FINAL ACCOUNT OF COMPANIES

Regulatory Framework
1. Companies Code, 1963 Act 179
2. Accounting Standards
a. IAS 1 - Presentation of Financial Statements
b. IAS 8 - Accounting policies, change in accounting estimates and errors
c. IAS 10 - Events occurring after the balance sheet date
d. IAS 34 - Interim Financial Statements

Overall Considerations

Fair presentation and compliance with IFRSs

Financial statements are required to be presented fairly as set out in the framework
and in accordance with IFRS and are required to comply with all requirements of
IFRSs.

Going concern
Financial statements are required to be prepared on a going concern basis and will
continue in operation for the foreseeable future (unless entity is in liquidation or has
ceased trading or there is an indication that the entity is not a going concern).

Accrual basis of accounting

Entities are required to use accrual basis of accounting except for cash flow
information.

Presentation consistency
An entity is required to retain presentation and classification from one period to the
next.

Materiality and aggregation

Each material class of similar assets and items of dissimilar nature or function is to
be presented separately.

Offsetting
Offsetting of assets and liabilities or income and expenses is not permitted unless
required by other IFRSs.

Comparative information
At least 1 year of comparative information is required. The disclosure is require both
on the face of the financial statements and in the notes, unless another Standard
requires otherwise.

Components of Financial Statements

Acomplete set of financial statements comprises:

Statement of financial position
Statement of profit or loss and other comprehensive income
Statement of changes in equity
Statement of cash flows
Notes, comprising a summary of significant accounting policies and other
explanatory notes
Comparative information prescribed by the standard.

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

All statements are required to be presented with equal prominence.

Structure and Content

Identification of the Financial Statements

Financial statements must be clearly identified and distinguished from other
information in the same published document, and must identify:
Name of the reporting entity
Whether the financial statements cover the individual entity or a group of entities
The statement of financial position date (or the period covered)
The presentation currency
The level of rounding used.

Statement of Profit or Loss and Other Comprehensive Income

Profit or loss is defined as "the total of income less expenses, excluding the
components of other comprehensive income". Other comprehensive income is
defined as comprising "items of income and expense (including reclassification
adjustments) that are not recognised in profit or loss as required or permitted by
other IFRSs".
Total comprehensive income is defined as "the change in equity during a period
resulting from transactions and other events, other than those changes resulting
from transactions with owners in their capacity as owners".
Comprehensive income for the period = Profit or loss + other
comprehensive income

Format for Merchandise Business

State of Profit or Loss and Other Comprehensive

Income for the year ended 31st Dec 20XX
GH

Revenue XXX
(XX
Cost of sales
X)
Gross profit XXX
Other income XXX
(XX
Selling and Distribution costs
X)
(XX
Administrative expenses
X)
(XX
Other expenses
X)
(XX
Finance costs
X)
Profit before tax XXX
(XX
Income tax expense
X)
Profit for the year from continuing operations XXX
Loss for the year from discontinued operations (XX

Final Account of Companies paulampadu@gmail.com pg. 2

 X)
XX
PROFIT FOR THE YEAR
X

Other comprehensive income

Exchange differences on translating foreign
operations XXX
Gains on property revaluation XXX
(XX
Loss on property revaluation
X)
Write-downs of inventories to net realisable value or (XX
of property X)
(XX
Litigation settlements
X)
Other comprehensive income for the year, net XX
of tax X

TOTAL COMPREHENSIVE INCOME FOR THE XX

YEAR X
Statement of Changes in Equity
Information required to be presented:
Total comprehensive income for the period, showing separately attributable to
owners or the parent and non-controlling interest
For each component of equity, the effects of retrospective
application/restatement recognised in accordance with IAS 8 Accounting Policies,
Changes in Accounting Estimates and Errors
Amount of dividends recognised as distributions to owners during the period (can
alternatively be disclosed in the notes)
For each component in equity a reconciliation between the carrying amount at
the beginning and end of the period, separately disclosing each change
- profit or loss
- other comprehensive income*
- transactions with owners, showing separately contributions by and distributions
to owners and changes in ownership interests in subsidiaries that do not result
in a loss of control

Statement of Financial Position (Balance Sheet)

Present current and non-current items separately; or
Present items in order of liquidity.

