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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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 – NOV 2017 – Q1 – Consolidated Financial Statements

Prepare the consolidated statement of financial position for Papa Group as at March 31, 2017.

Question

The following are the financial statements of Papa, Tata, and Chebe, all Plcs. as at March 31, 2017:

	Papa (N’m)	Tata (N’m)	Chebe (N’m)
Assets:
Tangible non-current assets	1,280	440	280
Investment in Tata	413	–	–
Investment in Chebe	60	–	–
Current assets	531	190	130
Total assets	2,284	630	410

Equity and liabilities:

Equity and Liabilities	Papa (N’m)	Tata (N’m)	Chebe (N’m)
Share capital of N1 each	800	240	200
Share premium	150	20	30
Revaluation reserve	90	–	–
Retained earnings	390	210	94
Total equity	1,430	470	324
Non-current liabilities	640	30	16
Current liabilities	214	130	70
Total equity and liabilities	2,284	630	410

Papa acquired the following shareholdings in Tata and Chebe:

Date of acquisition	Holding acquired	Fair value of net assets	Purchase consideration
Tata	April 1, 2014	30%	325
	April 1, 2016	50%	460
Chebe	April 1, 2016	25%	200

You are also provided with the following information, which will be relevant to the consolidated financial statements of Papa Plc:

(i) None of the companies has issued any additional share capital since April 1, 2014.
(ii) The financial statements of Papa have not yet been adjusted for the gain or loss arising on gaining control of Tata.
(iii) At April 1, 2014, the carrying value of the net assets of Tata was the same as their fair value of N325 million.
(iv) Papa Plc. wishes to use the full fair value method of accounting for the acquisition of Tata, and at April 1, 2016 the estimated value of goodwill attributable to non-controlling interests was N3 million. The estimated fair value of the initial investment in 30% of the shares of Tata was N150 million at March 31, 2017.
(v) Included in the tangible non-current assets of Tata is land, valued at cost, which on March 31, 2017 had a fair value of N25 million in excess of its carrying value. There has been no subsequent significant change in that value.
(vi) At April 1, 2016, the fair value of Chebe’s land was N16 million in excess of its carrying value. There has been no subsequent significant change in that value.
(vii) Goodwill arising on acquisition is tested for impairment at each year-end. At March 31, 2017, an impairment loss of N15 million was recognised for Tata.
(viii) There has been no impairment of the investment in Chebe.

Required:
Prepare the consolidated statement of financial position of Papa Group as at March 31, 2017.
(Total 30 Marks)

Answer

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Tags: consolidated financial statements, Financial Reporting, Group Accounting
Level: Level 3

Topic: Consolidated Financial Statements (IFRS 10)
Series: NOV 2017

FR – May 2016 – L2 – Q3 – Business Combinations

Calculate goodwill and prepare the consolidated income statement for Panda Group, including post-acquisition adjustments.

Question

On October 1, 2015, Panda purchased 75% of the equity shares in Sanda through a share exchange of two shares in Panda for every three shares in Sanda. The stock market price of Panda’s shares on October 1, 2015, was N6 per share.

The summarized statements of comprehensive income for the two companies for the year ending March 31, 2016, are as follows:

Item	Panda (N’000)	Sanda (N’000)
Revenue	675,000	360,000
Cost of Sales	(390,000)	(165,000)
Gross Profit	285,000	195,000
Distribution Costs	(35,400)	(18,000)
Administrative Expenses	(40,500)	(34,500)
Finance Costs	(2,250)	(1,800)
Profit Before Tax	206,850	140,700
Income Tax Expense	(72,000)	(41,700)
Profit for the Year	134,850	99,900
Other Comprehensive Income
Gain on Revaluation of Land	3,750	1,500
Loss on Fair Value of Equity Financial Asset	(1,050)	(600)
Total Comprehensive Income	137,550	99,900

Additional Information:

