Question Tag: Statement of Financial Position

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AAA – Nov 2018 – L3 – Q2 – Regulatory Investigations and Disciplinary Actions

Assessment of joint audit advantages, agenda setup, and addressing regulatory issues in audit planning

Question

Yusuf Olatunji & Co., (Chartered Accountants) have been auditors to XBC Bank Limited. There has been some regulatory and compliance issues for which the bank was sanctioned and paid penalties to both the Central Bank of Nigeria and the Financial Reporting Council of Nigeria. At the board of directors meeting to consider the last annual report audited by the firm, some of the problems caused by the auditors were raised. Following the reoccurrence of such issues, it was proposed that another audit firm be engaged in addition to the present firm. To achieve their objective, a bigger firm that has international affiliation was considered to take a leading position in a joint audit arrangement and to ensure appropriate compliance.

Your firm has been approached for the appointment. A meeting was scheduled between your firm, Yusuf Olatunji & Co., and the executive management of the bank. In preparation for the meeting, you are informed that you will address the meeting on the advantages and disadvantages of joint audit, being an area some members of the management team have expressed concerns.

After the meeting, your firm was subsequently appointed, and the necessary formalities were properly followed. Your partner has directed that you liaise with Yusuf Olatunji & Co. to obtain the necessary materials for the preparation of the audit and that you review your firm’s audit manual with respect to the concerns of management on joint audit.

Your assessment of the documents obtained from the other auditor revealed the following, amongst others:

Part of the penalty was on improper disclosure relating to a material property, plant, and equipment (PPE) acquired during the previous year and a substantial loan above the limit authorised for a sector of the economy;
The classification of unresolved transactions as debit balances in the statement of financial position, resulting in an increase in operating profit and the payment of higher taxes than projected;
The IT operations of the bank had weak controls such that it was possible for some staff to over-ride some of them;
The net current assets have continued to fall and, in the preceding year, have fallen below industry average despite an increase in gross earnings.

Required:

a. Evaluate the advantages and disadvantages of joint audit. (8 Marks)

b. Prepare an agenda for the scheduled meeting between the two audit firms. (4 Marks)

c. Develop the appropriate audit approach to address each of the issues identified from the review of the documents obtained from Yusuf Olatunji & Co. (8 Marks)

Answer

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Tags: Audit risks, IT Controls, Joint Audit, PPE Disclosure, Regulatory Compliance, Statement of Financial Position
Level: Level 3

Topic: Regulatory Investigations and Disciplinary Actions

FR – Nov 2023 – L2 – Q7b – Presentation of Financial Statements (IAS 1)

Lists minimum line items for the statement of financial position and changes in equity as per IAS 1

Question

IAS 1- Presentation of Financial Statements provides a list of line items that, as a minimum, must be shown on the face of the statement of financial position.

Required:

i. Give FIVE examples of minimum line items to be shown on the face of the statement of financial position. (5 Marks)
ii. State FIVE items that should be accounted for in the statement of changes in equity. (5 Marks)

Answer

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Tags: Changes in Equity, Equity Components, IAS 1, Minimum Line Items, Statement of Financial Position
Level: Level 2

Topic: Presentation of Financial Statements (IAS 1)

FM – Nov 2017 – L3 – Q1 – Financial Planning and Forecasting

Prepare forecast financials for Lekki Plc and suggest divestment options for a poorly performing subsidiary.

Question

Despite the global recession, demand for the company’s products has recently increased and is expected to grow over the next two years.

As part of a recent strategic review, the directors made the following projections for the years ending March 31, 2018, and March 31, 2019:

An anticipated annual revenue increase of 8% for each year.
Operating costs (excluding depreciation) expected to rise by 4% per year.
Tax rate to remain at 21%, payable in the year liability arises.
The trade receivables/revenue and trade payables/operating costs ratios will stay the same.
Inventory levels to increase by 10% in the year ending March 31, 2018, and then remain stable.
Non-current assets, including Lekki Plc.’s headquarters and factory, are not depreciated, and capital allowances are negligible.
Dividend growth rate to remain at 6% annually, with dividends declared at the year-end and paid the following year.
Purchase of new machinery at N8 million, financed through existing overdraft facilities. Machinery to be depreciated straight-line over 8 years with a N1 million residual value; capital allowances will apply at 18% reducing balance.
Finance costs are projected to increase by 50% in the year ending March 31, 2018, and remain stable thereafter.

