Questions 1

A).
Sunyani Ltd (Sunyani) is a limited liability company based in Brong Ahafo. It has shareholdings
in two other companies, Berekum Ltd (Berekum) and Jinijini Ltd (Jinijini). Sunyani bought 150
million ordinary shares in Berekum on 1 August 2016, when the retained earnings of Berekum
were GH¢22 million. The consideration was agreed at GH¢110 million for these shares.

On 1 August 2017, Sunyani bought a 40% holding in the ordinary shares of Jinijini when the
retained earnings balance in Jinijini‟s books stood at GH¢26 million. The consideration was an
immediate cash payment of GH¢25 million. The directors of Sunyani negotiated the right to
appoint 4 directors to Jinijini‟s 12-person board as a result of its investment. Statements of
Financial Position are shown below for all three companies as at 31 July 2018.

Statements of Financial Position as at 31 July, 2018

Sunyani Ltd Berekum Ltd Jinijini Ltd
Non-current assets GH¢ million GH¢ million GH¢ million
Property, Plant and Equipment 250.0 72.5 50.0
Investments 150.0 24.0 2.5
400.0 96.5 52.5
Current assets
Inventories 90.0 25.5 11.5
Trade receivables 32.0 12.0 6.5
Cash & Bank 12.0 6.5 4.0
134.0 44.0 22.0
534.0 140.5 74.5
Equity
Equity share of GH¢0.25 each 225.0 50.0 30.0
Retained earnings 179.0 32.5 30.5
404.0 82.5 60.5
Non-current liabilities
6% Loan Notes 50.0 40.0 –
Current liabilities
Trade payables 71.5 18.0 9.0
Dividends proposed 8.5 - 5.0
Total liabilities 130.0 58.0 14.0
Total equity & liabilities 534.0 140.5 74.5

The following additional information may be relevant:

i) At the date of acquisition, Sunyani conducted a fair value exercise on Berekum‟s net assets
which were equal to their carrying amounts with the following exceptions:

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75% of the value of this property relates to buildings with a useful economic life of 10 years at
the date of acquisition.

at 31 July 2018.
ii) Sunyani‟s policy is to value any Non-Controlling Interests (NCI) at their proportionate share
of identifiable net assets at the acquisition date.
iii) Immediately after the acquisition, Berekum issued GH¢40 million of 6% loan notes, GH¢8
million of which were bought by Sunyani Ltd. This investment has been correctly recorded in the
books of Sunyani under the heading “Investments”. All interest due on loan notes as at 31 July
2018 has been paid and recorded.
iv) During the financial year ended 31 July 2018, Berekum had sold goods to Sunyani amounting
to GH¢30 million. The purchase price included a mark-up of 20% on cost. Berekum‟s normal
mark-up on goods sold is 60%. Of these goods, one-quarter remained in the closing inventory of
Sunyani at the reporting date.
v) Sunyani has not accounted for any dividend receivable from its group companies. Both
Sunyani and Jinijini have proposed dividends as shown in current liabilities. Jinijini‟s proposed
dividend relates entirely to the post acquisition period. No other dividends were paid or proposed
in the year.
vi) Recorded in the books of Sunyani was an intra-group trade payable of GH¢10 million owed
to Berekum at year-end. However, the books of Berekum showed a balance of GH¢11 million
owed by Sunyani. It transpired that Berekum‟s computer system had automatically charged to
Sunyani‟s account, interest of GH¢1 million due to late payments. It was subsequently agreed
that Berekum would waive this interest.
vii) There were no impairment losses during the year end 31 July, 2018. (All workings may be
rounded to the nearest GH¢0.01m)

Required: Prepare the Consolidated Statement of Financial Position for the Sunyani group as at
31 July 2018 in accordance with International Financial Reporting Standards. (20 marks)

QUESTION 1
Below are the separate financial statements of Broad Ltd and two investee companies which also
operate in the same industry as the investor entity.

