QUESTION I The following trial balance relates to Ken and Ken Limited, a wholesale company as...

 

Transcribed Image Text:

QUESTION I The following trial balance relates to Ken and Ken Limited, a wholesale company as at 31" December 2017. Ordinary shares (29,000 shares) 8% Loan notes (2012-2020) (note (v)) 10% Debenture Revaluation reserve Contingency reserve Income Surplus - 1/1/2017 Sales revenue Inventory - 1/12/2017 VAT/NHIL Purchases Loan Note interest paid (note (v)) Investment income Administration expenses (note (iv)) Selling & distribution expenses Trade receivables cash and cash equivalents Trade payables Corporation tax Deferred tax - 1/1/2017 Leasehold building at valuation-1/1/2017. Plant and equipment-cost/depreciation Computer equipment- cost/depreciation Motor vehicles - cost/depreciation Investment property (note (i)) Suspense The following additional information is relevant: () ii) Debit GH¢ 55,200 2.400 124,000 880 68.320 44,800 74,280 112,720 (12,400 112.000 110,000 57,600 12,000 69,600 856,200 Credit GHE 116,000 20,000 24,000 1,400 12,000 28,800 $50,920 2,880 32,000 18,400 25.600 16,000 3,200 5,000 856,200 The closing inventories at 31st December, 2017 were valued at a cost of GH 37,500. Due to some slow moving products the estimated net realizable value was GH29,500. The sales and the purchases figures in the trial balance included output VAT/NHIL and input VAT/NHIL respectively at the standard rate of 3%. The VAT/NHIL figure on the trial balance represents the total net payment made to Ghana Revenue Authority during the year. iv) v) vi) 9 @ vii) The balance on the corporation tax account represents an under provision of tax for the previous year. Corporate Tax for the current year is estimated at GH 25,000. In addition, the deferred tax provision on the trial balance is to be adjusted to GH 20.400 in line with movement in the temporary timing differences. The company decided to change its accounting policy with respect to its investment property from "cost model" to "fair value model" as per IAS 40 Investment property. On 31 December 2017 a qualified surveyor valued the investment property at GH 79,000. This decision is yet to be accounted for in the books of the company. Non-current assets: Depreciation of Property, plant and equipment is to be provided on the following bases: Plant and equipment 10% on cost Computer equipment 25% on cost Motor vehicles 20% on reducing balance No depreciation has yet been charged on any non-current asset for the year ended 31" December, 2017. Ken and Ken Limited revalues its buildings at the end of each accounting year. At 31st December, 2017 the relevant value to be incorporated into the financial statements is GH¢117,600. The building's remaining life at the beginning of the current year (19 January, 2017) was 25 years. Ken and Ken does not make an annual transfer from the revaluation reserve to retained earnings in respect of the realisation of the revaluation surplus. Ignore deferred tax on the revaluation surplus. The company paid ordinary dividends of GH60.45 per share 15th December, 2017. The dividend payments are included in administrative expenses in the trial balance. The balance on the suspense account represents the proceeds from the issue of 1,000 ordinary shares issued at GHé5each. Required: Prepare the following financial statements of Invincible Ltd for publication in accordance with International Financial Reporting Standards (IFRS): a) Statement of Profit or Loss and other Comprehensive income for the year ended 31" December, 2017; b) Statement of Changes in Equity for the year ended 31 December, 2017; and c) Statement of Financial Position as at 31" December, 2017. Show clearly all relevant workings Note: Accounting policy notes are not required 2 23 42 (20 marks) QUESTION I The following trial balance relates to Ken and Ken Limited, a wholesale company as at 31" December 2017. Ordinary shares (29,000 shares) 8% Loan notes (2012-2020) (note (v)) 10% Debenture Revaluation reserve Contingency reserve Income Surplus - 1/1/2017 Sales revenue Inventory - 1/12/2017 VAT/NHIL Purchases Loan Note interest paid (note (v)) Investment income Administration expenses (note (iv)) Selling & distribution expenses Trade receivables cash and cash equivalents Trade payables Corporation tax Deferred tax - 1/1/2017 Leasehold building at valuation-1/1/2017. Plant and equipment-cost/depreciation Computer equipment- cost/depreciation Motor vehicles - cost/depreciation Investment property (note (i)) Suspense The following additional information is relevant: () ii) Debit GH¢ 55,200 2.400 124,000 880 68.320 44,800 74,280 112,720 (12,400 112.000 110,000 57,600 12,000 69,600 856,200 Credit GHE 116,000 20,000 24,000 1,400 12,000 28,800 $50,920 2,880 32,000 18,400 25.600 16,000 3,200 5,000 856,200 The closing inventories at 31st December, 2017 were valued at a cost of GH 37,500. Due to some slow moving products the estimated net realizable value was GH29,500. The sales and the purchases figures in the trial balance included output VAT/NHIL and input VAT/NHIL respectively at the standard rate of 3%. The VAT/NHIL figure on the trial balance represents the total net payment made to Ghana Revenue Authority during the year. iv) v) vi) 9 @ vii) The balance on the corporation tax account represents an under provision of tax for the previous year. Corporate Tax for the current year is estimated at GH 25,000. In addition, the deferred tax provision on the trial balance is to be adjusted to GH 20.400 in line with movement in the temporary timing differences. The company decided to change its accounting policy with respect to its investment property from "cost model" to "fair value model" as per IAS 40 Investment property. On 31 December 2017 a qualified surveyor valued the investment property at GH 79,000. This decision is yet to be accounted for in the books of the company. Non-current assets: Depreciation of Property, plant and equipment is to be provided on the following bases: Plant and equipment 10% on cost Computer equipment 25% on cost Motor vehicles 20% on reducing balance No depreciation has yet been charged on any non-current asset for the year ended 31" December, 2017. Ken and Ken Limited revalues its buildings at the end of each accounting year. At 31st December, 2017 the relevant value to be incorporated into the financial statements is GH¢117,600. The building's remaining life at the beginning of the current year (19 January, 2017) was 25 years. Ken and Ken does not make an annual transfer from the revaluation reserve to retained earnings in respect of the realisation of the revaluation surplus. Ignore deferred tax on the revaluation surplus. The company paid ordinary dividends of GH60.45 per share 15th December, 2017. The dividend payments are included in administrative expenses in the trial balance. The balance on the suspense account represents the proceeds from the issue of 1,000 ordinary shares issued at GHé5each. Required: Prepare the following financial statements of Invincible Ltd for publication in accordance with International Financial Reporting Standards (IFRS): a) Statement of Profit or Loss and other Comprehensive income for the year ended 31" December, 2017; b) Statement of Changes in Equity for the year ended 31 December, 2017; and c) Statement of Financial Position as at 31" December, 2017. Show clearly all relevant workings Note: Accounting policy notes are not required 2 23 42 (20 marks)

Answer rating: 100% (QA)

1 a KEN AND KEN LIMITED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 2017 GHC GHC GHC Sales 550920 Less Vat ... View the full answer