Current assets Current liabilities

Expected to be realised in, or is Expected to be settled in the entitys
intended for sale or consumption in normal operating cycle
the entitys normal operating cycle Held primarily for trading
Held primarily for trading Due to be settled within 12 months
Expected to be realised within 12 The entity does not have an
months unconditional right to defer
Cash or cash equivalents. settlement of the liability for at least
12 months.
All other assets are required to be
classified as non-current. All other liabilities are required to be
classified as non-current.
Final Account of Companies paulampadu@gmail.com pg. 3
 Statement of Financial Position as at 31st Dec, 20XX
Assets GH

Non-current assets
Property, plant and equipment XXX
Investment property XXX
Intangible assets XXX
Financial assets XXX
Biological assets XXX
Deferred tax assets XXX
Total non-current assets XXX

Current assets
Inventories XXX
Trade and other receivables XXX
Current tax assets XXX
Cash and cash equivalents XXX
Total current assets XXX

Total assets XXX

Equity and liabilities

Capital and reserves

Issued capital XXX
Other reserves XXX
Retained earnings XXX
Total equity XXX

Non-current liabilities
Financial liabilities XXX
Deferred tax liabilities XXX
Total non-current liabilities XXX

Current liabilities
Trade and other payables XXX
Current tax liabilities XXX
Provisions XXX
Deferred revenue XXX
Total current liabilities XXX

Total liabilities XXX

Total equity and liabilities XXX

Notes to the Financial Statements

Statement of compliance with IFRSs
Significant accounting policies, estimates, assumptions, and judgements must be
disclosed

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

 Additional information useful to users understanding/ decision making to be
presented
Information that enables users to evaluate the entitys objectives, policies and
processes for managing capital.

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 31 st 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

Final Account of Companies paulampadu@gmail.com pg. 5

 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.
(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)

Solution

Asetrapa Ltd

Final Account of Companies paulampadu@gmail.com pg. 6

 Statement of Profit or Loss and Other
Comprehensive Income
for the year ended 31 December 2012
GH'm
2,648.0
Sales Revenue 0
(1,756.0
Cost of sales 0)
Gross Profit 892.00
(514.00
Distribution cost )
Admin expenses [345+18( depreciation of (363.00
buildings)] )
Loss on disposal of PPE [12-7] (5.00)
Net Operating Profit 10.00
Other Income: Rental Income 48.00
Fair valuation gain on Investment Property 38.00
Profit before interest and tax [PBIT] 96.00
Finance costs [Interest on loan note] (6.00)
Profit before tax 90.00
Taxation (27.00)
Profit for the year 63.00
Other comprehensive income:
Revaluation surplus on land and buildings 484.00
Total comprehensive income 547.00

Statement of changes in equity for the year ended 31 Dec,

2012
State Capit Retain
d al ed
Capit Surpl earnin
al us gs Total
GH GH
'm 'm GH'm GH'm
100.0 314.0 1,263.0
Balance as at 1 January 2012 0 0 849.00 0
375.0 (375.0
Bonus issue 0 0) -
484.0
Total comprehensive income 0 63.00 547.00
Transfer : Real revaluation (13.00
surplus ) 13.00 -
Dividend (6.00) (6.00)
475.0 785.0 544.0 1,804.
Balance as at 31 December 0 0 0 00
Statement of financial position as at 31 December 2012
GH'm
ASSETS
Non-current assets
Property, plant and equipment 878.00
Investment property 586.00
1,464.00
Current assets
Inventory 381.00

Final Account of Companies paulampadu@gmail.com pg. 7

Trade receivable 545.00
Cash 28.00
954.00

Total assets 2,418.00

EQUITY AND LIABILITIES

Equity
Stated capital 475.00
Capital surplus 785.00
Retained earnings 544.00
1,804.00
Non-current liability
Loan note 150.00
150.00
Current liabilities
Trade payables 434.00
Current tax payable 27.00
Loan interest accrued 3.00
464.00