Equity at October 1, 2015:
- Panda: Equity Shares (N1 each) N375,000, Share Premium N150,000, Revaluation Reserve (Land) N12,600, Retained Earnings N135,000
- Sanda: Equity Shares (N1 each) N240,000, Retained Earnings N220,500
Immediately after acquisition, Panda transferred a plant item to Sanda valued at N7.5 million (carrying amount: N4 million). The plant had a remaining life of two and a half years, and depreciation is charged to cost of sales.
After the acquisition, Sanda sold goods to Panda for N60 million, which cost Sanda N45 million. N18 million of these goods remained in Panda’s closing inventory.
Non-controlling interest in Sanda is valued at fair value, set at N150 million by Panda’s directors.
The goodwill of Sanda has not suffered impairment.
All items in the comprehensive income statements accrue evenly over the year.

Required:

a) Calculate the amount paid by Panda and the goodwill arising on the acquisition of Sanda. (6 Marks)

b) Prepare the consolidated statement of comprehensive income for Panda Group for the year ending March 31, 2016. (14 Marks)

Answer

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Tags: Business Combinations, Consolidated Income, Financial Reporting, Goodwill Calculation
Level: Level 2

Topic: Business Combinations (IFRS 3), Consolidated Financial Statements (IFRS 10)
Series: MAY 2016

FR – May 2016 – L2 – Q4 – Business Combinations (IFRS 3)

Calculate and assess Quintet Plc's performance against industry averages using ratio analysis.

Question

Quintet Plc sells provisions through its stores located in various retail shopping centers in the major cities in Nigeria. It has recently been experiencing declining profitability, and the board is concerned whether this issue is specific to the company or related to the sector as a whole. Additionally, concerns regarding the company’s solvency have been raised. To address these, the company has engaged a consulting firm specializing in corporate report analysis to provide average ratios across the business sector to rate performance.

Below are the ratios provided by the consulting firm for Quintet Plc’s business sector based on the year ending June 30, 2015:

Debt to equity: 38%
Gross profit margin: 35%
Operating profit margin: 12%
Return on year-end capital employed (ROCE): 16.8%
Net asset turnover: 1.4 times
Current ratio: 1.25:1
Average inventory turnover: 3 times
Trade payables’ payment period: 64 days

The financial statements of Quintet Plc for the year ending September 30, 2015, are as follows:

Income Statement

Item	Amount (N’000)
Revenue	224,000
Opening Inventory	33,200
Purchases	175,600
Closing Inventory	(40,800)
Gross Profit	56,000
Operating Costs	(39,200)
Finance Costs	(3,200)
Profit Before Tax	13,600
Income Tax Expense	(4,000)
Profit for the Year	9,000

Statement of Financial Position

Item	Amount (N’000)
Assets
Non-current assets
Property and shop fittings	102,400
Deferred development expenditure	20,000
Total Non-current assets	122,400
Current Assets
Inventory	40,800
Bank	4,000
Total Current Assets	44,800
Total Assets	167,200
Equity and Liabilities
Equity
Equity shares of N1 each	60,000
Property revaluation reserve	12,000
Retained earnings	34,400
Total Equity	106,400
Non-current Liabilities
10% loan notes	32,000
Current Liabilities
Trade payables	21,600
Current tax payable	7,200
Total Current Liabilities	28,800
Total Equity and Liabilities	167,200

Note:

Net asset is defined by the consulting firm as total assets less current liabilities.
The deferred development expenditure relates to a one-off payment for a franchise as a sole distributor of a particular product under negotiation but not concluded as of September 30, 2015, although payment has been made.

Required:

a) Compute the equivalent ratios for Quintet Plc provided by the consulting firm for the business sector.
(9 Marks)

b) Write a report to the board assessing the profitability and solvency performance of Quintet Plc compared to its business sector averages. For clarity, solvency measures both liquidity and gearing.
(11 Marks)

Answer

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Tags: Financial Reporting, Profitability, Ratio Analysis, Sector Comparison, Solvency
Level: Level 2

Topic: Business Combinations (IFRS 3), Consolidated Financial Statements (IFRS 10)
Series: MAY 2016

FR – May 2015 – L2 – SB – Q7 – Consolidated Financial Statements (IFRS 10)

Identify and explain events after the reporting period, discuss treatment of liquidation and dividends under IAS 10.

