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Bata Plc, which operates in the manufacturing sector, has been surviving the challenges operating in the Nigerian economic environment. The draft Statements of Financial Position of Bata Plc and its subsidiaries as at October 31, 2016 are as follows:
The following information is relevant to the preparation of the group financial statements:
Required: Prepare a Consolidated Statement of Financial Position for Bata Plc and its subsidiaries as at October 31, 2016.
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James Obasi plc, a medium-sized drone manufacturing firm, is considering a 1-for-5 rights issue at a 15% discount to the current market price of N4.00 per share. Expected issue costs are N2 million, payable from the funds raised. The proceeds from the rights issue will be used to redeem some of the company’s existing bonds at par.
Statement of Financial Position (N’000):
a. Ignoring issue costs and any use of the funds raised by the rights issue, calculate: i. The theoretical ex-rights price per share. ii. The value of rights per existing share. (4 Marks)
b. Identify the alternative actions available to an owner of 1,500 shares in James Obasi plc concerning the rights issue and determine the effect of each action on the investor’s wealth. (6 Marks)
c. Calculate the current earnings per share and the revised earnings per share if the rights issue funds are used to redeem some of the existing bonds.
(5 Marks)
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Makoko Intercontinental Holdings Limited is a global merchant of cash crops. A policy of strategic acquisitions over the years has placed the company in a position to source for export products competitively. The lockdown arising from the recent pandemic posed a significant challenge for the export of their products throughout the year 2020. At a board meeting to review the performance of the company for that year and discuss the impact of the pandemic, the Managing Director noted the significant drop in the general performance indices. In order to get a greater market presence and higher demand locally, the board decided to acquire the following investments on January 1, 2021:
In the opinion of the board, both Ojodu Limited and Egbeda Confectioneries Limited are the biggest local customers of Makoko Intercontinental Holdings Limited and a control through shareholding would give the investing company greater stake in the operational decisions of the investee companies. Importantly, it would also boost revenue by allowing unrestricted access to local markets. It is believed that this will forestall any adverse impact of further lockdowns that may hinder export sales in the future.
The draft financial statements of the companies for the year are as follows:
Statements of financial position as at December 31, 2021
Additional Information:
Required: a. Prepare the consolidated statement of financial position for the Makoko Group for the year ended December 31, 2021. (20 Marks)
b. The Directors of Makoko Intercontinental Holdings Limited are concerned about getting significant influence, if not absolute control, of all entities they intend to buy into. The five-year strategic plan of the company (2020 – 2024) focuses on having control of the cash crops segment of the agribusiness sector of the economy. This is in order to make them ready to roll out the next developmental phase of the business, which is to migrate from exporting raw products to finished products for industrial and household use.
Towards this goal, the board requires the Group Accountant to make a presentation on the accounting implications of gaining significant influence in another entity.
Required: Discuss the issues involved in the requirements of the Board as specified above. (5 Marks)
c. A friend to the Chief Accountant of Makoko Intercontinental Holdings Limited, who is a consultant to Ojodu Limited and Egbeda Confectionaries Limited, is requesting for information on the new acquisitions from his friend, the Chief Accountant.
Required: Identify the ethical issues involved in the above scenarios and their implications. (5 Marks)
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Statements of financial position as at December 31, 2019
Statement of profit or loss for the year ended December 31, 2019
Statement of changes in equity (extract) for the year ended December 31,
2019
a. Prepare the consolidated statement of profit or loss for the year ended December 31, 2019.
(10 Marks)
b. Prepare the consolidated statement of financial position as at December 31, 2019.
(10 Marks)
c. Explain the benefits to external users of including a statement of group cash flows in the annual report.
(10 Marks)
d. At December 31, 2019, Hard plc owned 90% of Spark Limited’s shares. The net assets of Spark in Hard Group’s consolidated financial statements amounted to N800 million, with no asset revaluation.
On January 1, 2020, Hard sold 80% of its Spark equity for N960 million cash, and the fair value of Hard’s remaining Spark shares is N100 million.
Required: Explain how the Spark share disposal should be accounted for in Hard Group’s consolidated financial statements.
