Question Tag: Consolidated Statement of Profit or Loss

b) You are the Financial Accountant of Faisal Ltd (Faisal), a Ghanaian listed company, involved in food retailing. During 2017, Faisal acquired interests in Zaytuna Ltd (Zaytuna) and Medeama Ltd (Medeama). The Statement of profit or loss for Faisal, Zaytuna, and Medeama for the year ended 31 December 2017 are as follows:

Statement of profit or loss for the year ended 31 December 2017

Additional information:

1. On 1 April 2017, Faisal purchased 12 million of the 15 million GH¢1 ordinary shares in Zaytuna at a cost of GH¢8 per ordinary share. At the date of acquisition, the fair values of Zaytuna’s net assets were equal to their book value with the exception of property, the details of which are as follows:

   Zaytuna Property Details:

   Description	GH¢’million
   Cost	75
   Accumulated depreciation at 1 January 2017	(6)
   Net book value at 1 January 2017	69

   The property, which had a useful economic life of 25 years on 1 January 2015, is in a prime commercial location and has increased dramatically in value since it was purchased by Zaytuna on 1 January 2015. The replacement cost of a similar building, with a similar remaining useful economic life at 1 April 2017, is GH¢100 million. The fair value at acquisition has not been reflected in the records of Zaytuna.

2. On 1 July 2017, Faisal purchased 4 million of the 10 million GH¢1 ordinary shares in Medeama at a cost of GH¢6 per ordinary share. At the date of acquisition, the fair values of Medeama’s net assets were equal to their book value with the exception of property that had a fair value of GH¢9 million in excess of its book value and a remaining useful life of four years.
3. In August 2017, Faisal sold goods to Zaytuna for GH¢7.5 million, and 20% of these goods remained unsold at 31 December 2017. Faisal prices its sales at cost plus 50%.
4. On 23 January 2018, Faisal sold its former head office administrative building for GH¢1.25 million. At 31 December 2017, the building was for sale and unoccupied, with staff having moved to a new premises. The book value of the building in the statement of financial position of Faisal as at 31 December 2017 was GH¢2 million.
5. Each company charges depreciation on a time-apportionment basis to operating expenses.
6. The directors of Faisal believe that any goodwill arising on the acquisition of Zaytuna and Medeama has been impaired by 25% as at 31 December 2017. The directors have a policy of measuring non-controlling interests at the proportionate share of identifiable net assets.

(Note: All calculations may be taken to the nearest GH¢0.01 million and assume all expenses and gains accrue evenly throughout the year unless otherwise instructed.)

Required:

Prepare the consolidated statement of profit or loss account of Faisal Group for the year ended 31 December 2017 in accordance with International Financial Reporting Standards (IFRS). (16 marks)