Question

(a) There is usually a lead time between the end of an entity’s accounting year and when the financial statements are approved and signed off by the directors. In between this period, there are two types of events according to IAS 10-Events After The Reporting Period, which may require consideration when preparing financial statements.

Required:
Identify and explain these events and state how they are treated in the financial statements. (4 Marks)

(b) Company A is indebted to company B to the tune of N50,000,000. The financial year-end of company B is 30 June 2014. On 30 July 2014, company B received a letter from a liquidator advising it that company A has gone into insolvency. The letter revealed that company A ceased operations a month ago and that company B is only likely to receive a liquidation dividend of 20k for every naira owed by company A. It is the normal practice of company B’s board to approve the audited financial statements three months after the financial year end.

Required:

Explain how the above transactions should be treated in the financial statements of company B in accordance with IAS 10-Events After The Reporting Period. (2 Marks)
Prepare journal entries that are required to adjust company B’s financial statements to account for the above event. (2 Marks)
State what would have been the treatment in the financial statements assuming it was fire that destroyed company B’s factory building on 30 July 2014. (3 Marks)

(c) The directors of XYZ Plc declared that a dividend of N1 per ordinary share be paid to shareholders on the company’s register as at 15 April 2014. The financial statements were approved by the company’s board on 30 May 2014. The shareholders, at the company’s annual general meeting held on 15 June 2014, approved the payment of the dividend to eligible shareholders on 1 July 2014.

Required:
Explain how the dividend proposed by the Directors should be treated in the financial statements of XYZ Plc in accordance with IAS 10. (4 Marks)

Answer

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Tags: Adjusting Events, Contingent Liabilities, Dividends, Events After Reporting Period, Liquidation
Level: Level 2

Topic: Consolidated Financial Statements (IFRS 10)
Series: MAY 2015

FR – May 2016 – L2 – Q2b – Consolidated Financial Statements (IFRS 10)

Preparation of consolidated financial position statement, considering goodwill and NCI.

Question

The statement of financial position of PAPA Pie and MAMA Pie as at December 31, 2015, were as follows:

PAPA PLC	N’000	MAMA PLC	N’000
Property Plant & Equipment	9,000	Property Plant & Equipment	5,000
Investment in MAMA Pie	5,000	Other Assets	1,500
Other Assets	2,000
Total Assets	16,000	Total Assets	6,500
Share Capital	500	Share Capital	500
Retained Earnings	14,500	Retained Earnings	5,000
Other Liabilities	1,000	Other Liabilities	1,000
Total Equity & Liabilities	16,000	Total Equity & Liabilities	6,500

PAPA Plc acquired 80% equity interest in MAMA Plc two years ago.

At the date of acquisition, MAMA’s retained earnings stood at N3 million, and the fair value of its net assets was N5 million. This was N1.5 million above the carrying amount of the net assets at this date. The fair value adjustment related to an asset that had a remaining useful economic life of 10 years as at the date of acquisition.

The goodwill arising on consolidation has not suffered any impairment.

Required:

Prepare the consolidated statement of financial position of PAPA Pie Group as at December 31, 2015, on the assumption that non-controlling interest is valued at fair value (the full goodwill method). (15 Marks)

Answer

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Tags: Consolidation, Goodwill, Group Accounts, Non-Controlling Interest
Level: Level 2

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

FR – May 2015 – L2 – SA – Q1 – Consolidated Financial Statements

Prepare consolidated financial statements for Unitarisation Plc and compute Gain on Bargain Purchase.