(10 Marks)
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Alpha PLC is an entity which has grown in recent years by acquiring established businesses. Alpha PLC is contemplating acquiring Betta Limited and Gamma Limited, both operating in the same industry as Alpha PLC. The management of Alpha PLC has indicated a total acquisition price of N12 million for each company. The following financial statements provide insight into the performance and financial position of both Betta Limited and Gamma Limited as at September 30, 2020:
| Betta Ltd (N’000) | Gamma Ltd (N’000) | |
|---|---|---|
| Revenue | 25,000 | 40,000 |
| Cost of sales | (19,000) | (32,800) |
| Gross profit | 6,000 | 7,200 |
| Distribution costs | (800) | (1,400) |
| Administrative expenses | (450) | (900) |
| Finance costs | (250) | (900) |
| Profit before tax | 4,500 | 4,000 |
| Income tax expense | (900) | (1,000) |
| Profit for the year | 3,600 | 3,000 |
| Betta Ltd (N’000) | Gamma Ltd (N’000) | |
|---|---|---|
| Non-current assets | ||
| Property, plant and equipment | ||
| – Property | – | 3,000 |
| – Owned plant and equipment | 4,800 | 2,000 |
| – Leased plant and equipment | – | 5,300 |
| Total non-current assets | 4,800 | 10,300 |
| Current assets | ||
| Cash at bank and in hand | 1,600 | 200 |
| Trade receivables | 1,600 | 5,100 |
| Inventories | 1,600 | 3,400 |
| Total current assets | 4,800 | 8,700 |
| Total assets | 9,600 | 19,000 |
| Equity and liabilities | ||
| Ordinary shares (N1.00 each) | 1,000 | 2,000 |
| Revaluation surplus on property | – | 900 |
| Retained earnings | 1,600 | 2,700 |
| Total equity | 2,600 | 5,600 |
| Non-current liabilities | ||
| Finance lease obligation | – | 4,200 |
| 5% loan notes (Dec 2026) | 5,000 | – |
| 10% loan notes (Dec 2026) | – | 5,000 |
| Total non-current liabilities | 5,000 | 9,200 |
| Current liabilities | ||
| Trade payables | 1,250 | 2,100 |
| Finance lease obligation | – | 1,000 |
| Tax payable | 750 | 1,100 |
| Total current liabilities | 2,000 | 4,200 |
| Total equity and liabilities | 9,600 | 19,000 |
Required:
a. Write a memo to the Director of Alpha PLC advising him on how to make the investment decision considering the performance and financial position of Betta Limited and Gamma Limited for the year ended September 30, 2020. (14 Marks)
b. What other qualitative factors should the management of Alpha PLC take into consideration assuming Gamma Limited is a foreign subsidiary? (6 Marks)
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Komolafe Group carries on business as a distributor of warehouse equipment and importer of fruit into the country. Komolafe was incorporated in 2008 to distribute warehouse equipment. It diversified its activities during the year 2010 to include the import and distribution of fruit, and expanded its operations by the acquisition of shares in Kelvins in 2012 and Kelly in 2014.
Accounts for all companies are made up to December 31.