Statements of profit or loss and other comprehensive income for the year ended 30 June 2016
Broad Ltd Narrow Ltd Shadow Ltd
GH¢’000 GH¢’000 GH¢’000
Revenue 92,500 48,000 30,000
Cost of sales (70,500) (36,000) (18,000)
Gross profit 22,000 12,000 12,000
Distribution costs (2,500) (1,200) (1,000)
Administrative expenses (5,500) (2,400) (2,000)

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Finance costs (100) - -
Profit before tax 13,900 8,400 9,000
Income tax (3,900) (1,600) (2,200)
Profit for the year 10,000 6,800 6,800
Other comprehensive income:
Gain on revaluation of land 500 - -
Total comprehensive income 10,500 6,800 6,800

Statements of financial position as at 30 June 2016

Assets
Non-current assets: GH¢’000 GH¢’000 GH¢’000
Property, plant and equipment 18,300 18,900 15,000
Investments 12,600 - -
30,900 18,900 15,000
Current assets 12,500 2,400 3,000
Total assets 43,400 21,300 18,000
Equity and liabilities
Equity:
Equity shares of GH¢1 each 15,000 5,000 6,000
Land revaluation reserve – 30 June 2016 2,000 - -
Other equity reserve – 30 June 2015 500 - -
Retained earnings 12,900 9,500 5,000
30,400 14,500 11,000
Non-current liabilities:
6% loan note 3,000 - -
Current liabilities 10,000 6,800 7,000
Total equity and liabilities 43,400 21,300 18,000

The following information is relevant:

i) On 1 March 2016, Broad Ltd acquired 80% of the equity share capital of Narrow Ltd. The
consideration consisted of two elements: a share exchange of three shares in Broad Ltd for every
five acquired shares in Narrow Ltd and the issue of a GH¢100 6% loan note for every 500 shares
acquired in Narrow Ltd. The share issue has not yet been recorded by Broad Ltd, but the issue of
the loan notes has been recorded. At the date of acquisition, shares in Broad Ltd had a market
value of GH¢5 each and the shares of Narrow Ltd had a stock market price of GH¢3.50 each.
Broad Ltd had earlier on acquired 2.4 million shares in Shadow Ltd on the stock market at a
price of GH¢1.50 per share on 1 January 2016.
ii) At the date of acquisition, the fair values of Narrow Ltd.‟s assets were equal to their carrying
amounts with the exception of its property. This had a fair value of GH¢1.2 million below its
carrying amount. This would lead to a reduction of the depreciation charge (in cost of sales) of
GH¢50,000 in the post-acquisition period. Narrow Ltd has not incorporated this value change
into its separate financial statements.

iii) Broad„s group policy is to revalue all properties to current value at each year end. On 30 June
2016, the value of Narrow„s property was unchanged from its value at acquisition, but the land

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element of Broad Ltd.‟s property had increased in value by GH¢500,000 as shown in other
comprehensive income.

iv) Sales from Narrow Ltd to Broad Ltd throughout the year ended 30 June 2016 was GH¢12
million. Narrow made a mark-up on cost of 25% on these sales. Broad Ltd had GH¢2 million (at
cost to Broad Ltd) of inventory that had been supplied in the post-acquisition period by Narrow
Ltd as at 30 June 2016.

v) In June 2016, Broad Ltd sold goods to Shadow Ltd for GH¢2,000,000, thus achieving a profit
mark-up of 25%. The entire consignment remained unsold and was included in the inventory of
Shadow Ltd as at 30 June 2016.

vi) Broad‟s investments include some available-for-sale investments that have increased in value
by GH¢300,000 during the year. The other equity reserve relates to these investments and is
based on their value as at 30 June 2015. There were no acquisitions or disposals of any of these
investments during the year ended 30 June 2016.

vii) Broad‟s policy is to value the non-controlling interest at fair value at the date of acquisition.
For this purpose, Narrow‟s share price at that date can be deemed to be representative of the fair
value of the shares held by the non-controlling interest.

viii) It was determined at the year-end that 10% of the goodwill relating to the acquisition of
Narrow was impaired.

