Question Tag: Accounting Treatment

Search 500 + past questions and counting.

  • Filter by Professional Bodies

  • Filter by Subject

  • Filter by Series

  • Filter by Topics

  • Filter by Levels

  • 14 Marks

CR – May 2018 – L3 – SB – Q4b – Presentation of Financial Statements (IAS 1)

Discuss accounting issues and treatments for factoring and sale-leaseback transactions, applying the substance over form principle.

Waasimi entered into the following transactions during the year ended March 31, 2018:

In March 2018, Waasimi factored some of its trade receivables to Asejere, a finance house. Based on selected account balances, Asejere paid Waasimi 80% of its book value. The agreement was that Asejere would administer the collection of the receivables and remit a residual amount to Waasimi depending upon how quickly individual customers paid. Any balance not collected by Asejere after six months will be refunded to Asejere by Waasimi.

On April 1, 2017, Waasimi’s freehold building had a carrying amount of N15 million and an estimated remaining useful life of 20 years. On this date, Waasimi sold the building to Gbajumose for a price of N24 million and entered into an agreement with Gbajumose to lease back the building for an annual rental of N2.6 million for a period of five years.

The auditors of Waasimi have commented that in their opinion the building had a market value of N20 million at the date of its sale and to rent an equivalent building under similar terms to the agreement between Waasimi and Gbajumose would cost N1,600,000 per annum. Assume finance cost of 10% per annum.

Required:

i. Briefly explain the major accounting issues involved in the above transactions using the principles of substance over form. (5 Marks)

ii. State the appropriate accounting treatments of the various elements identified. (6 Marks)

iii. State the classes of charges to be incurred and their appropriate accounting treatments. (3 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "CR – May 2018 – L3 – SB – Q4b – Presentation of Financial Statements (IAS 1)"

  • 13 Marks

CR – May 2018 – L3 – SB – Q3b – Impairment of Assets (IAS 36)

valuate discontinuation conditions and prepare profit or loss statement for Bamgbose Plc with comparative figures.

Bamgbose Plc. is a long-established travel agent, operating through a network of retail outlets and online store. In recent years, the business has seen its revenue from the online store grow strongly, and that of retail outlets decline significantly. On July 1, 2017, the board decided to close the retail network at the financial year end of December 31, 2017, and put the buildings up for sale on that date. The directors are seeking advice regarding the treatment of the buildings in the statement of financial position as well as the treatment of the trading results of the retail division for the year. The following figures are available at December 31, 2017:

  • Carrying amount of buildings: ₦30.0 million
  • Fair value less costs to sell of buildings: ₦25.8 million
  • Other expected costs of closure: ₦5.85 million

Required:

(i) Outline the conditions which must be met in order to present the results of an operation as “discontinued” and the accounting treatment that applies when such a classification is deemed appropriate. (5 Marks)

(ii) Draft the statement of profit or loss for Bamgbose Plc. for year ended December 31, 2017, together with the comparative figures for 2016, taking the above information into account. (8 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "CR – May 2018 – L3 – SB – Q3b – Impairment of Assets (IAS 36)"

  • 7 Marks

CR – May 2018 – L3 – SB – Q3a – Impairment of Assets (IAS 36)

Outline conditions for classifying assets as held for sale and their accounting treatment under IFRS 5.

(a) “IFRS 5 Non-current Asset held for Sale and Discontinued Operations” sets out the principles governing the measurement and presentation of non-current assets that are expected to be realized through sale rather than through continuing use. The standard also deals with reporting the results of operations that qualify as discontinued.

Required:

Discuss the conditions which must be met for a non-current asset to be classified as being “held for sale” and explain the accounting treatment that applies when such a classification is deemed appropriate. (7 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "CR – May 2018 – L3 – SB – Q3a – Impairment of Assets (IAS 36)"

  • 20 Marks

PSAF – May 2018 – L2 – Q3 – International Public Sector Accounting Standards (IPSAS)

Explains the term "agricultural activity," determination of fair value, and the accounting treatment for biological assets and agricultural produce.

IPSAS 27 deals with the accounting treatment and disclosures in relation to agricultural practice.