The draft statements of profit or loss and other comprehensive income for Komolafe, Kelvins, and Kelly for the year ended December 31, 2016 are as follows:
| Komolafe | Kelvins | Kelly | |
|---|---|---|---|
| Revenue | 91,200 | 49,400 | 45,600 |
| Cost of sales | (36,100) | (10,926) | (10,640) |
| Gross profit | 55,100 | 38,474 | 34,960 |
| Distribution costs | (6,650) | (4,274) | (3,800) |
| Administrative expenses | (6,950) | (1,900) | (3,800) |
| Finance costs | (650) | – | – |
| Profit before tax | 40,850 | 32,300 | 27,360 |
| Income tax expense | (16,600) | (10,780) | (8,482) |
| Profit for the year | 24,250 | 21,520 | 18,878 |
| Other comprehensive income for the year: | |||
| Items that will not be reclassified to profit or loss in subsequent period | |||
| Revaluation of property | 400 | 200 | – |
| Total Comprehensive Income | 24,650 | 21,720 | 18,878 |
The draft statement of financial position as at December 31, 2016, is as follows:
| Komolafe | Kelvins | Kelly | |
|---|---|---|---|
| Non-current assets | |||
| Property, plant, and equipment (carrying amount) | 70,966 | 48,546 | 26,126 |
| Investments | |||
| Shares in Kelvins | 13,300 | – | – |
| Shares in Kelly | – | 7,600 | – |
| Total Non-current assets | 84,266 | 56,146 | 26,126 |
| Current assets | 3,136 | 18,050 | 17,766 |
| Total assets | 87,402 | 74,196 | 43,892 |
| Equity | |||
| Ordinary shares | 16,000 | 6,000 | 4,000 |
| Retained earnings | 45,276 | 48,150 | 39,796 |
| Current liabilities | 26,126 | 20,046 | 96 |
| Total equity and liabilities | 87,402 | 74,196 | 43,892 |
The following information is available relating to Komolafe, Kelvins, and Kelly:
Required:
Prepare for Komolafe Group:
a. A consolidated statement of profit or loss and other comprehensive income for the year ended December 31, 2016. (13 Marks)
b. A consolidated statement of financial position as at December 31, 2016. (12 Marks)
c. In business combination, the consideration given by the acquirer to gain control of the acquiree can be in different forms, including deferred and contingent considerations. While deferred and contingent considerations represent amounts of consideration to be transferred in the future, the two differ in nature and form.
Required:
Briefly distinguish between deferred and contingent consideration. (5 Marks)
Total: 30 Marks
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BP Fashion Limited is trading and expanding in the fashion industry. Over the years, the company has been audited by LMP Professional Services. The company is considering going to the stock market to raise funds through an increase in its issued share capital for the purpose of expansion into new markets.
The summarised two-year financial statements and the nine (9) months accounts of the company are given below:
BP Fashion Limited
Summarised Income Statement For the Years Ended December 31,
| 2019 | 2020 | 2021 (9 months) | |
|---|---|---|---|
| Revenue | ₦2,952m | ₦3,510m | ₦4,139m |
| Cost of sales | (₦1,402m) | (₦1,671m) | (₦1,987m) |
| Gross profit | ₦1,550m | ₦1,839m | ₦2,152m |
| Other income | ₦15m | ₦21m | ₦25m |
| Operating costs: | |||
| – Employee costs | (₦390m) | (₦460m) | (₦538m) |
| – Occupancy costs | (₦262m) | (₦312m) | (₦373m) |
| – Other operating costs | (₦278m) | (₦326m) | (₦389m) |
| Earnings before interests, taxes, depreciation and amortisation (EBITDA) | ₦635m | ₦762m | ₦877m |
Summarised Statement of Financial Position
| 2019 | 2020 | 2021 (9 months) | |
|---|---|---|---|
| Non-current assets | |||
| Property, plant and equipment | ₦375m | ₦470m | ₦470m |
| Deferred tax | ₦30m | ₦35m | ₦40m |
| Total non-current assets (A) | ₦405m | ₦505m | ₦510m |
| Current assets | |||
| Inventories | ₦425m | ₦525m | ₦655m |
| Trade and other receivables | ₦125m | ₦150m | ₦175m |
| Cash and equivalents | ₦425m | ₦545m | ₦780m |
| Total current assets (B) | ₦975m | ₦1,220m | ₦1,610m |
| Total assets (A + B) | ₦1,380m | ₦1,725m | ₦2,120m |
Equity and Liabilities
| 2019 | 2020 | 2021 (9 months) | |
|---|---|---|---|
| Share capital and reserves | ₦885m | ₦1,135m | ₦1,430m |
| Long-term loans | ₦125m | ₦125m | ₦125m |
| Employees’ benefits | ₦20m | ₦35m | ₦50m |
| Deferred tax | ₦55m | ₦65m | ₦70m |
| Non-current liabilities | ₦200m | ₦225m | ₦245m |
| Trade and other payables | ₦270m | ₦335m | ₦410m |
| Tax payable | ₦25m | ₦30m | ₦35m |
| Current liabilities | ₦295m | ₦365m | ₦445m |
| Total equity and liabilities | ₦1,380m | ₦1,725m | ₦2,120m |
It has become necessary, and as part of the NGX Exchange Limited‟s requirements,
to appoint another firm of accountants to review the financial statements for some
specified periods. Your firm Stratcom Partners has been approached to carry out the
necessary review.
