basis of their proportionate share in the identifiable net assets of the acquired subsidiary and not at fair value (full goodwill method).

ii. Also on 1 June, 2012, Bagat acquired 70% of the ordinary shares of Mingat. The consideration for the acquisition of these shares was N2.56 billion. Under the purchase agreement of 1 June, 2012, Bagat is required to pay the former shareholders of Mingat 30% of the profits of Mingat on 31 May, 2014 for each of the financial years to 31 May, 2013 and 31 May, 2014. The fair value of this arrangement was estimated at N120 million at 1 June, 2012, and this value has not changed. This amount has not been included in the financial statements. The fair value of the identifiable net assets at 1 June, 2012 of Mingat was N3.52 billion and the retained earnings and other components of equity were N1.1 billion and N140 million respectively. There had been no new issue of share capital by Mingat since the date of acquisition and the excess of the fair value of the net assets is due to an increase in the value of property, plant, and equipment (PPE). The fair value of the non-controlling interests in Mingat was N1.06 billion on this date. PPE is depreciated on a straight-line basis over seven years.

iii. Finally, Bagat acquired a 25% interest in Cagat Plc on 1 June, 2012 for N400 million achieving significant influence over that company in its financial and operating policy decisions. Cagat Plc retained earnings for the year to 31 May, 2013 was N200 million.

iv. Included in trade receivables of Bagat at 31 May, 2013 is a receivable from Megat of N30 million. Unknown to Bagat, Megat has paid this amount through a bank transfer by the close of work on 31 May, 2013, but it had not yet been reflected in the bank statement of Bagat. Megat has already passed accounting entries to reflect this transaction.

v. Goodwill arising on the purchase of Mingat was tested for impairment on 31 May, 2013, and this provided evidence of impairment to the tune of N36 million. No accounting entries have been passed to reflect the impairment.

Required:

Prepare a consolidated statement of financial position as at 31 May, 2013 for the Bagat Group. (30 Marks)

Answer

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Level: Level 3

Topic: Consolidated Financial Statements (IFRS 10)
Series: NOV 2014

CR – May 2021 – L3 – Q1a – Consolidated Financial Statements (IFRS 10)

Prepare a consolidated cash flow statement for Feedme Limited using the indirect method.

Question

Feedme Limited
Feedme Limited is a company that has been in operations for over two decades producing “Trobomao,” a natural cocoa powder beverage. Five years ago, it acquired 100% interest in Butane Nigeria Limited and 75% interest in Shawama Supermarket Limited in 2019. Draft consolidated financial statements of Feedme Limited are provided below:

Draft Consolidated Statement of Financial Position (December 31, 2019):

Draft consolidated statement of profit or loss and other comprehensive income for the year ended December 31, 2019

Additional information:

i. There had been no acquisition or disposal of freehold buildings during the year.
ii. Information relating to the acquisition of Shawama Supermarket Limited is as follows:

iii. Loan notes were issued at a discount in 2019 and the carrying amount of the loan as at December 31, 2019 included N600,000 representing the finance cost attributable to the discount and allocated in respect of the current reporting period.

Required:
Prepare a consolidated statement of cash flows for Feedme Limited Group for the year ended December 31, 2019 in accordance with IAS 7 using indirect method.

Answer

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Level: Level 3

Topic: Consolidated Financial Statements (IFRS 10)

CR – May 2023 – L3 – Q2b – Consolidated Financial Statements (IFRS 10)

Discuss the advantages of using consolidated financial statements and enumerate the contents of an environmental report in an annual report.

Question

(b) The annual reports of the group also contain separate financial statements of the parent company (Octopus Petroleum Plc). Some companies also include social and environmental reports as part of their financial statements.

Required:
i. Explain why it is better to use the consolidated financial statements for financial analysis rather than the parent’s separate financial statements. (4 Marks)
ii. Enumerate the possible contents of an environmental report included in the annual report of companies. (2 Marks)

Answer

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Tags: consolidated financial statements, Environmental Reports, Sustainability Reporting
Level: Level 3

Topic: Consolidated Financial Statements (IFRS 10)

CR – May 2023 – L3 – Q1a – Consolidated Financial Statements (IFRS 10)

Prepare a consolidated statement of financial position for Omi PLC and subsidiaries.