Required:

a. Explain the term “agricultural activity.” (5 Marks)

b. Explain how the fair value of a biological asset or agricultural produce is determined. (8 Marks)

c. Identify TWO ways in which an entity should recognize a biological asset or agricultural produce. (3 Marks)

d. Explain the accounting treatment of gains or losses arising from a biological asset or agricultural produce. (4 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "PSAF – May 2018 – L2 – Q3 – International Public Sector Accounting Standards (IPSAS)"

  • 6 Marks

CR – Nov 2020 – L3 – Q3a – Equipment Purchase via Share-Based Payment

Demonstrate with calculations how to account for a share-based payment with a choice of settlement in financial statements.

Tato Company (Tato), a listed company, purchased a significant item of equipment on 1 July 2018. The list price of the equipment was GH¢12 million, although the supplier always gives Tato a 10% discount on its list prices. Tato was unable to finance the purchase outright and the supplier therefore agreed to accept an arrangement whereby the amount of the payment would be determined by Tato’s share price on 30 June 2020.

At 30 June 2020, under the terms of the agreement, the supplier can choose to receive either:

  • Cash, equal to the value of 500,000 of Tato’s shares on that date; or
  • 540,000 Tato’s shares on 30 June 2020, provided that they cannot be sold for 1 year after that date.

Tato’s share price was GH¢19.80 per share on 1 July 2018 and GH¢20.40 on 30 June 2019.

Required:
Demonstrate with suitable calculations how the arrangement should be accounted for in Tato Company’s financial statements for the year ended 30 June 2019.

 

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "CR – Nov 2020 – L3 – Q3a – Equipment Purchase via Share-Based Payment"

FR – May 2020 – L2 – Q5b – Determining Liability Under the Conceptual Framework

This question tests the application of the conceptual framework to determine a liability in the event of an accident and subsequent lawsuit.

Amankwatia Ltd (Amankwatia) is a local construction company. The regulation in the construction sector requires employers to provide personal protective equipment for every employee. The company failed to do that, and a Plumber got involved in an accident in the course of work resulting in a serious and costly injury. The Plumber has sued the company.

The Solicitors of the company have prepared to vigorously defend the company in the lawsuit. They estimated that the company would have to make a compensation of GH¢17,000 to cover the injured party’s costs. A court decision, however, is not expected for at least a year.

Required:
What aspects of the conceptual framework might help you in determining the appropriate accounting treatment for this situation?

 

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FR – May 2020 – L2 – Q5b – Determining Liability Under the Conceptual Framework"

  • 4 Marks

FR – May 2021 – L2 – Q2d – Lease Accounting

Show the accounting treatment for lease transactions.

Odwira Ltd operates in the mining industry with a financial year end 31 December 2020. On 1 January 2020, Odwira Ltd began to lease a group of machines that were used in the production process. The lease was for five years, and the total annual rental (payable in arrears) was GH¢8 million. The lessor paid GH¢30 million for the machines on 31 December 2019. The lessor has advised Odwira Ltd that the interest rate implicit in the lease can be taken as 10%. The estimated useful economic life of the machines was five years.

Required:
In accordance with IFRS 16: Leases, show the accounting treatment of the above transaction.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FR – May 2021 – L2 – Q2d – Lease Accounting"

  • 20 Marks

FR – May 2021 – L2 – Q3 – Statement of Profit or Loss

Prepare financial statements based on the provided trial balance.

The following trial balance relates to Koli Ltd for the year ended 31 December, 2020.

Description Debit (GH¢’000) Credit (GH¢’000)
Sales 128,000
Purchases 75,000
Distribution expenses 8,000
Administrative expenses (Note ii) 22,000
License (Note iii) 5,000
Inventories at 31 December 2019 26,200
Finance costs on a long-term loan 3,000
Income tax (Note iv) 200
Deferred tax (Note iv) 6,000
Dividend paid on equity shares 2,000
Property, Plant and Equipment (PPE) 57,000
Provision for depreciation on PPE 10,790
Trade receivables 52,000
Bank balances 33,790
Trade payables 12,000
Provision for legal costs (Note ii) 10,000
Long-term loan 40,000
Stated capital 50,000
Retained earnings as at 31 December 2019 27,000
Total 283,990 283,990

Additional information:

i) The carrying value of inventories on 31 December 2020 was GH¢23 million.

ii) Administrative expenses include a provision of GH¢10 million for the possible costs of a legal claim lodged against Koli Ltd by one of its customers before 31 December 2020. The directors of Koli Ltd consider that it is probable that Koli Ltd can successfully defend the case, but they are providing for the worst possible outcome on the grounds of prudence. The provision of GH¢10 million is for the amount sought by the customer (GH¢9.6 million) plus the directors’ best estimate of the legal costs incurred in defending the case.