Required:
a. Highlight the features of professional engagements as contained in ISRE 2410:
International Standard on Review Engagement and ISRS 4410 (revised):
International standard on Related Services. (8 Marks)
b. Detail out the procedures to be carried out in the review of interim financial
information. (6 Marks)
c. In view of the changes in inventories in the financial statements given above,
between the last two periods, provide the substantive procedures that would
be carried out to establish a reliable evidence of the change. (6 Marks)
d. Prepare the outline of the reporting requirements of a compilation engagement.
(10 Marks)
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Adegaga Laboratories Plc (“AdeLabs”) is one of the largest companies in Nigeria engaged in cosmetic development and manufacturing. Its largest customer base is in the healthcare sector for post-surgery patients and the Nigeria movie industry (aka Nollywood). In the prior financial period, AdeLabs’ expansion strategy has been largely focused on growth by acquisition and joint ventures.
Additional Information:
Accounts for all companies are made up to December 31 annually.
Required:
Prepare for Adegaga Laboratories Plc:
i. Briefly explain how this additional acquisition will impact the preparation of AdeLabs’ consolidated financial statements for the year ended December 31, 2017. (4 Marks)
ii. Calculate the adjustment that will be required to be made to AdeLabs’ statement of financial position as a result of this acquisition. (6 Marks)
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Kukundawa Plc acquired a property for N8 million on which annual depreciation is charged on a straight-line basis at the rate of 7.5%. An impairment loss of N700,000 was recognized at the end of the May 31, 2018 financial year when accumulated depreciation was N2 million. Consequently, the property was valued at its estimated value in use. The company planned to move to new premises before the property was reclassified as held for sale on October 1, 2018. By this time, the fair value less costs to sell was N4.8 million. Kukundawa Plc published interim financial statements on December 1, 2018, by which time the property market value had improved, and the fair value less costs to sell was reassessed at N5.04 million. At the year end, on May 31, 2019, it had improved further, so that the fair value less costs to sell was N5.9 million. The property was disposed of eventually on June 5, 2019, for N6 million.
Required:
a. Assess the above transactions based on the requirements of IFRS 5 – Non-Current Assets Held for Sale and Discontinued Operations. (5 Marks)
b. Evaluate the impact of the events occurring on the property over time and on the financial statements up to the date of disposal. (10 Marks)
(Total 15 Marks)
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The following draft statements of financial position of RAM, DAM, and TAM, all of which are public limited companies as at April 30, 2021, are provided:
| RAM Plc (N’m) | DAM Plc (N’m) | TAM Plc (N’m) | |
|---|---|---|---|
| Non-current assets: | |||
| Property, plant, and equipment | 2,030 | 705 | 356 |
| Investment in DAM | 690 | – | – |
| Investment in TAM | 180 | 110 | – |
| Total non-current assets | 2,900 | 815 | 356 |
| Current assets: | |||
| Inventories | 450 | 185 | 75 |
| Trade receivables | 270 | 115 | 60 |
| Cash and cash equivalents | 105 | 65 | 85 |
| Total current assets | 825 | 365 | 220 |
| Total assets | 3,725 | 1,180 | 576 |
| Equity and liabilities | |||
| Equity: | |||
| Ordinary share capital | 2,400 | 620 | 220 |
| Share premium | 300 | 105 | 56 |
| Revaluation reserves | 60 | – | – |
| Retained earnings | 685 | 280 | 76 |
| Total equity | 3,385 | 1,005 | 412 |
| Non-current liabilities | 200 | 65 | 64 |
| Current liabilities | 140 | 110 | 100 |
| Total equity and liabilities | 3,725 | 1,180 | 576 |
Additional Information:
Required:
Prepare a consolidated statement of financial position for the RAM Group as at April 30, 2021.