Required:
a) Prepare the consolidated statement of profit or loss and other comprehensive income for Broad
Ltd. Group for the year ended 30 June 2016. (10 marks)
b) Prepare the consolidated statement of financial position for Broad Ltd. Group as at 30 June
2016. (10 marks)
(Total: 20 marks)

Question 2
A) Mane is an entity specializing in importing a wide range of non-food items and selling them
to retailers. Aqeel is Mane‟s CEO and founder and owns 40% of Mane‟s equity shares:
i) Mane‟s largest customer, Zico accounts for 35% of Mane‟s revenue. Zico has just completed
negotiations with Mane for a special 5% discount on all sales.

ii) During the accounting period, Aqeel purchased a property from Mane for GH¢500,000. Mane
had previously declared the property surplus to its requirements and had valued it at
GH¢750,000.

iii) Aqeel‟s son, Sherif is a director in a financial institution, Cheap Capital. During the
accounting period, Cheap Capital advanced GH¢2 million to Mane as an unsecured loan at a
favourable rate of interest.

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Required:
Explain, with reasons, the extent to which each of the above transactions should be classified and
disclosed in accordance with IAS 24 Related Party Disclosures in Mane‟s financial statements
for the period. (4 marks)

B)
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors is applied in
selecting and applying accounting policies, accounting for changes in estimates and reflecting
corrections of prior period errors.
The standard requires compliance with any specific IFRS applying to a transaction, event or
condition, and provides guidance on developing accounting policies for other items that result in
relevant and reliable information.

Required:
i) Discuss the procedure for selecting accounting policies. (3 marks)

ii) Recommend how an entity should account for a change in accounting policy. (2 marks)

C)
Afoko Ltd acquired a car taxi business on 1 January 2015 for GH¢230,000. The value of the
assets of the business at that date based on net selling price were as follows:
GH¢000
Vehicles 120
Intangible assets 30
Trade receivables 10
Cash 50
Trade payables (20)
190
On 1 February 2015, the taxi business had three (3) of its vehicles stolen. The net selling values of these
vehicles was GH¢30,000 and because of non-disclosure of certain risk to the insurance company, the
business was uninsured. As a result of this event, Afoko Ltd wishes to recognise an impairment loss of
GH¢45,000 inclusive of the loss of the stolen vehicles due to the decline in value of the stolen income
generating unit, that is the taxi business. On 1 March 2015, a rival taxi company commenced business in
the same area. It is anticipated that the business revenue of Afoko Ltd would be reduced by 25% leading
to a decline in the present value in use of the business which is calculated at GH¢150,000. The net selling
value of the taxi license has fallen to GH¢25,000 as a result of the rival taxi operator. The net selling
values of the other assets have remained the same as at 1 January 2015.

Required: Recommend how Afoko Ltd should account for the above transaction in its financial
statements in accordance with IAS 36 Impairment of Assets.

D)
IAS 12: Income Taxes sets out guidance for dealing with under provision and over provision of
income taxes by reporting entities.
During the year ended 31 March 2019, Dansoman Ltd finalised and paid its liability for
corporate tax on profit for year ended 31 March 2018, at an amount of GH¢21 million. It had
previously made an estimated provision for corporation tax of GH¢25 million in the financial

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statements for year ended 31 March 2018. The directors estimate the liability for year ended 31
March 2019 at GH¢24.5 million.
Required:
Explain the treatment of the above transactions in the financial statements of Dansoman Ltd for
the year ended 31 March 2019 in respect of taxation. (4 marks)