iii) On 1 January, 2020, Koli Ltd paid GH¢5 million for a ten-year export license.

iv) The estimated income tax on the profits for the year to 31 December 2020 is GH¢2.5 million. During the year, GH¢2.2 million was paid in full and in the final settlement of income tax on the profits for the year ended 31 December 2019. The statement of financial position on 31 December 2019 had included GH¢2.4 million in respect of this tax liability. A transfer of GH¢1.4 million is required to increase the deferred tax liability in the statement of financial position; GH¢900,000 of this amount was necessary due to the taxable temporary difference caused by the property revaluation (see note v below).

v) The details of property, plant and equipment are as follows:

Component of PPE Cost (GH¢’000) Accumulated Depreciation (GH¢’000) Carrying Amount (GH¢’000)
Land 12,000 0 12,000
Buildings 18,000 3,240 14,760
Plant and Equipment 27,000 7,550 19,450
Total 57,000 10,790 46,210

Estimate of useful economic life (at the date of purchase) of PPE components:

  • Land: nil (infinite life)
  • Building: 50 years
  • Plant and Equipment: 4 years

Depreciation of property, plant and equipment is allocated as follows:

  • 80% to cost of sales
  • 10% to distribution expenses
  • 10% to administrative expenses

On 1 January, 2020, the directors of Koli Ltd decided to revalue its property (Land and Building) to its market value of GH¢40 million, including GH¢19.5 million for the Land. The original estimate of the useful economic life of the property was still considered valid. The directors wish to make an annual transfer of excess depreciation from the revaluation reserve to realized profits following the revaluation.

Required:
Prepare for Koli Ltd,
a) The Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2020. (8 marks)
b) The Statement of Changes in Equity for the year ended 31 December 2020. (4 marks)
c) The Statement of Financial Position as at 31 December 2020. (8 marks)

(Total: 20 marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FR – May 2021 – L2 – Q3 – Statement of Profit or Loss"

  • 20 Marks

FA – May 2018 – L1 – Q7 – Preparation of Partnership accounts | The IASB’s Conceptual Framework

Identify key issues in a partnership agreement and advise on the accounting treatment of subsequent events.

a) When two or more individuals come together to form a Partnership, it is advisable to have a correctly drafted Partnership Agreement carefully detailing the terms of the business relationship. A partnership agreement is a contract between partners in a partnership that sets out the terms and conditions of the relationship between the partners.

Required:
Identify and explain FIVE key issues that should be covered in a partnership agreement when setting up a partnership. (10 marks)

b) Ashiyie Ltd is a telecommunication company that prepares accounts in accordance with International Financial Reporting Standards (IFRS). A meeting of the Directors of Ashiyie Ltd is scheduled for 5 December 2017 to discuss the following matters with a view to finalizing the accounts for the year ending 30 October 2017:

i) A fire occurred in one of the warehouses of Ashiyie Ltd on 3 November 2017, destroying inventory that had a cost price of GH¢100,000 and a net realizable value of GH¢150,000.
ii) On 9 November 2017, Ashiyie Ltd received information that one of their largest customers had gone bankrupt. At 30 October 2017, this customer owed Ashiyie Ltd GH¢235,000. It is anticipated that Ashiyie Ltd can only receive 10 pesewas for every GH¢1 they were owed.
iii) In November 2017, Ashiyie Ltd sold inventory that had been in one of their warehouses for the past two years for GH¢75,000. This had been included in the financial statements, for the year ended 30 October 2017, at its cost price of GH¢105,000.
iv) On 30 October 2017, an employee of Ashiyie Ltd fell and injured her arm at work. This employee has commenced legal action. The Solicitors for Ashiyie Ltd informed the company on 10 August 2017 that it is probable they will be found liable and have to pay this employee GH¢33,000. The employee has worked for Ashiyie Ltd for the past four years.

Required:
Advise the board on the accounting treatment of these issues. Your answer should give a detailed reason for the accounting treatment that you have chosen. (10 marks)

 

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – May 2018 – L1 – Q7 – Preparation of Partnership accounts | The IASB’s Conceptual Framework"

  • 14 Marks

CR – May 2018 – L3 – SB – Q4b – Presentation of Financial Statements (IAS 1)

Discuss accounting issues and treatments for factoring and sale-leaseback transactions, applying the substance over form principle.