Equity and liabilities 2,418.00

Workings

a. Cost of Sales
GHm
Opening inventory 444.00
Purchases 1,669.00
Closing inventory (381.00)
Cost of goods sold 1,732.00
Depreciation of plant 24.00
1,756.0
Cost of sales 0

b. Closing Inventories - GH388m [GH15m GH8] = GH381m

c. Real Revaluation Surplus

When assets are revalued we charge depreciation on the revalued amount and
further that we transfer an amount equal to the incremental depreciation from
revaluation reserve to retained earnings.

The entry is made to smooth the retained earnings figure and to facilitate
comparison year by year..

= ([380-120]/50) ([800-100]/40) = 13

Final Account of Companies paulampadu@gmail.com pg. 8

d. Plant, Property and Equipment Schedule
Plant and
Buildi equipmen
Land ng t Total
GH GH GH
Cost 'm 'm GH'm 'm
120.0 260.0
Balance 1/1/12 0 0 258.00 638.00
(20.00 504.0
Revaluation Surplus ) 0 484.00
(15.00
Disposal (15.00) )
Depreciation (64.00 (64.00
Adjustment ) )
100.0 700.0 1,043.
Balance 31/12/12 0 0 243.00 00

Depreciation
Balance 1/1/12 64.00 126.00 190.00
Depreciation (64.00 (64.00
Adjustment ) )
Disposal (3.00) (3.00)
Charger for the year 18.00 24.00 42.00
165.0
- 18.00 147.00 0

100.0 682.0 878.0

NBV 0 0 96.00 0

e. Note: The plant referred to in note (c) is not impaired. Please check below:

Impairment of assets IAS 36

The basic principle of impairment is that an asset may not be carried on the
balance sheet above its recoverable amount.

Recoverable amount is defined as the higher of the assets fair value less costs
of disposal and its value in use.

Fair value less costs of disposal is the price that would be received to sell an
asset in an orderly transaction between market participants at the measurement
date, less costs of disposal.

Value in use requires management to estimate the future pre-tax cash flows to
be derived from the asset and discount them using a pre-tax market rate that
reflects current assessments of the time value of money and the risks specific to
the asset.

GH
Carrying value at 31 December
2011 22.00
Depreciation for 2012 [20%of 22] 4.40
Carrying value at 31 December
2012 17.60

Final Account of Companies paulampadu@gmail.com pg. 9

 Fair value less cost to sell at 31
Dec 2012 16.00

Value in use at 31 December

2012:
3.8 x 3.993 15.20
4.2 x 0.667 2.80
18.00

f. Dividend Only dividend paid is considered in the financial statement, however,

if an entity declares dividends after the reporting period, the entity shall not
recognise those dividends as a liability at the end of the reporting period. That is
a non-adjusting event.

g. Bonus Issue ( x 200m shares) x GH7.50 = GH375m

(May 2011)
The trial balance of Anidaso Company Ltd (ACL) as at 31 December 2010 is as
follows:
GH000 GH000
Sales Revenue (note ii) 12,420.00
Income from investment property 192.00
Proceeds from sale of motor vehicles (note vi) 32.00
60.0
Debenture interest paid
0
7,728.0
Purchases (note ii)
0
560.0
VAT Service
0
Provision for deferred tax (1 January 2010)
10.00
(note iv)
3,436.0
Administration and Distribution costs
0
24.0
Interim dividend paid (note v)
0
1,776.0
Inventories at 1 January 2010
0
2,180.0
Trade receivables
0
Trade payables 1,678.00
112.0
Cash and cash equivalents
0
Ordinary shares (issued at GHS1 per share) 400.00
Income surplus (1 January 2010) (note vii) 4,480.00
20% Debenture Stocks (2009-2013) 600.00
1,520.0
Buildings: Cost (note iii)
0
Acc depreciation at 1 January 2010 304.00
1,032.0
Motor Vehicles: Cost (note vi)
0
Acc. depreciation at 1 Jan 2010 504.00