Question

The draft statement of financial position of Omi PLC, Ruwa Limited, and Mmili Limited as of November 30, 2020, are as follows:

Additional Information for Consolidated Financial Statements Preparation:

Acquisition of Ruwa Limited:
- Omi PLC acquired 80% of Ruwa Limited’s ordinary share capital on December 1, 2017.
- Retained earnings of Ruwa Limited at acquisition: N400 million.
- Fair value of Ruwa Limited’s net assets: N2,840 million.
- Any fair value adjustment pertains to net current assets, which had been realized by November 30, 2020.
- No new issue of shares occurred in the group since the establishment of the current structure.
Acquisition of Mmili Limited:
- On December 1, 2018, Omi PLC acquired 40% and Ruwa Limited acquired 25% of Mmili Limited’s ordinary share capital.
- Retained earnings of Mmili Limited at acquisition: N200 million.
- Retained earnings of Ruwa Limited at acquisition: N600 million.
- No revaluation surplus existed in Mmili Limited’s books at acquisition, and the fair value of Mmili Limited’s net assets was consistent with their carrying amount.
Development Costs:
- Significant expenditure incurred on developing internet products. These were initially written off but later reinstated as development inventories upon commercial use.
- Costs do not meet the recognition criteria of IAS 38 – Intangible Assets.
- Ruwa Limited included N80 million of these costs in its inventory, of which N20 million relates to expenses from periods before December 1, 2017.
- The group wishes to ensure compliance with IFRS for this treatment.
Internet Equipment:
- Ruwa Limited purchased new internet equipment for N200 million, excluding a trade discount of N24 million.
- The discount was recorded in the income statement.
- Depreciation is calculated using the straight-line method over six years.
Property, Plant, and Equipment Policy:
- The group transitioned from the revaluation model to the cost model under IAS 16 – Property, Plant, and Equipment in 2020.
- Mmili Limited’s assets were revalued on December 1, 2019, creating a revaluation surplus of N280 million.
- Mmili Limited’s property was originally purchased in December 2018 for N1,200 million, with depreciation over six years.
- The group does not transfer excess depreciation from revaluation reserves to retained earnings.
Valuation of Non-controlling Interests:
- The group values non-controlling interests at acquisition using their proportionate share of the subsidiary’s identifiable net assets.
Defined Benefit Pension Scheme:
- Omi PLC established a defined benefit pension scheme, contributing N400 million to it.
- Details as of November 30, 2020:
  - Present value of obligation: N520 million.
  - Fair value of plan assets: N500 million.
  - Current service cost: N440 million.
  - Interest cost (scheme liabilities): N80 million.
  - Expected return on pension assets: N40 million.
  - Actuarial gain: N60 million.
- The only recorded entry was the cash contribution, included in Omi PLC’s trade receivables.
- Directors propose recognizing actuarial gain immediately in the statement of profit or loss.

Required:
Prepare the consolidated statement of financial position of Omi Group for the year ended November 30, 2020, in accordance with relevant IFRS.

Answer

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Tags: consolidated financial statements, Defined benefit plans, Goodwill, IFRS 10, Non-Controlling Interest, Property Plant and Equipment
Level: Level 3

Topic: Consolidated Financial Statements (IFRS 10)

CR – Mar 2025 – L3 – Q4 – Business Valuation

Calculate share value for Gogomi LTD using net assets, price-earnings, and dividend yield methods.

Question

Draft statement of profit or loss of Gogomi LTD for the year ended 31 August 2024

	GH¢000
Revenue	115,500
Cost of sales	(80,300)
Gross profit	35,200
Selling and distribution	(12,300)
Administrative expenses	(8,550)
Profit before tax	14,350
Tax	(2,030)
Profit after tax	12,320

Draft statement of financial position of Gogomi LTD as at 31 August 2024

	GH¢000
Assets
Non-current assets:
Properties	52,400
Plant and equipment	53,300
Current assets	35,300
Total assets	141,000
Equity and liabilities
Capital and reserves
Ordinary shares @ GH¢2 each	24,000
10% Irredeemable preference shares @ GH¢1.50 each	6,000
Retained earnings	57,500
Non-current liabilities	38,080
Current liabilities	15,420
Total equity and liabilities	141,000

Additional information:

Included in properties is an office building whose fair value has been measured by a valuation specialist at GH¢25 million. This value compares to a book value of GH¢19.5 million. Plant is not yet adjusted for a required reversal of GH¢2 million impairment charge previously written off to profit or loss account against an item of plant. On 28 August 2024, Gogomi LTD bought an item of equipment and paid GH¢15.2 million, net of 5% withholding tax, to the equipment dealer. Management have expensed the associated withholding tax (already paid to the local tax office) within the income statement.
Included in receivables is an amount of GH¢4.4 million owed by a customer who has fallen into an unexpected, serious financial difficulty. As a consequence, expert assessment indicates that Gogomi LTD will have to wait until 31 August 2025 to receive the full amount in a single payment.
Gogomi LTD’s current ordinary dividend cover computed, based on the above draft accounts, is 4. Preference dividends have been fully paid.
A comparable quoted firm’s price-earnings ratio and dividend yield are 7.2 and 4.52% respectively. No adjustment should be made to these ratios, if they are used in any computations.
Applicable cost of capital is 10%.

Required:
Determine a range of values to be placed on each ordinary share of Gogomi LTD using:
i) Net assets basis
ii) Price-earnings basis
iii) Dividend yield basis

b) For the purpose of consolidation, a parent must consolidate all controlled entities. However, there is an exemption that applies to investment entities.

Answer

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Tags: Consolidation, Financial Reporting, IFRS 10, Investment Entities
Level: Level 3

Topic: Consolidated Financial Statements (IFRS 10)
Series: MAR 2025

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

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

	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

Answer

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Tags: Consolidated Cash Flows, Discontinued Operations, Dividends, Group Transactions, IAS 7, IFRS 10, Impairment, Non-Controlling Interest, Share Issues, Statement of Cash Flows
Level: Level 3

Topic: Consolidated Financial Statements (IFRS 10)
Series: MAR 2025

CR – Nov 2024 – L3 – Q4b – Consolidation and Financial Reporting

Discuss the appropriate reporting figures a parent company should include in its consolidated financial statements when its subsidiaries have different reporting dates.

Question

A parent company has a year-end of 31 December 2023. One of its subsidiaries has a year-end of 30 June 2023, and another has a year-end of 30 September 2023.

Required:
What figures should the parent include in its consolidated financial statements in respect of these subsidiaries?

Answer

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Tags: Consolidation, Financial Statements, IFRS 10, Parent Company, Reporting Period, Subsidiary Reporting
Level: Level 3

Topic: Consolidated Financial Statements (IFRS 10)
Series: Nov 2024

CR – May 2015 – L3 – Q1 – Consolidated Financial Statements (IFRS 10)

Prepare a consolidated statement of financial position for Barewa Group as of 31 May 2013, considering acquisitions and adjustments.

Question

The draft Statements of Financial Position of Barewa and its two subsidiaries as at 31 May, 2013 are as follows:

Assets	Barewa (N’m)	Megida (N’m)	Mindara (N’m)
Non-current assets
Plant	2,650	2,300	1,610
Investments – Megida	3,000
Investments – Mindara	1,280
Associate (Calamari)	200
Available for sale	510	60	50
Total Non-current assets	7,640	2,360	1,660
Current assets
Inventory	1,350	550	730
Trade receivables	910	450	320
Cash and cash equivalent	1,020	1,000	80
Total Current assets	3,280	2,000	1,130
Total Assets	10,920	4,360	2,790

Equity and Liabilities
Share capital	5,200	2,200	1,000
Retained earnings	2,400	1,500	800
Other components of equity	120	40	70
Total equity	7,720	3,740	1,870
Non-current liabilities
Long-term loans	1,200	150	50
Deferred tax	250	90	30
Total non-current liabilities	1,450	240	80
Current liabilities
Trade payables	1,150	300	600
Current tax payables	600	80	240
Total current liabilities	1,750	380	840
Total Equity and Liabilities	10,920	4,360	2,790

The following information is relevant to the preparation of the group financial statements:

Acquisition of Megida Plc
- Date of Acquisition: 1 June 2012
- Barewa acquired 80% of the equity interest in Megida Plc.
- At the date of acquisition, Megida’s retained earnings were N1.36 billion, and other components of equity amounted to N40 million.
- There had been no new issuance of share capital by Megida since the acquisition date.
- The consideration for the acquisition was N3 billion in cash.
- The fair value of Megida’s identifiable net assets at acquisition was N4 billion, with the excess attributed to an increase in the value of non-depreciable land.
- An independent valuation determined that the fair value of the non-controlling interest (NCI) in Megida on 1 June 2012 was N860 million.
- Barewa’s policy is to measure NCI based on their proportionate share in the identifiable net assets of the subsidiary, not at fair value (full goodwill method).
Acquisition of Mindara Plc
- Date of Acquisition: 1 June 2012
- Barewa acquired 70% of the ordinary shares of Mindara Plc.
- The consideration for the acquisition included:
  - An upfront payment of N1.28 billion.
  - A contingent consideration requiring Barewa to pay the former shareholders 30% of Mindara’s profits on 31 May 2014 for each of the financial years ending 31 May 2013 and 31 May 2014. This arrangement was valued at N120 million as of 1 June 2012 and remains unchanged. It has not been included in the financial statements.
- The fair value of the identifiable net assets at acquisition was N1.76 billion. This included retained earnings of N550 million and other components of equity of N70 million.
- There had been no new issuance of share capital by Mindara since the acquisition date.
- The excess fair value of the net assets was due to an increase in property, plant, and equipment (PPE), which is depreciated on a straight-line basis over seven years.
- The fair value of the non-controlling interest (NCI) in Mindara was N530 million on the acquisition date.
Investment in Calamari Plc
- On 1 June 2011, Barewa acquired a 10% interest in Calamari Plc for N80 million. This was classified as an available-for-sale investment.
- As of 31 May 2012, the value of this investment had increased to N90 million.
- On 1 June 2012, Barewa acquired an additional 15% interest in Calamari for N110 million, achieving significant influence.
- Calamari recorded profits after dividends of N60 million and N100 million for the financial years ending 31 May 2012 and 31 May 2013, respectively.
Equity Instrument Purchase
- On 1 June 2012, Barewa purchased an equity instrument valued at 100 million pesos, classified as available-for-sale.
- Relevant exchange rates:
  - 31 May 2012: N5.1 to 1 peso.
  - 31 May 2013: N5.0 to 1 peso.
- The fair value of the instrument as of 31 May 2013 was 90 million pesos, reflecting an impairment that Barewa has not recorded.
Loan to a Director
- A loan of N10 million to a director has been included in cash and cash equivalents.
- The loan is repayable on demand with no specific repayment date.
- The directors believe that this treatment complies with International Financial Reporting Standards (IFRS), as no IFRS explicitly prohibits showing the loan as cash.
Goodwill Impairment
- There is no impairment of goodwill arising from the acquisitions.

Required

Prepare a consolidated statement of financial position for Barewa Group as of 31 May 2013.

Answer

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Level: Level 3

Topic: Consolidated Financial Statements (IFRS 10)

CR – Nov 2016 – L3 – SA – Q1 – Consolidated Financial Statements (IFRS 10)

Prepare a Consolidated Statement of Financial Position for Bata Plc and subsidiaries; explain IAS 21 principles for translating foreign subsidiaries.

Question

Bata	N’million	Jewe	N’million	Gaba	N’million
Non-current assets		Property, plant, and equipment	4,320	360	420
Investments in subsidiaries	1,110	600	–
Financial assets	500	–	–
Total Non-current assets	5,930	960	420
Current assets	1,050	570	540
Total assets	6,980	1,530	960
Equity		Share capital – N1 ordinary shares	2,400	600	300
Retained earnings	3,410	540	390
Other components of equity	450	–	–
Total equity	6,260	1,140	690
Current liabilities	720	390	270
Total liabilities and equity	6,980	1,530	960

Additional Information:

Acquisition of Subsidiaries:
- Bata Plc acquired 60% of the share capital of Jewe Plc on November 1, 2012, and 10% of Gaba Plc on November 1, 2013. The costs of the combinations were N852 million and N258 million, respectively.
- Jewe Plc acquired 70% of the share capital of Gaba Plc on November 1, 2013.
Retained Earnings Balances:

Date	Jewe Plc (N’million)	Gaba Plc (N’million)
November 1, 2012	270	–
November 1, 2013	360	240