Waasimi entered into the following transactions during the year ended March 31, 2018:

In March 2018, Waasimi factored some of its trade receivables to Asejere, a finance house. Based on selected account balances, Asejere paid Waasimi 80% of its book value. The agreement was that Asejere would administer the collection of the receivables and remit a residual amount to Waasimi depending upon how quickly individual customers paid. Any balance not collected by Asejere after six months will be refunded to Asejere by Waasimi.

On April 1, 2017, Waasimi’s freehold building had a carrying amount of N15 million and an estimated remaining useful life of 20 years. On this date, Waasimi sold the building to Gbajumose for a price of N24 million and entered into an agreement with Gbajumose to lease back the building for an annual rental of N2.6 million for a period of five years.

The auditors of Waasimi have commented that in their opinion the building had a market value of N20 million at the date of its sale and to rent an equivalent building under similar terms to the agreement between Waasimi and Gbajumose would cost N1,600,000 per annum. Assume finance cost of 10% per annum.

Required:

i. Briefly explain the major accounting issues involved in the above transactions using the principles of substance over form. (5 Marks)

ii. State the appropriate accounting treatments of the various elements identified. (6 Marks)

iii. State the classes of charges to be incurred and their appropriate accounting treatments. (3 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "CR – May 2018 – L3 – SB – Q4b – Presentation of Financial Statements (IAS 1)"

  • 13 Marks

CR – May 2018 – L3 – SB – Q3b – Impairment of Assets (IAS 36)

valuate discontinuation conditions and prepare profit or loss statement for Bamgbose Plc with comparative figures.

Bamgbose Plc. is a long-established travel agent, operating through a network of retail outlets and online store. In recent years, the business has seen its revenue from the online store grow strongly, and that of retail outlets decline significantly. On July 1, 2017, the board decided to close the retail network at the financial year end of December 31, 2017, and put the buildings up for sale on that date. The directors are seeking advice regarding the treatment of the buildings in the statement of financial position as well as the treatment of the trading results of the retail division for the year. The following figures are available at December 31, 2017:

  • Carrying amount of buildings: ₦30.0 million
  • Fair value less costs to sell of buildings: ₦25.8 million
  • Other expected costs of closure: ₦5.85 million

Required:

(i) Outline the conditions which must be met in order to present the results of an operation as “discontinued” and the accounting treatment that applies when such a classification is deemed appropriate. (5 Marks)

(ii) Draft the statement of profit or loss for Bamgbose Plc. for year ended December 31, 2017, together with the comparative figures for 2016, taking the above information into account. (8 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "CR – May 2018 – L3 – SB – Q3b – Impairment of Assets (IAS 36)"

  • 7 Marks

CR – May 2018 – L3 – SB – Q3a – Impairment of Assets (IAS 36)

Outline conditions for classifying assets as held for sale and their accounting treatment under IFRS 5.

(a) “IFRS 5 Non-current Asset held for Sale and Discontinued Operations” sets out the principles governing the measurement and presentation of non-current assets that are expected to be realized through sale rather than through continuing use. The standard also deals with reporting the results of operations that qualify as discontinued.

Required:

Discuss the conditions which must be met for a non-current asset to be classified as being “held for sale” and explain the accounting treatment that applies when such a classification is deemed appropriate. (7 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "CR – May 2018 – L3 – SB – Q3a – Impairment of Assets (IAS 36)"

  • 20 Marks

PSAF – May 2018 – L2 – Q3 – International Public Sector Accounting Standards (IPSAS)

Explains the term "agricultural activity," determination of fair value, and the accounting treatment for biological assets and agricultural produce.

IPSAS 27 deals with the accounting treatment and disclosures in relation to agricultural practice.

Required:

a. Explain the term “agricultural activity.” (5 Marks)

b. Explain how the fair value of a biological asset or agricultural produce is determined. (8 Marks)

c. Identify TWO ways in which an entity should recognize a biological asset or agricultural produce. (3 Marks)

d. Explain the accounting treatment of gains or losses arising from a biological asset or agricultural produce. (4 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "PSAF – May 2018 – L2 – Q3 – International Public Sector Accounting Standards (IPSAS)"

  • 6 Marks

CR – Nov 2020 – L3 – Q3a – Equipment Purchase via Share-Based Payment

Demonstrate with calculations how to account for a share-based payment with a choice of settlement in financial statements.