Final Account of Companies paulampadu@gmail.com pg. 10

 Investment Property at (1 January 2010) (note 2,192.0
viii) 0
20,620.00 20,620.00

Further examination of the financial records revealed the following:

i) Closing inventories at 31 December 2010 were valued at cost as GH

1,624,000.However, some slow moving products included in the inventory at a
cost of GH40,000 had estimated realizable value GH16,000.

ii) The sales figure and the purchases figure in the trial balance included output
VAT and input VAT respectively at the standard rate of 15%. The VAT figure in
the trial balance represents the total net payments made to VAT Service during
the year.

iii) The company decided to change its accounting policy with respect to its
buildings from the "cost model" to the "revaluation model. The revalued
amount at 1 January 2010 was GH2,400,000. The original estimated useful life
of 50 years (on the date of initial recognition on 1 January 2000) remained
unchanged, thus estimated remaining useful life at the date of revaluation was
40 years. No further revaluation was necessary at 31 December 2010.

iv) The income tax liability for the year is estimated at GH100,000. The deferred
tax provision at 31 December 2010 is to be adjusted to GH30,000 in line with
movement in the temporary timing differences.

v) An interim dividend of 6 pesewas per share was paid on 30 June 2010. No

further dividend is proposed at the end of the year.

vi) In January 2010, Anidaso Ltd disposed of some old motor vehicles for GH
32,000. The vehicles had cost GH40,000 and had accumulated depreciation
brought forward at 1 January 2010 of GH32,000. There were no other
additions or disposal to motor vehicles in the year. Motor vehicles are
depreciated at 25% per annum on cost.

Depreciation on buildings and motor vehicles are charged to selling and

administration expenses.

vii) On 1 October 2010, Anidaso Ltd made a bonus issue of 1 share for any 4 shares
held, capitalizing its income surplus. This transaction had not yet been
accounted for. The fair value of the company's shares on the date of the bonus
issue was GH5 each.

viii) Anidaso Ltd uses the fair value model of IAS 40. The fair value of the
investment property at 31 December 2010 was GH2,320,000

Required:
a) Prepare a statement of comprehensive income and statement of changes in
equity for Anidaso Limited for the year ended 31 December 2010.
(10 marks)

b) Prepare a statement of financial position as at 31 December 2010

(10 marks)

Final Account of Companies paulampadu@gmail.com pg. 11

c) State any two (2) bases of preparation and three (3) accounting policies applied
in preparing the financial statements.
(5 marks)
(25 marks)
Solution

Workings
a) Sales = GH12,420,000 X 100/115 = GH10,800,000

b) Purchases = GH7,728,000 X 100/115 = GH6,720,000

c) Cost of sales GH000 d) Other Income

GH000
Open inventory 1,776 Profit on sale of motor veh.
(32- 8) 24
Purchases 6,720 Income from inv property
192
Closing inventory (1624-(40-16) (1,600) Fair valuation surplus of
inv property 128
6,896
344

f) PPE Schedule
Building Motor Vehicle Total
GH000 GH000 GH000
Balance at 1 Dec 2010 1,520 1,032 2,552
Revaluation surplus 1,184 1,184
Depreciation adjustment (304) (304)
Disposal _____ (40) (40)
Balance as at 31 Dec 2010 2,400 992 3,392

Accumulated Depreciation
Balance as at 1 Dec 2010 304 504 808
Charge for the year 60 248 308
Revaluation adjustment (304) (304)
Disposal ____ (32) (32)
Balance as at 31 Dec 2010 60 720 780

NBV at 31 December 2010 2,340 272 2,612

g) VAT Services
Output VAT 1,620
Input VAT (1,008)
Balance (560)
52

Anidaso Company Ltd

Statement of Comprehensive Income for the year ended 31 December
2010
Notes Gh000
10,800.
Sales Revenue
00

