FINAL ACCOUNT OF COMPANIES

ILLUSTRATION

(MAY 2014 Q3)

Asetrapa Ltd is a listed company reporting under IFRS. During the year ended 31 st December, 2012, the
company changed its accounting policy with respect to property valuation. There are also a number of other
issues that need to be finalized before the financial statement can be published.

Asetrapa Ltds trial balance from the general ledger at 31st December, 2012 showed the following balances:
GH'm GH'm
Revenue 2,648.00
Loan note interest paid 3.00
Purchases 1,669.00
Distribution cost 514.00
Administrative expenses 345.00
Interim dividend paid 6.00
Inventories at 1st January, 2012 444.00
Trade receivable 545.00
Trade payable 434.00
Cash and cash equivalent 28.00
Stated capital (ordinary shares issued at 50p) 100.00
Capital surplus 314.00
Retained earnings at 1st January, 2012 849.00
4% loan note repayable 2018 (issued 2010) 150.00
Land and buildings: cost (including GHC120m land) 380.00
Accumulated depreciation at 1st January, 2012 64.00
Plant and equipment: cost 258.00
Accumulated depreciation at 1st January, 2012 126.00
Investment property at 1st January, 2012 548.00
Rental income 48.00
Proceeds from sale of equipment 7.00
4,740.00 4,740.00
Further information to be taken into account:
(a) Closing inventories were counted and amounted to GHC388m at cost. However, shortly after the year end
out-of-date inventories with a cost of GHC15m were sold for GHC8m.
(b) The company decided to change its accounting policy with respect to its 10 year old land and buildings
from the cost model to the revaluation model. The revaluation amounts at 1st January, 2012 were
GHC800m (including GHC100m for the land). No further revaluation was necessary at 31st December,
2012. The company wishes to treat the revaluation surplus as being realized over the life of the assets.
(c) Due to a change in the companys product portfolio plans, an item of plant with a carrying value GHC22m
at 31st December, 2011 (after adjusting for depreciation for the year) may be impaired due to change in
use. An impairment test conducted at 31st December, 2012, revealed its fair value less costs to sell to be
GHC16m. The asset is now expected to generate an annual net income stream of GHC3.8m for the next 5
years at which point the asset would be disposed for GHC4.2m. An appropriate discount rate is 8%. 5 year
discount factors at 8% are:
Simple Cumulative
0.677 3.993
(d) The income tax liability for the year is estimated at GHC27m. Ignore deferred tax.

Final Account of Companies paulampadu@gmail.com pg. 1

(e) An interim dividend of 3p per share was paid on 30th June, 2012. A final dividend of 1.5p per share was
declared by the directors on 28th January, 2013.
(f) During the year, Asetrapa Co. disposed of some malfunctioning equipment for GHC7m. The equipment
had cost GHC15m and had accumulated depreciation brought forward at 1st January 2012 of GHC3m.
There were no other additions or disposal to property, plant and equipment in the year.
(g) The company treats depreciation on plant and equipment as a cost of sale and on land and buildings as an
administration cost. Depreciation rates as per the companys accounting policy notes are as follows:
Buildings Straight line over 50 years
Plant and equipment 20% reducing balance
Asetrapa Ltds accounting policy is to charge a full years depreciation in the year of an assets purchase
and none in the year of disposal.
(h) On 1st July 2012, Asetrapa Ltd made a bonus issue of 1 share for every 4 held capitalizing its retained
earnings. This transaction has not yet been accounted for. The fair value of the companys shares on the
date of the bonus issue was GHC7.50 each.
(i) Asetrapa Ltd uses the fair value model of IAS 40. The fair value of the investment property at 31st
December, 2012 was GHC586m.

Required:
(a) Prepare Statement of profit or loss and other comprehensive income for the year ended 31st December
2012;
(b) Prepare Statement of changes in equity for the year ended 31st December 2012
(c) Prepare Statement of financial position as at 31st December 2012
(Work to nearest 1 million Ghana Cedis) (20 marks)

ICA NOV 2012 Q4

The Faith Rural Bank Ltd has presented the following trial balance for the 2011 financial year:
DR CR
GH'000 GH'000
Operating Expenses 987.00
Donations 24.00
Staff Cost 2,213.00
Directors remuneration 39.00
Capital work-in-progress 168.00
Motor Vehicles/Accum. Depreciation 327.00 182.00
Equipment & Furniture /Accum. Depreciation 588.00 163.00
Computers/Accum. Depreciation 390.00 133.00
Land and Building/Accum. Depreciation 776.00 83.00
Corporate tax 180.00
Sundry Payables 763.00
Interest from short term funds 243.00
Interest from Government securities 7,137.00
Interest on loans and advances 373.00
Other accounts 789.00
Staff advances 449.00
Loans and Overdrafts granted 8,233.00
Income Surplus 01/01/2011 1,146.00
Final Account of Companies paulampadu@gmail.com pg. 2
 Allowance for doubtful debts 01/01/2011 614.00
Statutory reserves 01/01/2011 648.00
Share Deals 34.00
Capital Surplus 410.00
Trade investment 1,343.00
19,593.0
Government Treasury Bills 0
Interest on customers' deposits 3,515.00
Amounts due to other banks 3,871.00
12,794.0
Deposits with other banks 0
Cash in hand 1,629.00
Balance with other banks 4,666.00
State Capital 4,823.00
Current Accounts 22,767.00
Fixed/Time deposits 3,582.00
Savings accounts 7,819.00
Profit on foreign exchange transaction 141.00
Dividend from investments 55.00
Miscellaneous income 2,328.00
Commission and fee income 1,388.00
58,703.0
Total 0 58,703.00

Additional Information
i. Increase allowance for doubtful debts to GH851,700.00
ii. Provide for depreciation at the following rates:
Land and buildings 5% on cost
Equipment and furniture 20% on cost
Computers 33% on cost
Motor vehicles 33% on cost
iii. Provide for Audit fees of GH60,000.00
iv. Transfer 12 of net profit after tax to Statutory Reserve Fund.
v. The corporate tax provision made in the 2010 financial statements was GH200,000.00. This was agreed
with Ghana Revenue Authority at GH220,000.00 and fully settled in March 2011. Interim tax for 2011
based on self-assessment was settled at GH160,000.00 Corporate tax applicable to the bank is 25%.
vi. Directors have agreed to pay end-of-year bonus to staff estimated at GH72,000.00. This is yet to be paid.
vii. The authorised capital is 10,000 equity shares of no par value out of which 6,000 shares have been issued
and fully paid.

Required.
a) Statement of Comprehensive Income for the year ended 31st December, 2011.
b) Statement of changes in equity for the year ended 31st December, 2011.
c) Statement of financial position as at 31st December, 2011

Notes are not required but show all workings. (20 marks)

Final Account of Companies paulampadu@gmail.com pg. 3

Final Account of Companies paulampadu@gmail.com pg. 4