Tato Company (Tato), a listed company, purchased a significant item of equipment on 1 July 2018. The list price of the equipment was GH¢12 million, although the supplier always gives Tato a 10% discount on its list prices. Tato was unable to finance the purchase outright and the supplier therefore agreed to accept an arrangement whereby the amount of the payment would be determined by Tato’s share price on 30 June 2020.

At 30 June 2020, under the terms of the agreement, the supplier can choose to receive either:

  • Cash, equal to the value of 500,000 of Tato’s shares on that date; or
  • 540,000 Tato’s shares on 30 June 2020, provided that they cannot be sold for 1 year after that date.

Tato’s share price was GH¢19.80 per share on 1 July 2018 and GH¢20.40 on 30 June 2019.

Required:
Demonstrate with suitable calculations how the arrangement should be accounted for in Tato Company’s financial statements for the year ended 30 June 2019.

 

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "CR – Nov 2020 – L3 – Q3a – Equipment Purchase via Share-Based Payment"

FR – May 2020 – L2 – Q5b – Determining Liability Under the Conceptual Framework

This question tests the application of the conceptual framework to determine a liability in the event of an accident and subsequent lawsuit.

Amankwatia Ltd (Amankwatia) is a local construction company. The regulation in the construction sector requires employers to provide personal protective equipment for every employee. The company failed to do that, and a Plumber got involved in an accident in the course of work resulting in a serious and costly injury. The Plumber has sued the company.

The Solicitors of the company have prepared to vigorously defend the company in the lawsuit. They estimated that the company would have to make a compensation of GH¢17,000 to cover the injured party’s costs. A court decision, however, is not expected for at least a year.

Required:
What aspects of the conceptual framework might help you in determining the appropriate accounting treatment for this situation?

 

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FR – May 2020 – L2 – Q5b – Determining Liability Under the Conceptual Framework"

  • 4 Marks

FR – May 2021 – L2 – Q2d – Lease Accounting

Show the accounting treatment for lease transactions.

Odwira Ltd operates in the mining industry with a financial year end 31 December 2020. On 1 January 2020, Odwira Ltd began to lease a group of machines that were used in the production process. The lease was for five years, and the total annual rental (payable in arrears) was GH¢8 million. The lessor paid GH¢30 million for the machines on 31 December 2019. The lessor has advised Odwira Ltd that the interest rate implicit in the lease can be taken as 10%. The estimated useful economic life of the machines was five years.

Required:
In accordance with IFRS 16: Leases, show the accounting treatment of the above transaction.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FR – May 2021 – L2 – Q2d – Lease Accounting"

  • 20 Marks

FR – May 2021 – L2 – Q3 – Statement of Profit or Loss

Prepare financial statements based on the provided trial balance.

The following trial balance relates to Koli Ltd for the year ended 31 December, 2020.

Description Debit (GH¢’000) Credit (GH¢’000)
Sales 128,000
Purchases 75,000
Distribution expenses 8,000
Administrative expenses (Note ii) 22,000
License (Note iii) 5,000
Inventories at 31 December 2019 26,200
Finance costs on a long-term loan 3,000
Income tax (Note iv) 200
Deferred tax (Note iv) 6,000
Dividend paid on equity shares 2,000
Property, Plant and Equipment (PPE) 57,000
Provision for depreciation on PPE 10,790
Trade receivables 52,000
Bank balances 33,790
Trade payables 12,000
Provision for legal costs (Note ii) 10,000
Long-term loan 40,000
Stated capital 50,000
Retained earnings as at 31 December 2019 27,000
Total 283,990 283,990

Additional information:

i) The carrying value of inventories on 31 December 2020 was GH¢23 million.

ii) Administrative expenses include a provision of GH¢10 million for the possible costs of a legal claim lodged against Koli Ltd by one of its customers before 31 December 2020. The directors of Koli Ltd consider that it is probable that Koli Ltd can successfully defend the case, but they are providing for the worst possible outcome on the grounds of prudence. The provision of GH¢10 million is for the amount sought by the customer (GH¢9.6 million) plus the directors’ best estimate of the legal costs incurred in defending the case.

iii) On 1 January, 2020, Koli Ltd paid GH¢5 million for a ten-year export license.