(Total: 30 Marks)
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GBENGANIG Plc. Trial balance as at December 31, 2015 is shown below:
| Account | Debit (N) | Credit (N) |
|---|---|---|
| Revenue | 2,290,125 | |
| Administrative expenses | 237,150 | |
| Selling and distribution expenses | 175,200 | |
| Legal and professional expenses | 81,150 | |
| Allowance for receivables – 31/12/15 | 8,625 | |
| Inventories – finished goods – 31/12/14 | 276,750 | |
| Work-in-progress – 31/12/14 | 49,125 | |
| Inventories – raw materials at cost-31/12/14 | 162,600 | |
| Purchases – raw materials | 1,125,900 | |
| Carriage inwards – raw materials | 15,750 | |
| Manufacturing wages | 375,000 | |
| Manufacturing overheads | 187,500 | |
| Authorized and issued 900,000 ordinary shares of N0.50 each fully paid | 450,000 | |
| 150,000 8.4% cumulative preference shares of N1 each fully paid | 150,000 | |
| Revaluation surplus | 65,000 | |
| Share premium | 150,000 | |
| General reserve | 85,000 | |
| Retained earnings-31/12/14 | 425,250 | |
| Patents and trademarks | 323,250 | |
| Freehold property at cost | 375,000 | |
| Leasehold property at cost | 112,500 | |
| Amortization of leasehold property – 31/12/14 | 22,500 | |
| Plant and equipment at cost | 225,000 | |
| Accumulated depreciation – plant and equipment – 31/12/14 | 102,750 | |
| Furniture and fittings at cost | 75,000 | |
| Accumulated depreciation – furniture and fittings – 31/12/14 | 23,625 | |
| Motor vehicles at cost | 112,500 | |
| Accumulated depreciation – motor vehicles 31/12/14 | 37,500 | |
| 10% loan notes | 150,000 | |
| Trade payables | 146,250 | |
| Trade receivables | 266,445 | |
| Bank overdraft | 76,875 | |
| Cash | 7,680 | |
| Total | 4,183,500 | 4,183,500 |
Additional Information:
Required:
a. Prepare the statement of profit or loss and other comprehensive income for the year ended December 31, 2015.
b. Prepare a statement of financial position as at December 31, 2015, in accordance with International Financial Reporting Standards.
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a. The following trial balance was extracted from the books of Adama Plc as at June 30, 2022:
Additional information:
Required: Prepare for Adama PLC the following financial statements:
b. Some new trainee accountants in your organization discussed Earnings Per Share (EPS) and Return on Capital Employed (ROCE) as the best ratios for analyzing an entity’s financial performance. The finance director has requested a memo explaining these ratios and highlighting their limitations.
Required:
Prepare a memo to the finance director explaining the EPS and ROCE ratios and their limitations. (6 Marks)
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The Trial Balance of Excellent Plc. as at 30 June 2014 is as follows:
The following notes are relevant:
i. Inventories as at 30/6/2013:
The net realisable values of these commodities per unit are as follows:
ii. Inventories on 30 June 2014 amounted to N9,000,000
iii. Prepaid salaries and wages were N10,000,000
iv. Included in the plant and machinery maintenance cost was depreciation of
N14,800,000.
v. The allowances for receivables are no longer required. The outstanding 10%
loan notes interest was paid on 30 June 2014 and this has not been accounted
for. The fair value of goods is N40,000,000 at the end of the year.
vi. The value in use of delivery van for the year 30 June 2014 is N31,000,000. The
prevailing market interest rate is 21% per annum and the Discounting Factor for
this year is 0.8264.
vii. The fair value of delivery van at an arm’s length transaction as at 30 June 2014
was N28,000,000 and the cost to sell was N2,000,000. All non-current assets
were depreciated at 10% per annum on reducing balance basis.
viii. Current tax provision for the year is N165,000,000.