Final Account of Companies paulampadu@gmail.com pg. 12

 (6,896.0
Cost of sales
0)
3,904.0
Gross Profit
0
Administration and selling expenses (3,744.0
(3,436 + 308) 0)
Net operating profit 160.00
Other Income 344.00
Net Profit before interest and tax 504.00
Finance charge (20% of 600) (120.00)
Net Profit before taxation 384.00
Taxation (100+ 30 10) (120.00)
Net Profit for the period 264.00
Other Comprehensive Income 1,184.0
(Revaluation surplus) 0
1,448.0
Total Comprehensive Income
0

Statement of Changes in Equity for the year ended 31 December 2010

Revaluat
Stated Income Total
ion
Capital Surplus Surplus
GH GH
GH000 GH000
000 000
Balance as at 1 December 4,480.0
2010 400.00 0 4,880.00
Bonus Issue 500.00 (500.00) 0.00
Statement of Comprehensive
264.00
Income 1,184.00 1,448.00
Dividend (24.00) (24.00)
Balance as at 31 December 4,220.0
900.00 1,184.00 6,304.00
2010 0
Statement of Financial Position as at 31 December 2010
Not
GH000
es
Assets

Non-Current Assets
Property, Plant and Equipment
2,612.00
Investment Property
2,320.00

4,932.00
Current Assets
Inventories
1,600.00
Trade Receivables
2,180.00
Cash and cash receivables
112.00

Final Account of Companies paulampadu@gmail.com pg. 13

 3,892.00

Total Assets
8,824.00

Equity and Liabilities

Equity
Stated capital
900.00
Revaluation surplus
1,184.00
Income Surplus
4,220.00

6,304.00
Non-Current Liabilities
20% Debentures
600.00
Deferred tax provision
30.00

630.00
Current Liabilities
Trade payables
1,678.00
VAT payable
52.00
Loan interest payable
60.00
Tax
100.00

1,890.00

Equity and Liabilities

8,824.00

Notes to the financial statements

1. Bases of Preparation

a) Statement of Compliance
The financial statements of Anidaso Ltd have been prepared in accordance
with International Financial Reporting Standards (IFRS) issued by IASB and
adopted by ICAG.

b) Basis of Measurement
The financial statements have been prepared under the historical cost
convention as modified to include the fair valuation of certain items of PPE
and investment property.

c) Use of Estimates and Judgement

Final Account of Companies paulampadu@gmail.com pg. 14

 The preparation of financial statements in conformity with IFRS requires
management to make judgement, estimates and assumptions that affect the
application of policies and reported amounts of assets, liabilities, income and
expenses. The estimates and the associated assumptions are based on
historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of
making the judgement about carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates.

d) Functional and Presentation Currency

The financial statements are presented in Ghana Cedis (GH), which is the
companys functional and presentational currency.

2. Significant Accounting Policies

The significant accounting policies adopted by the company which have been
used in preparing these financial statements include the following:

a) Depreciation
Properties, plant and equipment are depreciated over their estimated useful
lives. The rates applicable are as follows:
Buildings 2% on cost
Motor vehicles 25% on cost

b) Deferred Tax
The company accounts for deferred tax under the liability method as applied
to all temporary timing differences

c) Inventory
Inventories are valued on a first in first out basis at the lower of cost and
net realizable value. Cost includes all direct expenses incurred in bringing
the stocks to their current state under normal operating conditions.

d) Trade receivables
Debtors are stated after making provision for debts considered to be doubtful

e) Investment Properties
The company adopts the fair value model in measuring the value of
investment properties subsequent to initial recognition and any fair valuation
surplus or deficit is dealt with in the Statement of Comprehensive Income.

f) Revenue
Sales revenue is stated net of discounts, allowances and Value Added Tax

Final Account of Companies paulampadu@gmail.com pg. 15

Format for Financial Institutions

State of Profit or Loss and Other Comprehensive Income for the

year ended 31st Dec 20XX
Not
es GH
Interest Income XXX
Interest Expense (XXX)
Net Interest Income XXX

