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Done

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$34\%$

:$$ TRIAL QUESTIONS FR $2024$

Done

The following notes are relevant:

Included in revenue is GH$12$ million for receipts that the company's auditors have

advised are commission sales. The costs of these sales, paid for by Petra, were GH$8$

million. GH$3$ million of the profit of GH$4$ million was attributable to and remitted to

Sharma $($the auditors have advised that Sharma is the principal for these transactions$).$

Both the GH$8$ million cost of sales and the GH$3$ million paid to Sharma have been

included in cost of sales.

The buildings had an estimated life of $30$ years when they were acquired and are

being depreciated on the straight$-$line basis.

Included in the trial balance figures for plant and equipment is plant that had cost

GH$16$ million and had accumulated depreciation of GH$6$ million. Following a review

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of the company's operations this plant was made available for sale during the year. Negotiations with a broker have concluded that a realistic selling price of this plant will be GH$7*5$ million and the broker will charge a commission of $8\%$ of the selling price. The plant had not been sold by the year end. Plant is depreciated at $20\%$ per annum using the reducing balance method. Depreciation of buildings and plant is charged to cost of sales.

iv$.$ The development expenditure relates to the capitalised cost of developing a product called the Topaz. It had an original estimated life of five years. Production and sales of the Topaz started in October $2003.$ A review of the sales of the Topaz in late September $2005,$ showed them to be below forecast and an impairment test concluded that the fair value of the development costs at $30$ September $2005$ was only GH$18$ million and the expected period of future sales $($from this date$)$ was only a further two years.

v$.$ The balance on the income tax account in the trial balance is the under$-$provision in respect of the income tax liability for the year ended $30$ September $2004.$ The directors have estimated the provision for income tax for the year ended $30$ September $2005$ to be GH$4$ million and the required statement of financial position provision for deferred tax at $30$ September $2005$ is GH$176$ million.

Required:

Prepare for Petra:

$($a$)$ A statement of profit or loss and other comprehensive income for the year ended $30$ September $2005$; and

$($b$)$ A statement of financial position as at $30$ September $2005.$

$($c$)$ A statement of changes in equity.

$($d$)$ Comprehensive notes to the financial statement

Question $3$

An entity has incurred the following expenditure during the current year:

$($a$)$ GH$100,000$ spent on the design of a new product it is anticipated that this design will be