iv) The estimated income tax on the profits for the year to 31 December 2020 is GH¢2.5 million. During the year, GH¢2.2 million was paid in full and in the final settlement of income tax on the profits for the year ended 31 December 2019. The statement of financial position on 31 December 2019 had included GH¢2.4 million in respect of this tax liability. A transfer of GH¢1.4 million is required to increase the deferred tax liability in the statement of financial position; GH¢900,000 of this amount was necessary due to the taxable temporary difference caused by the property revaluation (see note v below).

v) The details of property, plant and equipment are as follows:

Component of PPE Cost (GH¢’000) Accumulated Depreciation (GH¢’000) Carrying Amount (GH¢’000)
Land 12,000 0 12,000
Buildings 18,000 3,240 14,760
Plant and Equipment 27,000 7,550 19,450
Total 57,000 10,790 46,210

Estimate of useful economic life (at the date of purchase) of PPE components:

  • Land: nil (infinite life)
  • Building: 50 years
  • Plant and Equipment: 4 years

Depreciation of property, plant and equipment is allocated as follows:

  • 80% to cost of sales
  • 10% to distribution expenses
  • 10% to administrative expenses

On 1 January, 2020, the directors of Koli Ltd decided to revalue its property (Land and Building) to its market value of GH¢40 million, including GH¢19.5 million for the Land. The original estimate of the useful economic life of the property was still considered valid. The directors wish to make an annual transfer of excess depreciation from the revaluation reserve to realized profits following the revaluation.

Required:
Prepare for Koli Ltd,
a) The Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2020. (8 marks)
b) The Statement of Changes in Equity for the year ended 31 December 2020. (4 marks)
c) The Statement of Financial Position as at 31 December 2020. (8 marks)

(Total: 20 marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FR – May 2021 – L2 – Q3 – Statement of Profit or Loss"

  • 20 Marks

FA – May 2018 – L1 – Q7 – Preparation of Partnership accounts | The IASB’s Conceptual Framework

Identify key issues in a partnership agreement and advise on the accounting treatment of subsequent events.

a) When two or more individuals come together to form a Partnership, it is advisable to have a correctly drafted Partnership Agreement carefully detailing the terms of the business relationship. A partnership agreement is a contract between partners in a partnership that sets out the terms and conditions of the relationship between the partners.

Required:
Identify and explain FIVE key issues that should be covered in a partnership agreement when setting up a partnership. (10 marks)

b) Ashiyie Ltd is a telecommunication company that prepares accounts in accordance with International Financial Reporting Standards (IFRS). A meeting of the Directors of Ashiyie Ltd is scheduled for 5 December 2017 to discuss the following matters with a view to finalizing the accounts for the year ending 30 October 2017:

i) A fire occurred in one of the warehouses of Ashiyie Ltd on 3 November 2017, destroying inventory that had a cost price of GH¢100,000 and a net realizable value of GH¢150,000.
ii) On 9 November 2017, Ashiyie Ltd received information that one of their largest customers had gone bankrupt. At 30 October 2017, this customer owed Ashiyie Ltd GH¢235,000. It is anticipated that Ashiyie Ltd can only receive 10 pesewas for every GH¢1 they were owed.
iii) In November 2017, Ashiyie Ltd sold inventory that had been in one of their warehouses for the past two years for GH¢75,000. This had been included in the financial statements, for the year ended 30 October 2017, at its cost price of GH¢105,000.
iv) On 30 October 2017, an employee of Ashiyie Ltd fell and injured her arm at work. This employee has commenced legal action. The Solicitors for Ashiyie Ltd informed the company on 10 August 2017 that it is probable they will be found liable and have to pay this employee GH¢33,000. The employee has worked for Ashiyie Ltd for the past four years.

Required:
Advise the board on the accounting treatment of these issues. Your answer should give a detailed reason for the accounting treatment that you have chosen. (10 marks)

 

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – May 2018 – L1 – Q7 – Preparation of Partnership accounts | The IASB’s Conceptual Framework"

Elevate your professional expertise across key business domains with our comprehensive training programs

Our offerings

Contact Info

  • +233203701923
    +233543919232
  • info@nbcinstitute.com

Customer

Get In Touch

Follow us on our social media and get daily updates.

Facebook-f Twitter Linkedin-in Envelope
error: Content is protected !!
Oops!

This feature is only available in selected plans.

Click here to view all plans

Click on the login button below to login if you’re already subscribed to a plan or click on the upgrade button below to upgrade your current plan.

Login
Upgrade Plan

If you’re not subscribed to a plan, click on the button below to choose a plan

Subscribe to a plan