Question

Unitarisation Plc is a successful Nigerian Company that recently amended its objects clause to promote national unity and encourage anti-terrorism compliance. The company acquired 60% of the equity share capital of Famous Plc to further this mission. Summarised draft financial statements of the two companies are as follows:

Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 October 2014

	Unitarisation Plc (N’m)	Famous Plc (N’m)
Revenue	51,000	25,200
Cost of Sales	(37,800)	(19,200)
Gross Profit	13,200	6,000
Distribution Costs	(1,200)	(1,200)
Administrative Expenses	(3,600)	(1,920)
Finance Costs	(180)	(240)
Profit before Tax	8,220	2,640
Income Tax Expense	(2,820)	(840)
Profit for the Year	5,400	1,800

Statement of Financial Position as at 31 October 2014

	Unitarisation Plc (N’m)	Famous Plc (N’m)
Non-current assets:
Property, Plant & Equipment	24,360	7,560
Current Assets	9,600	3,960
Total Assets	33,960	11,520
Equity & Liabilities:
Equity Shares of N1 each	6,000	2,400
Retained Earnings	21,240	3,900
Total Equity	27,240	6,300
Non-current Liabilities:
12% Loan Notes	1,800	2,400
Current Liabilities	4,920	2,820
Total Equity & Liabilities	33,960	11,520

Additional Information:

Shares of Famous Plc were acquired on 1 May 2014, and the issue of shares was not recorded by Unitarisation Plc.
There is cash in transit of N120,000,000 due from Unitarisation Plc to Famous Plc.
Non-controlling interests are valued at full fair value; at acquisition, the fair value of non-controlling interests in Famous Plc was N3,540,000,000.
Famous Plc’s assets’ fair value equaled carrying amounts at acquisition except for one equipment valued N1,200,000,000 above its carrying amount with a 5-year remaining life, using straight-line depreciation.
The acquisition of 60% of Famous Plc’s shares was settled via a share exchange of two shares in Unitarisation Plc for three shares in Famous Plc, valued at N6 per share.
Post-acquisition, Unitarisation Plc bought goods from Famous Plc for N4,800,000,000 with a 40% markup; N3,120,000,000 of these goods were unsold by year-end.
Famous Plc’s trade receivables included N360,000,000 from Unitarisation Plc, with a discrepancy in Unitarisation’s payable ledger.
Profits or losses are assumed to accrue evenly.

Required:

Prepare Unitarisation Plc Consolidated Profit or Loss and Other Comprehensive Income for the year ended 31 October 2014. (10 Marks)
Prepare Unitarisation Plc Consolidated Statement of Financial Position as at 31 October 2014. (10 Marks)
Prepare the Consolidated Statement of Changes in Equity for the year ended 31 October 2014. (6 Marks)
Explain “Gain on Bargain Purchase” according to IFRS 3 on Business Combinations. (4 Marks)

Answer

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Tags: Consolidated Equity Changes, Consolidated Financial Position, Consolidated Profit or Loss, Gain on Bargain Purchase
Level: Level 2

Topic: Consolidated Financial Statements (IFRS 10)
Series: MAY 2015

FR – Nov 2022 – L2 – Q3a – Consolidated Statement of Financial Position

Preparation of the consolidated statement of financial position for Food Plc and its subsidiary Eba Ltd as of September 30, 2020.

Question

a. Food Plc has a subsidiary, Eba Limited. The statements of financial position of the companies as at September 30, 2020 are presented below:

Additional Information:
(i) Food PLC acquired four hundred and eighty million shares in Eba Limited two years ago when the balances in retained earnings and general
reserves were N60,000,000 and N48,000,000 respectively.
(ii) The fair value of non-controlling interests in Eba limited as at the acquisition date was N158,000,000.
(iii) During the year, goods costing N80,000,000 to Food PLC were transferred to Eba Limited. It is the policy of Food PLC to transfer goods at cost plus 25%. A quarter of these goods have been sold by Eba Limited at year end.
(iv) Part of the bills receivable have been discounted by Food PLC.
(v) The sum of N8,000,000 transferred by Eba Limited to Food PLC as part payment for indebtedness was received after the reporting date.
(vi) An impairment test revealed a loss of N16,000,000 on the goodwill arising on the acquisition of Eba Limited.
(vii) The carrying amount of the net assets of Eba Limited is N20,000,000 more than the fair value at acquisition date. This was due to the loss in value of the company’s machinery occasioned by change in technology. The machinery is depreciated at a flat rate of 15% on cost.
(viii) The nominal value of the ordinary shares of Food PLC are denominated in 50 kobo per share, while those of Eba Limited are 25 kobo each.

