Question $2$

A$.$ QRS Ltd acquired a new technology that will revolutionalise its current manufacturing process. The costs are set out below:

$\backslash$table$[[$Original cost of the new technology,$],[$Discount provided $($@$10\%),500,000],[$Staff training incurred in operating the new technology,$],[25,000,],[$Testing of the new manufacturing process,$5,000],[,]]$

Losses incurred whiles other parts of the plant stood idle $10,000$

Required:

Determine the amount to be capitalised as the cost of the intangible asset.

$(2$ marks$)$

B$.$ Adamu Ltd issued a GH$40$ million $15\%$ convertible loan note at par on $1$ January $2020$ with interest payable annually in arrears. Three years later, on $31$ December $2022,$ the loan note is convertible into equity shares on the basis of $GH!in100$ of loan note for $50$ equity shares or it may be redeemed at par in cash at the option of the loan note holder.

The company's financial accountant observed that the use of a convertible loan note was preferable to a non$-$convertible loan note as the latter would have required an interest rate of $20\%$ in order to make it attractive to investors. The present value of $GH11$ receivable at the end of the year, based on discount rates of $15\%$ and $20\%$ can be taken as:

$\backslash$table$[[$Year$,$DCF$-15\%,$DCF$-20\%],[1,0\mathrm{.}870,0\mathrm{.}833],[2,0\mathrm{.}756,0\mathrm{.}694],[3,0\mathrm{.}658,0\mathrm{.}579]]$

Required:

i$.$ Pass a journal to record the initial measurement of the loan on $1$ January $2020.(5$ marks$)$

$20-3C5$ marks

CS CamScanner

EXAM CODE $01$

ii$.$ Prepare extracts from the statement of profit or loss and the statement of financial position for all the relevant years.

$(7$ marks$)$

C$.$ Bomarks acquires an item of equipment at the cost GH&$48,000,000$ on $31$ March $2020.$ The entity incurred other costs as follows:

Legal fees and other installation expenses

$GH!in1,800,000$

Transport cost from port to premises

GH$1,500,000$

Allocated General Overhead $GH600,000$

The estimated useful life of the equipment is $10$ years, and the entity has obligation to restore the location to its original state after usage. The estimated cost of dismantling and restoration in $10$ years is $GH5$ million and the entity's cost of capital is $15\%.$ Although the equipment was available for use from $1$ May $2020,$ the entity did not bring it into use until $1$ July, $2020.$

Required

Calculate the carrying value of the equipment at the year end $31$ December $2020$ to be recognised in the statement of financial position.

$(6$ marks$)$

$]=[20$ Marks