Required:
a. Identify any FOUR of the cost items that are EXCLUDED in the valuation of inventories under IAS 2. (4 Marks)
b. Calculate the following:
c. Prepare the Statement of Profit or Loss and Other Comprehensive Income (OCI) and Statement of Changes in Equity for the year ended 30 June 2014. (11 Marks)
d. Prepare the Statement of Financial Position as at 30 June 2014. (8 Marks)
Show all relevant workings
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Ogogo Local Government is one of the 26 Local Governments in Alimosho state of
Federal Republic of Wazobia. The Local Government has adopted Treasury Single
Accounting (Direct method) and prepares its accounts using IPSAS accrual basis.
There has been wide spread fraud since the retirement of the Treasurer of the
council about two years ago. However, there was no adequate information to
suggest that there was fraud or misappropriation of funds. The Chairman invited
you to his office as the new Treasurer and handed over some of the financial data
from treasury department to you as detailed below:
The trial balance for the year ended December 31, 2017 is as follows:
The following transactions took place in the Office of the Treasurer of the Local
Government for the year ended December 31, 2018.
i. Listed below are the revenue and expenditure items for the year ended December 31, 2018
(ii) Code 1 is used as prefix for revenue, 2 for recurrent expenditure and 4 for
capital expenditure
(iii) Preliminary investigations carried out revealed the following irregularities,
which occurred and were discovered within the year:
• Included in the payments for the expenses under primary health care department were various duplicated vouchers amounting to N7million;
• There were some falsifications in the bills for items bought for the provision of water under other charges. The total discrepancies amounted to N3million.
(iv) The following agreed revenue demand notices were sent to the indigenes of the Local Government during the year.
(v) Included in the payments under works and housing is the cost of motor
vehicles of N25 million while medical equipment costing N35 million was
included in primary health care department expenses.
(vi) Included in the payments under works and housing is the cost of land
including construction of access roads, certificate of occupancy etc, amounting
to N100 million. The land was acquired by the Local Government and sold to
local prospective land owners at a cost of N520,000 per plot. The land consists
of 200 standard plots for the construction of houses of their choice. Only 150
plots were fully subscribed and paid for during the year.
(vii) Included in the payments under finance department is the cost of office
stationery of N25 million while the value of office stationery based on stock
sheet as at December 31, 2018 was N6.5 million.
viii) Capital grant from the State Government was received on December 31, 2017
and utilised in 2018.
(ix) The capital expenditure paid during the year was for the acquisition of land for the new Local Government Health Centers.
(x) Some of the accounting policies for depreciation adopted by the Government include the following depreciation rates;
Note: All non-current assets were purchased at the beginning of the
year.
(xi) The following expenses were incurred but not settled as at end of the year.
You are required to prepare:
a. The journal entries to record the loss of fund (3 Marks)
b. The statements of financial performance for year ended December 31, 2018
(15 Marks)
c. The statement of financial position as at December, 31 2018 (17 Marks)
d. Identify FIVE external controls and FIVE problems of Local Government in
Nigeria (5 Marks)
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Magifera Plc had been trading in merchandise for several years in Garden City. The information below relates to extracts from the Financial Statements for the past two (2) years.