Required:
a. Prepare the consolidated statement of financial position of Food group as at September 30, 2020. (15 Marks)

Answer

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Tags: Consolidated Financial Position, Fair value adjustment, Goodwill Calculation, Group Accounting, Non-Controlling Interest
Level: Level 2

Topic: Consolidated Financial Statements (IFRS 10)
Series: NOV 2022

FR – May 2021 – L2 – Q4 – Consolidated Financial Statements (IFRS 10)

Prepare consolidated statement of profit or loss and financial position for Bottle Nigeria Plc.

Question

Bottle Nigeria Plc acquired 80% of Glass Limited’s equity share since its incorporation about 10 years ago.

The two companies’ draft financial statements as at December 31, 2019, are as follows:

Statements of profit or loss for the year ended December 31, 2019:

	Bottle Nigeria Plc	Glass Limited
Revenue	N225,000	N45,000
Cost of Sales	(N130,500)	(N27,000)
Gross Profit	N94,500	N18,000
Other Expenses	(N76,500)	(N14,400)
Profit Before Tax	N18,000	N3,600
Income Tax Expense	(N5,850)	(N1,125)
Profit for the Year	N12,150	N2,475

Statement of Financial Position as at December 31, 2019:

	Bottle Nigeria Plc	Glass Limited
Assets
Non-Current Assets:
Property, Plant & Equipment	N86,400	N9,000
Investment in Glass Ltd	N3,600	—
Total Non-Current Assets	N90,000	N9,000
Current Assets
Inventories	N22,500	N5,400
Trade Receivables	N29,250	N1,800
Cash & Cash Equivalents	N17,550	N1,575
Total Current Assets	N69,300	N8,775
Total Assets	N159,300	N17,775

Equity and Liabilities:

	Bottle Nigeria Plc	Glass Limited
Equity
Ordinary Share Capital	N90,000	N4,500
Retained Earnings	N22,500	N10,800
Total Equity	N112,500	N15,300
Current Liabilities
Trade Payables	N40,950	N1,350
Current Tax Liabilities	N5,850	N1,125
Total Current Liabilities	N46,800	N2,475
Total Equity and Liabilities	N159,300	N17,775

Additional Information:

On December 31, 2019, Bottle Nigeria Plc dispatched goods that cost N3,600,000 to Glass Limited at an invoice price of N4,500,000. Glass Limited received the goods on January 2, 2020, and recorded the transaction on that date.
The group’s policy is to value the non-controlling interest at acquisition at its proportionate share of the fair value of the subsidiary’s identifiable net assets.

Required:

i. Prepare Bottle Group’s draft consolidated statement of profit or loss for the year ended December 31, 2019. (8 Marks)

ii. Prepare the consolidated statement of financial position as at December 31, 2019. (10 Marks)

iii. Explain the term “cash and cash equivalent” under IAS 7 Statement of Cash Flows. (2 Marks)

Answer

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Tags: Consolidation, Financial Statements, IFRS 10, Non-Controlling Interest
Level: Level 2

Topic: Consolidated Financial Statements (IFRS 10)
Series: MAY 2021

FR – May 2017 – L2 – SB – Q2 – Consolidated Financial Statements

Calculate non-controlling interest, goodwill, and consolidated reserves for Abuja Limited’s acquisition of Abaji Limited.