Commission and Fees Income XXX

Commission and Fees Expenses (XXX)
Net Commission and Fees Income XXX

Net Forex Trading Income XXX

Other Income XXX
Other Operating Income XXX

Total Income XXX

Impairment Losses of Loans and Advances (XXX)

Operating Expenses (XXX)
Profit before Tax XXX
Tax Provision (XXX)
National Fiscal Stabilization Levy (XXX)
Profit for the year XXX

Other comprehensive income

Property revaluation surplus/Loss XXX
Litigation settlements (XXX)
Other comprehensive income for the year, net
of tax XXX

TOTAL COMPREHENSIVE INCOME FOR THE YEAR XXX

Statement of Financial Position as at 31st

December, 20XX
Not
e
Assets
XX
Cash and Balance with the Central Bank
X
XX
Government Securities
X
Due from other Banks and Financial XX
Institutions X
XX
Loans and Advances to Customers
X

Final Account of Companies paulampadu@gmail.com pg. 16

 XX
Investments
X
XX
Other Assets
X
XX
Deferred Tax Assets
X
XX
Property, Plant and Equipment
X
XX
Intangible Assets
X
XX
Total assets
X

Liabilities
XX
Customers Deposit
X
Due to other Banks and Financial XX
Institutions X
XX
Interest Payable and other Liabilities
X
XX
Tax Payable
X
XX
Deferred Tax Liability
X
XX
Borrowings
X
XX
Total Liabilities
X

Shareholders' Fund
XX
Stated Capital
X
XX
Income Surplus
X
XX
Capital Surplus
X
XX
Share Deals
X
XX
Statutory Reserve Funds
X
XX
Other Reserve
X
XX
X

XX
Liabilities and Shareholders' Fund
X

ILLUSTRATION

ICA NOV 2012 Q4

The Faith Rural Bank Ltd has presented the following trial balance for the 2011
financial year:
Final Account of Companies paulampadu@gmail.com pg. 17
 DR CR
GH GH
'000 '000
Operating Expenses 987.00
Donations 24.00
2,213.0
Staff Cost 0
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
7,137.0
Interest from Government securities 0
Interest on loans and advances 373.00
Other accounts 789.00
Staff advances 449.00
8,233.0
Loans and Overdrafts granted 0
1,146.0
Income Surplus 01/01/2011 0
Allowance for doubtful debts
01/01/2011 614.00
Statutory reserves 01/01/2011 648.00
Share Deals 34.00
Capital Surplus 410.00
1,343.0
Trade investment 0
19,593.
Government Treasury Bills 00
3,515.0
Interest on customers' deposits 0
3,871.0
Amounts due to other banks 0
12,794.
Deposits with other banks 00
1,629.0
Cash in hand 0
4,666.0
Balance with other banks 0
4,823.0
State Capital 0
22,767.
Current Accounts 00
3,582.0
Fixed/Time deposits 0
Savings accounts 7,819.0

Final Account of Companies paulampadu@gmail.com pg. 18

 0
Profit on foreign exchange transaction 141.00
Dividend from investments 55.00
2,328.0
Miscellaneous income 0
1,388.0
Commission and fee income 0
58,703. 58,703.
Total 00 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 GH
200,000.00. 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)

Solution
FAITH RURAL BANK LTD
Statement of Comprehensive Income for the year
ended 31/12/11
Not
GH
es
7,753.
Interest Income
00
(3,515.
Interest Expense
00)

Final Account of Companies paulampadu@gmail.com pg. 19

 4,238
Net Interest Income
.00

1,388
Commission and Fees Income
.00

141.
Profit on foreign exchange
00
2,383.
Other Income
00
2,524
Other Operating Income
.00

8,150
Total Income
.00

Impairment Losses of Loans and (238.00

Advances )
(3,793.
Operating Expenses
00)
4,119
Profit before Tax
.00
(1,050.
Tax Provision (20 + 1,030)
00)
3,069
Profit for the year
.00