E)
IFRS 15: Revenue from Contracts with Customers specifies how and when an IFRS reporter will
recognise revenue as well as requiring such entities to provide users of financial statements with
more informative, relevant disclosures. The standard provides a single, principles based five-step
model to be applied to all contracts with customers. Mankranso Ltd, a hotel had the following
transactions during the year:

i) On 31 March 2019, Mankranso Ltd signed a contract to supply 50,000 units of food packs at
an agreed price of GH¢10 per unit. On the same day, 30,000 units were delivered at that date,
with the remainder delivered on 1 June 2019. It was agreed that the customer would have
extended credit terms of 12 months from the date of delivery. Mankranso Ltd‟s cost of capital is
10%. (3 marks)

ii) During the year ended 31 March 2019, Mankranso Ltd received payment in advance for the
supply of 2,000 hotel room-nights to customers at GH¢100 per room per night. Only 400 of these
had been occupied by 31 March 2019. The amounts paid by the customers are non-refundable
unless the company fails to provide the agreed accommodation. (3 marks) Assume
Mankranso Ltd has decided to adopt IFRS 15 for year ended 31 March 2019.

Required: In each scenario above, calculate the amount of revenue to be recognised in the
financial statements of Mankranso Ltd for year ended 31 March 2019. Justify the correct
accounting treatment for each transaction.

F)
Kantanka Ltd adopts the revaluation model of IAS 16 Property, Plant & Equipment and the fair
value model of IAS 40 Investment Property.
Kantanka Ltd owns a piece of property it purchased on 1 April 2014 for GH¢3.7 million. The
land component of the property was estimated to be GH¢1.2 million at the date of purchase. The
useful economic life of the building on this land was estimated to be 25 years on 1 April 2014.
The property was used as the corporate head office for two years from that date. On 1 April
2016, the company moved its head office to another building and leased the entire property for
five years to an unrelated tenant on an arm‟s length basis in order to benefit from the rental
income and future capital appreciation. The fair value of the property on 1 April 2016 was
GH¢4.1 million (land component GH¢1.9 million), and on 31 March 2017, GH¢4.8 million (land
component GH¢2.1 million). The estimated useful economic life remained unchanged
throughout the period. Land and buildings are considered to be two separate assets by the
directors of Kantanka Ltd.

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Required:
Advise Kantanka Ltd on how to account for the above transactions in accordance with relevant
accounting standards

G)
Nyame Ltd incurred the following expenditure during the year:
GH¢'000 GH¢'000
Licence to operate in business sector for 10 years

from 1 January 2017
 400
Costs incurred in planning a website for a new product 40
(The website will be set up in 2018)

Purchase of 300 personal computers (PCs) on 1 July 2017


(Three-year useful life). Total cost:

300 PCs (excluding operating system) 480
Windows operating system for each unit (licence for 300 PCs) 60
Microsoft Office software for each unit (licence for 300 PCs) 48 588

Induction training for new staff 30

Nyame Ltd owns the rights to a popular range of books, which it purchased from another entity
for GH¢180,000 few years ago. The rights were not amortised as they have been attributed an
indefinite useful life. The books are still very popular so no impairment losses have been
necessary and it was valued by an independent valuer at GH¢280,000 at the year-ended 31
December 2017.
The company's policy is to use the revaluation model for its intangible assets where a market
valuation is available and permitted.

Required: Recommend with suitable calculations the carrying amount of intangible assets at the
end of the year 31 December 2017 according to the guidance given in IAS 38: Intangible assets.

(5 marks)

H)
Dompoase Ltd incurred the following borrowing costs during the financial year 2018:
GH¢'000
Overdraft interest 12
Foreign currency loan interest (correctly translated into GH¢) 84
Foreign currency loan exchange differences on capital 140

In addition a three-year fixed rate GH¢2 million loan was taken out on 1 January 2018 at 6.5%.
A loan set-up fee was charged at GH¢20,000. This increased the effective interest rate on the
loan to 6.88%.

Required: Determine the maximum amount that could potentially be capitalised as borrowing
costs during the period (assuming an asset was being financed using all available finance).

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i) Asamankese Ltd (Asamankese) purchased a 6% GH¢50 million bond on 1 August 2018 at a
10% discount to par value. Expenses of purchase were GH¢500,000. The bond is due for
redemption on 31 July 2028 at par. The effective annual interest rate to maturity is 7.3%.
Asamankese intends to hold the bond until its maturity date.