Statement of Profit or Loss and Other Comprehensive Income for the year ended September 30:
| 2016 | 2015 | |
|---|---|---|
| N’ Million | N’ Million | |
| Revenue | 100,000 | 160,000 |
| Gross Profit | 45,000 | 70,000 |
| Administrative Expenses | 22,500 | 27,500 |
| Finance Cost: | ||
| 10% Loan Note Interest | 1,250 | 1,250 |
| 23,750 | 28,750 | |
| Operating Profit Before Tax | 21,250 | 41,250 |
| Less: Taxation Expense | 8,000 | 16,000 |
| Operating Profit for the year | 13,250 | 25,250 |
| Dividends Paid to Equity holders | 6,050 | 8,550 |
Extract of Statement of Financial Position as at September 30
| 2016 | 2015 | |
|---|---|---|
| N’Million | N’Million | |
| Assets: | ||
| Non – Current Assets at Cost | 50,000 | 70,000 |
| Less: Accumulated Depreciation | 10,000 | 12,500 |
| Carrying Amount | 40,000 | 57,500 |
| Current Assets: | ||
| Inventory | 32,500 | 7,500 |
| Trade Receivables | 20,000 | 5,000 |
| Bank Balance | 4,000 | 37,500 |
| 56,500 | 50,000 | |
| Total Assets | 96,500 | 107,500 |
| Equity and Liabilities: | ||
| Ordinary Share Capital @ 50k each | 23,000 | 23,000 |
| Retained Earnings | 17,200 | 10,000 |
| 10% Loan notes | 12,500 | 12,500 |
| 10% Redeemable Preference Shares | _______ | 2,000 |
| 52,700 | 47,500 | |
| Current Liabilities: | ||
| Trade Payables | 7,500 | 10,750 |
| Taxation | 24,000 | 16,000 |
| Bank Overdrafts | 12,300 | 33,250 |
| 43,800 | 60,000 | |
| Total Equity and Liabilities | 96,500 | 107,500 |
The Board of Directors were worried over the dwindling financial performance and precarious financial position of the company. The products are ageing; the economic depression is biting as a result of the worsening exchange rate of $1 to N400. The company imports 60% of the goods sold in Garden City. The worsening exchange rate had affected the company’s importation, consequently the revenue of the company dropped significantly. The unsafe financial performance has also affected the market price of the company’s share which dropped from 12kobo/share in the year ended September 30, 2015 to 8kobo/share in 2016.
You are required to:
a. Calculate the following ratios for the year ended September 30, 2015 and 2016 in columnar form:
i. Return on Capital Employed
ii. Total Assets Turnover
iii. Quick Ratio
iv. Debt- Equity Ratio
v. Fixed Interest Cover
vi. Earnings Yield
vii. Price Earnings Ratio
viii. Dividend Yield (12 Marks)
b. Write a brief and formal technical report to the Board of Directors to assess the performance, liquidity and stability of the Company using only: i. Return on Capital Employed
ii. Total Assets Turnover
iii. Quick Ratio
iv. Fixed Interest Cover
v. Debt Equity Ratio (8 Marks)
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The following details are available from the books of Tops Darts Society:
(iii)
The person handling Dart sales, “all in cash,” disappeared with the money received from this source. It is unknown how much was stolen, but all darts were sold at a profit of 33⅓% on cost price.
(iv)
Three people paid life membership fees of N4,000 each. One-tenth of this amount is to be credited to the income and expenditure account each year, while the remaining is treated as prepaid.
(v)
Depreciation on equipment is to be calculated at 20%.
You are required to:
(a) Draw up a Darts Income Statement for the year 2011 to calculate the gross profit on Darts sold. The cash stolen should be credited to this account, with a debit shown in the Income and Expenditure Account.
(b) Prepare an Income and Expenditure Account for the year ended 31 December 2011, and a Statement of Financial Position as at that date.
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The Income Tax Account of Wazobia Limited showed a balance of N50,000 on 1 January 2011. Tax paid during the year was N45,000 and the estimated tax based on current year’s account is N60,000
What is the amount to be shown in the company’s statement of financial position as the closing balance from the company’s Income Tax Account?
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Ishola & Sons Limited purchased a moulding machine for N2,550,000 from Japan, the transport expenses amounted to N250,000, installation cost amounted to N150,000, and the annual maintenance is N170,000. At what cost will the moulding machine be stated in the statement of financial position?
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At 1 January 2011, the capital structure of Jumbo Plc was as follows:
Issued share capital, 10,000,000 ordinary shares of N1.00 each: N10,000,000
Share premium account: N500,000
On 1 September 2011, the company made a fresh issue of 500,000 shares at N1.30 each. Which of the following correctly presents the company’s share capital and share premium accounts as at 31 December 2011?
A. Share capital N10,000,000, Share premium N650,000
B. Share capital N10,500,000, Share premium N650,000
C. Share capital N10,650,000, Share premium N500,000
D. Share capital N10,150,000, Share premium N1,000,000
E. Share capital N10,000,000, Share premium N500,000
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