Fair Value Adjustments:
- At acquisition dates, the fair value of the net assets was N930 million for Jewe Plc and N660 million for Gaba Plc. The difference in the fair value and book value relates to non-depreciable land.
- The fair value of non-controlling interest (NCI) was N390 million for Jewe Plc and N330 million for Gaba Plc. Bata Plc adopts the full goodwill method under IFRS 3 to account for NCI.
Impairment Testing:
- Jewe Plc suffered an impairment loss of N60 million.
- Gaba Plc did not suffer any impairment loss.
Intra-group Inventory Sales:
- During the year ended October 31, 2016, Bata Plc sold inventory to Jewe Plc and Gaba Plc.
- The invoiced prices of the inventories were N480 million and N360 million, respectively.
- Bata Plc invoices goods to achieve a markup of 25% on cost to all third parties, including group companies.
- At the year-end, half of the inventory sold to Jewe Plc remained unsold, but the entire inventory sold to Gaba Plc had been sold to third parties.
Financial Asset:
- Bata Plc purchased a deep discount bond for N500 million on November 1, 2015.
- The bonds will be redeemed in 3 years for N740.75 million and are carried at amortized cost in line with IAS 39.
- The Accountant has not passed the correct entries to reflect amortized cost valuation at year-end, and the financial asset is shown at N500 million.

Compound sum of N1: (1 + r)^n

Year	12%	14%
1	1.1200	1.1400
2	1.2544	1.2996
3	1.4049	1.4815
4	1.5735	1.6890

Required:

Prepare a Consolidated Statement of Financial Position for Bata Plc and its subsidiaries as at October 31, 2016. (25 Marks)
Explain to the directors of Bata Plc how the assets, liabilities, income, and expenses of a foreign subsidiary, including the resulting goodwill, are translated for consolidation purposes under IAS 21. (5 Marks)

(Total: 30 Marks)

Answer

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Tags: Consolidation, Exchange Rate Effects, Foreign subsidiary, Goodwill, Group Accounting, Impairment testing
Level: Level 3

Topic: Consolidated Financial Statements (IFRS 10)
Series: NOV 2016

CR – May 2019 – L3 – Q1 – Consolidated Financial Statements (IFRS 10)

Prepare the consolidated statement of financial position for a group with a foreign subsidiary and inter-company transactions as at September 30, 2017.

Question

The statements of financial position of Oyin Plc. and Kemy Plc. as at 30 September, 2017 are as follows:

Additional Information:

It is the policy of Oyin Plc. group to recognize non-controlling interest at acquisition at the proportionate share of the net assets. The retained earnings of Kemy Plc., at the date of acquisition were 390 million BRL.
Kemy Plc. sells goods to Oyin Plc. at cost plus a mark-up of 33 1/3%. At 30 September, 2017, Oyin Plc. held N15 million of the goods. The goods were purchased at an exchange rate of N1 to 5 BRL. On 28 September, 2017, Oyin Plc. sent Kemy Plc., a payment for N15 million to clear the intra-group payables. Kemy received and recorded the cash on 2 October, 2017.
On 1 October, 2016, Kemy Plc. purchased a leasehold building for 375 million BRL, taking out a loan note payable after five years to finance the purchase. The estimated useful life of the building on 1 October, 2016 was 25 years with no estimated residual value. The building is to be depreciated on a straight-line basis. The building was professionally revalued at 450 million BRL on 30 September, 2017 and the directors have included the revalued amount in the statement of financial position.Both companies adopt a policy of revaluation for their properties. There was no difference between the carrying amount and fair value of the property of Oyin Plc. at 30 September, 2017.
Exchange Rates:

Date	BRL to N1
1 October, 2015	6.0
30 September, 2015	5.5
30 September, 2017	5.0
Average for the year to 30 September, 2016	5.2

Required:
Prepare the consolidated statement of financial position of Oyin group at 30 September, 2017.

Answer

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Level: Level 3

Topic: Consolidated Financial Statements (IFRS 10)

CR – Nov 2014 – L3 – SA – Q1 – Consolidated Financial Statements (IFRS 10)

Prepare a consolidated statement of financial position for Bagat Plc, incorporating details on acquisitions, impairments, and inter-company balances.

Question

Draft Statements of Financial Position as at 31 May 2013

The following information is relevant to the preparation of the group financial statements:

Required:

Prepare a consolidated statement of financial position as at 31 May, 2013 for the Bagat Group. (30 Marks)

Answer

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Tags: consolidated financial statements, Fair Value Adjustments, Goodwill Impairment, IFRS Standards, Non-Controlling Interests
Level: Level 3

Topic: Consolidated Financial Statements (IFRS 10)
Series: NOV 2014

CR – May 2021 – L3 – Q1a – Consolidated Financial Statements (IFRS 10)

Prepare a consolidated cash flow statement for Feedme Limited using the indirect method.