Required: In accordance with IFRS 9: Financial Instruments, how much should be recognised in
Asamankese financial statements in respect of the above transaction for the year ended 31 July
2019 (to two decimal places)? (5 marks)

Question 3
A)
Badu Trading Ltd has prepared the following draft financial statements for your review
Badu Trading Ltd
Statement of profit or loss for the year ended 31 May 2020
GH¢000
Revenue 30,000
Raw materials consumed (9,500)
Manufacturing overheads (5,000)
Increase in inventories of work in progress and finished goods 1,400
Staff costs (4,700)
Distribution costs (900)
Depreciation (4,250)
Interest payable (350)
Interim dividend paid (200)
6,500

Statement of financial position as at 31 May 2020

GH¢000 GH¢00
Assets
Non-current assets
Freehold land and buildings 20,000
Plant and machinery 14,000
Fixtures and fittings 5,600
39,600
Current assets
Prepayments 200
Trade receivables 7,400
Inventories 4,600
Cash at bank 700 12,900
Total assets 52,500
Equity and liabilities
Share Capital 21,000
Revaluation reserve 5,000
Retained Earnings 14,000

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Total equity 40,000

Current liabilities 7,300

Non-current liabilities
8% Debentures 2024 5,200
Total equity and liabilities 52,500

Additional information:
i) Income tax of GH¢2.1 million is yet to be provided for on profit for the current year. An
unpaid under-provision for the previous year‟s liability of GH¢400,000 has been identified on 5
June 2020 and has not been reflected in the draft accounts.

ii) There have been no additions to, or disposals of, non-current assets in the year but the assets
under construction have been completed in the year at an additional cost of GH¢50,000. These
relate to plant and machinery. The cost and accumulated depreciation of non-current assets as at
1 June 2019 were as follows:
Cost Depreciation
GH¢000 GH¢000
Freehold land and buildings 19,000 3,000
(land element GH¢10 million)
Plant and machinery 20,100 4,000
Fixtures and fittings 10,000 3,700
Assets under construction 400 -

iii) There was a revaluation of land and buildings during the year, creating the revaluation
reserve of GH¢5 million (land element GH¢1 million). The effect on depreciation has been to
increase the buildings charge by GH¢300,000. Badu Trading Ltd adopts a policy of transferring
the revaluation surplus included in equity to retained earnings as it is realised.

iv) Staff costs comprise 70% factory staff, 20% general office staff and 10% goods delivery
staff.

v) An analysis of depreciation charge shows the following:

GH¢000
Buildings (50% production, 50% administration) 1,000
Plant and machinery 2,550
Fixtures and fittings (30% production, 70% administration) 700

Required:
Prepare the following information in a form suitable for publication for Badu Trading Ltd‟s
financial statements for the year ended 31 May 2020.
1. Statement of profit or loss (7 marks)
2. Statement of financial position (7 marks)
3. Statement of changes in equity (6 marks)

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B)
White Angel is a publicly listed company. Its financial statements for the year ended 31 March
2020 including comparatives are shown below:

Statements of profit or loss and other comprehensive income for the year ended:
31 March 2020 31 March 2019
GHC’000 GHC’000
Revenue 31,000 25,000
Cost of sales (21,800) (18,600)
––––––– –––––––
Gross profit 9,200 6,400
Distribution costs (3,600) (2,400)
Administrative expenses (2,200) (1,600)
Finance costs – loan interest (150) (250)
– lease interest (250) (100)
––––––– –––––––
Profit before tax 3,000 2,050
Income tax expense (1,000) (750)
––––––– –––––––
Profit for the year 2,000 1,300
Other comprehensive income (note (i)) 1,350 nil
––––––– –––––––
3,350 1,300
––––––– –––––––

Statements of financial position as at:

31 March 2020 31 March 2019
GHC’000 GHC’000 GHC’000 GHC’000
Assets
Non-current assets
Property, plant and equipment 14,000 10,700
Deferred development expenditure 1,000 nil
––––––– –––––––
15,000 10,700
Current assets
Inventory 3,300 3,800
Trade receivables 2,950 2,200
Bank 50 6,300 1,300 7,300
–––––– ––––––– –––––– –––––––
Total assets 21,300 18,000
––––––– –––––––
Equity and liabilities
Equity
Equity shares of GHC1 each 8,000 8,000
Revaluation reserve 1,350 nil
Retained earnings 3,200 1,750

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 ––––––– –––––––
12,550 9,750
Non-current liabilities
8% loan notes 1,400 3,125
Deferred tax 1,500 800
Finance lease obligation 1,200 4,100 900 4,825
–––––– ––––––
Current liabilities
Finance lease obligation 750 600
Trade payables 2,650 2,100
Current tax payable 1,250 4,650 725 3,425
–––––– ––––––– –––––– –––––––
Total equity and liabilities 21,300 18,000
––––––– –––––––

Notes:
(i) On 1 July 2019, White Angel acquired additional plant under a finance lease that had a fair
value of GHC1·5 million. On this date it also revalued its property upwards by GHC2 million
and transferred GHC650,000 of the resulting revaluation reserve this created to deferred tax.
There were no disposals of non-current assets during the period.
(ii) Depreciation of property, plant and equipment was GHC900,000 and amortisation of the
deferred development expenditure was GHC200,000 for the year ended 31 March 2020.
Required:
Prepare a statement of cash flows for White Angel for the year ended 31 March 2020, in
accordance with IAS 7 Statement of Cash Flows, using the indirect method.

Question 4
A) The following are the accounts of Bounce Back Ltd, a company that manufactures
playground equipment, for the year ended 30 November, 2019.
Statement of comprehensive income for year ended 30 November
2019 2018
GH¢’000 GH¢’000
Profit before interest and tax 2,200 1,570
Interest expense (170) (150)
Profit before tax 2,030 1,420
Taxation (730) (520)
Profit after tax 1,300 900
Dividends paid (250) (250)
Retained profit 1,050 650

Statement of financial position as at 30 November 2019

2019 2018
GH¢’000 GH¢’000
Non-current assets (written-down value) 6,350 5,600

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Current assets
Trade receivables 2,100 2,070
Inventories 1,710 1,540
Total current assets 3,810 3,610

Creditors: amounts due within one year

Trade payables 1,040 1,130
Taxation 550 450
Bank overdraft 370 480
Total current liabilities 1,960 2,060

Net current assets 1,850 1,550

Total net assets 8,200 7,150

Creditors: amounts due after more than one year

10% debentures 2020/ 2021 1,500 1,500
Equity:
Share Capital (ordinary shares of 50p fully paid up) 3,000 3,000
Retained earnings 3,700 2,650
6,700 5,650

Long term liabilities and Equity 8,200 7,150

Required:
a) Calculate, for both years, the return on equity and the return on capital employed.
b) Calculate, for both years, TWO (2) investment ratios of interest to a potential investor.
c) Calculate, for both years, TWO (2) ratios of interest to a potential long-term lender.
d) Report on the performance and state of the business from the view point of a potential
shareholder and lender using the ratios calculated above and explain any weaknesses in these
ratios. (20 marks)

B).
Adenta Ltd (Adenta) assembles telecommunication equipment and sells to wholesalers and
retailers. The following ratios relate to the average figures for Adenta‟s industry for the year
ended 31 December, 2018:
Return on capital employed 20.10%
Gross profit margin 32%
Net profit (before tax) margin 12.50%
Current ratio 1.6:1
Acid-test ratio 0.9:1
Inventory turnover period 46 days
Trade receivable collection period 45 days
Debt-to-equity ratio 40%
Dividend yield 6%
Dividend cover 3 times

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Adenta’s financial statements for the year to 31 December, 2018 are set out below:

Statement of Profit or Loss for the year ended 31 December, 2018

GH¢‟000
Sales 48,500
Cost of sales (37,400)
Gross profit 11,100
Operating expenses (6,880)
Operating profit 4,220
Finance cost (500)
Profit before taxation 3,720
Taxation (1,800)
Profit after taxation 1,920

