UNIVERSITY OF PROFESSIONAL STUDIES, ACCRA (UPSA) DEGREE PROGRAMME REGULAR SCHOOL Ea J END OF SECOND SEMESTER EXAMINATIONS- 2017/2018 ACADEMIC YEAR FACULTY OF ACCOUNTING AND FINANCE DEPARTMENT OF ACCOUNTING LEVEL 400 BACT 402: CORPORATE REPORTING II Date: Wednesday, May 23, 2018 TIME ALLOWED: 3 HOURS INDEX NUMBER INSTRUCTION(S) ANSWER ALL QUESTIONS ‘ ies, Nect corel or prfesianl Stubs Universi pox U6 149) A867 Pe yibraryUE: (a) (ON 1 D Group At the year start, on 1 January Mersey (M) bought 40% of Inwell (1). On 1 July D acquired 75% of M and 25% of I. Goodwill has not been impaired. It is the group’s policy to value the non-controlling interest at fair value. Fair Value of the NCI and Reserves were as follows: Fair Value of NCI__ Reserves 1 Jan | July 1 Jan 1 July M 49 62 90 100 I 7 8S 135 150 The Statements of financial position at 31 December are as follows: D M I GHC*000 GHC‘000 GHC-000 Investment in M 200 Investment in I 70 80 Net assets 600 «112,180 se —— —— x £ 870 192 180 ; S9° Share capital ($1 each) s ? 100 20 10 Retained eamings eee 70 172 170 we wl > Required: Prepare Group statement of financial position for the D group. Show workings for () (2) GB) (4) (b) a) (2) Net Assets List Goodwill Consolidated Reserves and Non-Controlling Interest (NCI) (18 marks) Establish whether control exists in the following entity relationships. H owns 60% of S, S owns 30% of T and H owns 30% of T H owns 35% of S, S owns 40% of T and H owns 40% of T. (2 marks)QUESTION 2 Summarised Financial Statements of Megan Group for the y Income Statements 2014 GHCm moldegy Cost of sales (190) Gross profit 60 Operating Expenses (30) Operating Profit 30 Finance Cost (15) Profit before tax 15 Tax ©. Z Profit after tax 9 ee. Non-controlling interest GB) Group profit after tax 6 sult 2 bei Megan declared and paid a dividend of GHC5m in 2013 and GHC: Statement of financial positions . 2011 2010 GHCm GHCm ‘Non-Current Assets Tangibles 240 180 Goodwill 10 Current Assets Inventory 180 Receivables 140 Cash/Bank 10 580 Share Capital 200 Reserves 110 NCI 27 NCL(loan) 100 Current Liabilities 143 580 1) Depreciation for 2014 was GHC2Sm (2010 GHC15m) 2) Credit sales were 100% of total sales for both yearsRequired: Write a report on Megan Group’s financial performance and position over the two year period. Your report should; 1) Discuss any THREE problems that are inherent when ratios are used to assess a company’s financial performance. G marks) 2) Calculate SEX ratios (at least one each from profitability, liquidity, gearing, (3 marks) 3) Analyse the financial performance of the company of the six ratios calculated, S (9 marks) L's S ¥ (Total 15 marks) Ss QUESTIO’ Sov (a) Bilberry Bilberry offered a three year share based payment scheme to its directors. The volume granted was 20m. Year Rights expected to vest _Fair value of the option 0 17m 20 pesewas 1 18m 27 pesewas 2 15m 33 pesewas 3 16m 29 pesewas Required: State the Financial Statement effects over 3 years, assuming that the share based payment used. (7 marks) (b) ABC Ltd. ABC Ltd issued a bond for GHS 476,300 on 1 January 2008. No interest is payable on the bond, but it will be held and redeemed on 31 December 2010 for GHS 600,000. The bond has not been designated as fair value through profit or loss. Required (1) Calculate the charge to income statement for the years ended 31 December 2008, 2009 and 2010 and (2) State the balance outstanding on statement of financial position (through amortization schedule) as at 31 December 2008 and 2009. (8 marks)QUESTION 4 (a) Intellectual assets can be divided into three main types. clearly explain the three types of intellectual assets. (©) State the objectives of the International Accounting Standards (@) State any four factors that have influenced financial reporting. End of Paper University of Professional Studies, Accre P. 0. Box LG 149, Accra Library