Question

Abuja Limited acquired 80% of Abaji Limited’s ordinary shares on January 1, 2015. The company paid an immediate N5.00 per share and a further payment of N19,440,000 in cash. The company only recorded the cash consideration of N5 per share. The two statements of financial position as of December 31, 2015, are as follows:

Additional Information:

Non-Controlling Interests (NCI): Abuja Limited values NCI using the fair value at the acquisition date, set at N14,940,000. Due to impairment, the NCI value reduced to N14,220,000 by December 31, 2015.
Revaluation: Abaji Limited revalued its land and buildings at the acquisition date, increasing the value by N3,600,000, with an additional increase of N720,000 on December 31, 2015.
Brand Valuation: Abaji Limited’s product line brand was valued at N7,200,000, with a 10-year useful life as of January 1, 2015. This brand is not included in Abaji’s statement of financial position.
Intercompany Loan: Abuja Limited provided a loan of N10,800,000 to Abaji Limited at acquisition. Interest, payable annually, was not recorded by Abuja Limited by the end of the year.
Development Costs: Abaji Limited completed a development project on June 30, 2015, costing N9,000,000, of which N1,800,000 was amortized by year-end. Only N3,240,000 of development costs were capitalized by the acquisition date, but Abuja Limited’s directors deem these costs unrecognized assets under IAS 38.
Inventory Profits: Abaji Limited sold goods to Abuja Limited, with one-third remaining in Abuja’s inventory at December 31, 2015. The sale profit was N1,080,000.

Required:

Provide the figures to be included in the consolidated statement of financial position as of December 31, 2015, for:

a. Non-Controlling Interest (7 Marks)
b. Goodwill (7 Marks)
c. Consolidated Reserves:
i. Share premium
ii. Retained earnings
iii. Revaluation reserve
(Show workings for all calculations)

Answer

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Tags: Consolidation, Goodwill, IFRS 10, Non-Controlling Interest, Retained Earnings
Level: Level 2

Topic: Consolidated Financial Statements (IFRS 10)
Series: MAY 2017

FR – May 2024 – L2 – SA – Q3 – Consolidated Financial Statements

Preparation of consolidated financial statements, calculation of goodwill, and non-controlling interest.

Question

Olu Nigeria PLC has a subsidiary, Oba Limited, which it acquired on January 1, 2022. The financial statements of the companies are detailed below:

Statements of Profit or Loss for the year ended September 30, 2022

Additional Information:

Olu PLC acquired its 70% interest in Oba Limited through a share exchange of three shares in Olu PLC for every five shares in Oba Limited. At the acquisition date, the shares of Olu PLC were sold at ₦8.10 each on the Nigerian Exchange (NGX). The parent company has not recorded this share issue in its books.
At the acquisition date, the fair value of Oba Limited’s assets equaled their carrying amounts except for an item of plant, which had a fair value of N30,000,000 above its carrying amount. This fair value increase has not been adjusted in Oba Limited’s books. The plant’s remaining life at acquisition was five years.
During the year, Oba Limited transferred goods worth N40,000,000 to Olu PLC. These goods were invoiced at cost plus 25%, and only a quarter of them were sold by Olu PLC at year-end.
Included in the other income was N6,550,000 received from Oba Limited as interest paid on a loan granted by Olu PLC. The loan was fully repaid before September 30, 2022.
An impairment test revealed a goodwill impairment of N28,000,000 at the acquisition date.
It is the group’s policy to value non-controlling interests at fair value. The prevailing market price per ordinary share of Oba Limited at January 1, 2022, was ₦5.05.
The gain on the revaluation of property arose from an independent valuation of the group’s property in September 2022.
Administrative expenses of Oba Limited included N10,000,000 paid as management fees to Olu PLC, and the income has been duly recorded in Olu PLC’s books.
Income and expenses accrue evenly over the period.

Required:

a. Prepare the consolidated statement of profit or loss and other comprehensive income for Olu Group for the year ended September 30, 2022. (12 Marks)

b. Calculate the goodwill on acquisition and the non-controlling interest at the reporting date. (4 Marks)

c. IFRS 10 – Consolidated Financial Statements states that a parent must present consolidated financial statements for its investments in subsidiaries.

Required:
State FOUR exceptions to this pronouncement. (4 Marks)

Answer

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Tags: consolidated financial statements, Elimination of Intragroup Transactions, Fair Value, Goodwill, IFRS 10, Non-Controlling Interest, Profit or Loss
Level: Level 2