Extracts of Statement of Changes in Equity for the year ended 31 December, 2018
GH¢‟000
Retained earnings as at 1 January 2018 3,580
Net profit after tax 1,920 5,500 Dividends (1,800)
Retained earnings as at 31 December 2018 3,700

Statement of Financial Position as at 31 December 2018

GH¢‟000
Non-current assets
Property, plant and equipment 10,800
Current Assets Inventories 5,500
Trade receivables 6,400
11,900
Total assets 22,700

Equity Stated capital (Ordinary shares issued @ GH¢0.25 per share) 3,000
Retained earnings 3,700
6,700
Non-current Liabilities
8% Debenture 6,000
Current liabilities
Bank overdraft 1,300
Trade payables 7,000
Taxation 1,700
10,000
Total equity and liabilities 22,700
(Note: The market price of Adenta‟s shares throughout the year averaged GH¢6.00 each.)

Required: a) Calculate the ratios for Adenta Ltd equivalent to the industry averages.
(10 marks)

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b) As the Financial Controller of Adenta Ltd, write a report to the Board of Directors analysing
the financial performance of Adenta Ltd based on a comparison with the industry averages.
(10 marks)

Question 5
A)
Measurement is the process of determining the monetary amounts at which the elements of
financial statements are to be recognized and carried in the statement of financial position and
statements of profit or loss and other comprehensive income (Conceptual Framework). This
involve the selection of a particular basis of measurement. A number of these are used to
different degrees and in varying combinations in financial statements.
Required: Discuss the measurement basis of elements of financial statements in accordance with
the IASB Conceptual Framework.
B)
Mr. Charles Agyekum is a qualified ICAG member who prepares accounts on behalf of a small
independent trader. An annual practicing certificate is not required.

This is the first year the member has prepared these accounts. When compiling the most recent
accounts, he noticed that some errors were noted in the previous accounts. It appeared that the
accounts were based on incomplete records as certain costs were excluded, either intentionally or
because records were not maintained.

The client has also requested some additional work to be completed on a complex tax issue.
However, the member has no prior experience and does not feel competent to do the work. The
client would also like him to provide an audit opinion as they are planning to apply for a bank
loan and the bank would like some additional assurance.

Required: In accordance with IFAC‟s code of ethics, explain which ethical principles apply and
comment on their relevance to the above scenario. (6 marks)

C) On 1 August 2018 Charlie Ltd, whose functional currency is the cedi, bought a property in
Morocco for DH40 million. The property had a 20-year useful economic life with no residual
value estimated. On 31 July 2019, the property was revalued to DH45 million.

Exchange rates were: 1 January 2018 GH¢1 = DH 1.32

1 August 2018 GH¢1 = DH 1.25
31 July 2019 GH¢1 = DH 1.125

Required: In accordance with IAS 21: The Effects of Changes in Foreign Exchange Rates and
IAS 16: Property, Plant & Equipment how much should be recognised in Statement of Profit or
Loss and Other Comprehensive Income for year ended 31 July 2019? (5 marks)

D)
IFRS10: Consolidated Financial Statements outlines the requirements for the preparation and
presentation of consolidated financial statements, requiring entities to consolidate other entities it
controls.

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Required:
i) Define control (1 mark)
ii) Indicate FOUR (4) circumstances that an entity may not have gained control in another entity
but may be allowed to prepare consolidated financial statements. (4 marks)

iii) Accra Ltd, a government business entity, acquires 40% of the voting rights of Tema Ltd. The
remaining investors each hold 5% of the voting rights of Tema Ltd. A shareholder agreement
grants Accra Ltd the right to appoint, remove and set the remuneration of management
responsible for key business decisions of Tema Ltd. To change this agreement, a two-thirds
majority vote of the shareholders is required.

Required: In accordance with IFRS 10: Consolidated Financial Statements, discuss whether
Accra Ltd controls Tema Ltd.

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