Statement of Changes in Equity for the year ended 31st December,

2011
State Capit Incom Statut
d al e ory
Capit Share Surpl Surpl Res.
al Deals us us Fund Total
GH GH GH GH GH GH
'000 '000 '000 '000 '000 '000
4,823. 410.0 1,146. 7,061.0
Balance Bfwd 00 34.00 0 00 648.00 0
Transfer Income 3,069. 3,071.0
Statement 00 0
Transfer Statutory (384.0
Reserve 0) 384.00 -
4,823. 410.0 3,831. 1,032.0 10,130.
Balance Cfwd 00 34.00 0 00 0 00

FAITH RURAL BANK LIMITED

Statement of Financial Position as at 31st
December, 2011
GH
Notes
'000
Assets:

Final Account of Companies paulampadu@gmail.com pg. 20

 6,295.
Cash and Short-Term Funds
00
19,593.
Government Securities
00
12,794.
Balance due from other Banks
00
7,381.
Loans and Advances (8,233 852)
00
1,343.
Trade Investments
00
1,238.
Other Assets
00
1,290.
Property, Plant and Equipment
00
49,934
Total assets
.00

Liabilities
34,168.
Customers Deposit
00
3,871.
Balance due to other Banks
00
835.
Sundry Creditors
00
870.
Taxation
00
60.
Accrued Auditors Fees
00
39,804
.00
Shareholders' Fund
4,823.
Stated Capital
00
410.
Capital Surplus
00
34.
Share Deals
00
1,032.
Statutory Reserve Funds
00
3,831.
Income Surplus
00
10,130
.00

Total shareholders fund & 49,934

Liabilities .00

Workings

GH GH
'000 '000

Final Account of Companies paulampadu@gmail.com pg. 21

 1 Interest Income:
Interest from Short Term
243.00 2 Other Income:
Funds
Interest on Gov't 7,137.0 2,328.0
Miscellaneous income
Securities 0 0
Interest on Loans & Dividends from
373.00 55.00
Advances investment
7,753. 2,383.
00 00

Impairment Losses
3 Operating Expenses: 4
of Loans
Directors Remuneration 39.00 Balance c/fwd 852.00
2,213.0
Staff costs Less balance b/fwd 614.00
0
Donations 24.00 Income statement 238.00
Operating expenses 987.00
Cash & Shirt term
Audit fees 60.00 5
Funds:
1,629.0
Bonus 72.00 Cash
0
Balance with Bank of 4,666.0
Depreciation 398.00
Ghana 0
3,793. 6,295.
00 00

22,767.
6 Other Assets Account: 7 Customer Deposits:
00
3,582.0
Other Accounts 789.00 Current Accounts
0
7,819.0
Staff allowances 449.00 Time Deposits
0
1,238. 34,168
Savings Accounts
00 .00

8 Other Liabilities:
Sundry Payables 763.00
bonus 72.00
835.0
0

Property, Plant and Equipment Schedule

Land Equipm
Capit and ent & Motor
al buildin furnitur Comput vehicl
Cost WIP gs e ers es Total
GH GH GH GH GH GH
'000 '000 '000 '000 '000 '000
2,249.
Bal b/f 168.00 776.00 588.00 390.00 327.00 00
Final Account of Companies paulampadu@gmail.com pg. 22
 168.0 327.0 2,249.
0 776.00 588.00 390.00 0 00

Depreciation
Bal b/f 83.00 163.00 133.00 182.00 561.00
Charge for the
year 39.00 118.00 131.00 110.00 398.00
292.0 959.0
- 122.00 281.00 264.00 0 0

168.0 1,290.
NBV 0 654.00 307.00 126.00 35.00 00

Taxation Schedule
Charg
Balan e for Balan
ce at the Paym ce at
01/01 year ent 31/12
GH GH GH GH
'000 '000 '000 '000
200.0 (220.0 (20.00
For 2010 0 0) )
1,050. (160.0 890.0
For 2011 00 0) 0
200.0 1,050. (380.0 870.0
0 00 0) 0

Final Account of Companies paulampadu@gmail.com pg. 23