UNIVERSITY OF CAPE COAST

COLLEGE OF HUMANITIES AND LEGAL STUDIES

SCHOOL OF BUSINESS
DEPARTMENT OF ACCOUNTING
ADVANCED FINANCIAL REPORTING
Question 1
Patty acquired 80% of Slessor several years ago. Patty presents the statement of profit or loss and other
comprehensive income as a single statement. Items in other comprehensive income are shown net of tax.
The summarised statements of profit or loss and other comprehensive income for the year to 31 December
2020 are as follows:

Statement of Profit or Loss and Other Comprehensive Income for the year to 31/12/20
Patty Slessor
GH¢'000 GH¢'000
Revenue 400 000 260 000
Cost of sales - 200 000 - 60 000
Gross Profit 200 000 200 000
Expenses - 90 000 - 95 000
Profit before tax 110 000 105 000
Income Tax - 30 000 - 15 000
Profit for the year 80 000 90 000
Other Comprehensive income
Remeasurement-Defined Benefit-Cannot be reclassified 2 000 1 000
Cash flow hedge-may not be reclassified - 1 200 400
Total comprehensive income 80 800 91 400

Required: Prepare consolidated statement of profit or loss and other comprehensive income and the
statement of changes in equity for the year to 31 December 2020.
Question 2
A owns 80% of B. At 31 October 2018 the carrying amount of B’s net assets is GH¢600,000, excluding
goodwill of GH¢80,000 that arose on the original acquisition. The recoverable amount of the net assets of B
is GH¢640,000.
Required: Calculate the impairment loss if:
a) the NCI at acquisition was measured at fair value
b) the NCI at acquisition was measured at its proportion of the fair value of the subsidiary's
identifiable net assets.

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Question 3
On 1 January 2018, Azay group purchased 80% of Dzidzor for GH¢10,000,000. The fair value of the
identifiable net assets of Dzidzor at the date of acquisition amounted to GH¢11,800,000. The carrying amount
of Dzidzor’s net assets at 31 December is 10,400,000 (excluding goodwill). Dzidzor is a cash-generating unit.
At 31 December 2018 the recoverable amount of Dzidzor’s net assets is GH¢10,600,000.
Required: Calculate the impairment loss and explain how this would be dealt with in the financial statements
of the Azay group if:
(a) the NCI at acquisition was measured at its fair value of GH¢2,600,000.
(b) the NCI at acquisition was measured at its share of the fair value of Dzidzor's identifiable net assets.

Question 4
The financial statements of each company for the year ended 31 March 2017 are as follows:
Statement of Financial Position - 31 March, 2017
PAPOIS SATOIS
Non-current assets GH¢000 GH¢000
PPE 9,000 4,000
Investment in Satois 7,000
Current assets 3,000 6,000
19,000 10,000

Share capital (GH¢1) 2000 1500

Share Premium 500
Retained Earnings 13,500 7,000
Non-current liabilities 1,000 900
Current liabilities 2,000 600
19,000 10,000

Statement of Profit or Loss - 31 March, 2017

PAPOIS SATOIS
GH¢000 GH¢000
Revenue 10,000 2,600
Cost of Sales - 7,500 - 800
Gross Profit 2,500 1,800
Operating costs - 600 - 350
Operating profits 1,900 1,450
Investment income 200
- 250 - 150
Profit before tax 1,850 1,300
Tax - 1,000 - 300
Profit for the year 850 1,000

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Papois acquired 70% of Satois three years ago, when Satois’s retained earnings were GH¢4,300,000.
i. Satois had plant in its statement of financial position at the date of acquisition with carrying amount
of GH¢1,000,000, but a fair value of GH¢1,200,000. The plant had a remaining life of 10 years at
acquisition. Depreciation is charged to cost of sales.
ii. The Patois Ltd group values the non-controlling interests at fair value. The fair value of non-
controlling interest at the date of acquisition was GH¢2,500,000. Goodwill has been impaired by a
total of 30% of its value at the reporting date, of which one third related to the current year.
iii. At the start of the year Papois Ltd transferred a machine to Satois Ltd for GH¢150,000. The asset
had a remaining useful economic life of three years at the date of transfer. It had a carrying amount
of GH¢120,000 in the books of Patois Ltd at the date of transfer.
iv. During the year, Satois Ltd sold some goods to Papois Ltd for GH¢600,000 at a mark-up of 20%.
40% of the goods remained unsold at the year-end.
v. At the year-end Satois Ltd’s books showed a receivables of GH¢60,000 as being due from Papois
Ltd. This disagrees with the payable balance of GH¢10,000 in Papois Ltd’s books due to Page Ltd
having sent a cheque to Satois shortly before the year end which Satois had not yet received.
vi. Satois paid a dividend of GH¢200,000 on 1 March 2017.
Required: Prepare the consolidated statement of financial position and consolidated statement of
profit or loss for the year ended 31 December, 2017.