Question

Draft Consolidated Statement of Financial Position (December 31, 2019):

Draft consolidated statement of profit or loss and other comprehensive income for the year ended December 31, 2019

Additional information:

i. There had been no acquisition or disposal of freehold buildings during the year.
ii. Information relating to the acquisition of Shawama Supermarket Limited is as follows:

Required:
Prepare a consolidated statement of cash flows for Feedme Limited Group for the year ended December 31, 2019 in accordance with IAS 7 using indirect method.

Answer

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Level: Level 3

Topic: Consolidated Financial Statements (IFRS 10)

CR – May 2023 – L3 – Q2b – Consolidated Financial Statements (IFRS 10)

Discuss the advantages of using consolidated financial statements and enumerate the contents of an environmental report in an annual report.

Question

Answer

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Tags: consolidated financial statements, Environmental Reports, Sustainability Reporting
Level: Level 3

Topic: Consolidated Financial Statements (IFRS 10)

CR – May 2023 – L3 – Q1a – Consolidated Financial Statements (IFRS 10)

Prepare a consolidated statement of financial position for Omi PLC and subsidiaries.

Question

The draft statement of financial position of Omi PLC, Ruwa Limited, and Mmili Limited as of November 30, 2020, are as follows:

Additional Information for Consolidated Financial Statements Preparation:

Acquisition of Ruwa Limited:
- Omi PLC acquired 80% of Ruwa Limited’s ordinary share capital on December 1, 2017.
- Retained earnings of Ruwa Limited at acquisition: N400 million.
- Fair value of Ruwa Limited’s net assets: N2,840 million.
- Any fair value adjustment pertains to net current assets, which had been realized by November 30, 2020.
- No new issue of shares occurred in the group since the establishment of the current structure.
Acquisition of Mmili Limited:
- On December 1, 2018, Omi PLC acquired 40% and Ruwa Limited acquired 25% of Mmili Limited’s ordinary share capital.
- Retained earnings of Mmili Limited at acquisition: N200 million.
- Retained earnings of Ruwa Limited at acquisition: N600 million.
- No revaluation surplus existed in Mmili Limited’s books at acquisition, and the fair value of Mmili Limited’s net assets was consistent with their carrying amount.
Development Costs:
- Significant expenditure incurred on developing internet products. These were initially written off but later reinstated as development inventories upon commercial use.
- Costs do not meet the recognition criteria of IAS 38 – Intangible Assets.
- Ruwa Limited included N80 million of these costs in its inventory, of which N20 million relates to expenses from periods before December 1, 2017.
- The group wishes to ensure compliance with IFRS for this treatment.
Internet Equipment:
- Ruwa Limited purchased new internet equipment for N200 million, excluding a trade discount of N24 million.
- The discount was recorded in the income statement.
- Depreciation is calculated using the straight-line method over six years.
Property, Plant, and Equipment Policy:
- The group transitioned from the revaluation model to the cost model under IAS 16 – Property, Plant, and Equipment in 2020.
- Mmili Limited’s assets were revalued on December 1, 2019, creating a revaluation surplus of N280 million.
- Mmili Limited’s property was originally purchased in December 2018 for N1,200 million, with depreciation over six years.
- The group does not transfer excess depreciation from revaluation reserves to retained earnings.
Valuation of Non-controlling Interests:
- The group values non-controlling interests at acquisition using their proportionate share of the subsidiary’s identifiable net assets.
Defined Benefit Pension Scheme:
- Omi PLC established a defined benefit pension scheme, contributing N400 million to it.
- Details as of November 30, 2020:
  - Present value of obligation: N520 million.
  - Fair value of plan assets: N500 million.
  - Current service cost: N440 million.
  - Interest cost (scheme liabilities): N80 million.
  - Expected return on pension assets: N40 million.
  - Actuarial gain: N60 million.
- The only recorded entry was the cash contribution, included in Omi PLC’s trade receivables.
- Directors propose recognizing actuarial gain immediately in the statement of profit or loss.

Required:
Prepare the consolidated statement of financial position of Omi Group for the year ended November 30, 2020, in accordance with relevant IFRS.

Answer

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Level: Level 3