Financial Statement Extracts (March 31, 2017):

Income Statement:
- Revenue: N60,240,000
- Operating Costs: N49,500,000
- Operating Profit: N10,740,000
- Finance Costs: N800,000
- Profit before Tax: N9,940,000
- Tax: N2,286,000
- Profit after Tax: N7,654,000
Statement of Financial Position:
- Assets:
  - Non-current Assets: N28,850,000
  - Current Assets:
    - Inventories: N9,020,000
    - Trade Receivables: N9,036,000
    - Cash and Equivalents: N396,000
- Equity and Liabilities:
  - Ordinary Share Capital: N16,700,000
  - Retained Earnings: N12,482,000
  - Non-current Liabilities: N8,000,000 (6% Debentures)
  - Current Liabilities: N10,120,000 (Trade Payables, Dividends)

Assume today is April 1, 2017.

a. Prepare a Forecast Financial Statement (Income Statement, Statement of Financial Position, and Cash Flow Statement) for each of the years ending March 31, 2018, and March 31, 2019.
(24 Marks)

Note: All calculations should be rounded up to the nearest N’000.

b. Beyond March 31, 2019, the directors are considering the disposal of a smaller subsidiary due to poor performance. The Finance Director suggests avoiding liquidation to minimize industrial relations issues.

Required: Discuss three non-liquidation methods to divest the subsidiary.
(6 Marks)

Answer

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Tags: Cash Flow Statement, Divestment Options, Finance Strategy, Forecast Financial Statements, Income Statement, Statement of Financial Position, Subsidiary
Level: Level 3

Topic: Financial Planning and Forecasting
Series: NOV 2017

PSAF – Nov 2015 – L2 – Q4 – Public Sector Financial Statements

Prepare the financial statements of Egbin Electricity Board for 2014, including statement of financial performance and position.

Question

The following information has been extracted from the books of Egbin Electricity Board, a public sector-owned electricity generating company, for the year ended December 31, 2014:

Item	N’000
Accumulated Depreciation, January 1, 2014	45,224
Sale of Electricity	114,392
Purchase of Electricity	95,784
Meter reading, billing, and collection	1,624
Non-Current Assets Expenditure	84,102
Debtors for electricity consumption	12,006
Training and welfare	692
Stock and work-in-progress	1,234
Rents, Rates, and Insurance	2,126
Electricity Estimated unread consumption	7,222
Administration and General Expenses	1,476
Electricity Council Grant	21,556
Preparation of Electricity Council’s Expenses	362
Bank Balance and Cash	1,284
Depreciation for the year	3,634
Hire purchase and deferred payment	2,672
Interest and Financing Expenses	2,434
Creditors and accrued liabilities	13,926
Profit on contracting and sale of appliance poles	534
Reserves	23,116
Rental of Meters Application	556
Distribution cost	4,476
Customer Service	1,810

Required:

Prepare in vertical form the Statement of Financial Performance and Statement of Financial Position for Egbin Electricity Board for the year ended December 31, 2014.

Answer

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Tags: Financial Reporting, Public Sector Accounting, Statement of Financial Performance, Statement of Financial Position
Level: Level 2

Topic: Public Sector Financial Statements
Series: NOV 2015

FR – May 2024 – L2 – SA – Q2 – Conceptual Framework for Financial Reporting

Discusses the information needs of financial statement users, CAMA director report requirements, and deferred tax calculations.

Question

a. The Conceptual Framework for Financial Reporting sets out the concepts that underlie the preparation and presentation of financial statements and considers the various users of these financial statements.

Required:
Identify and discuss the information needs of the different users of financial statements. (10 Marks)

b. The Companies and Allied Matters Act (CAMA) 2020 is the primary source of company law that establishes the requirements for financial reporting by all companies in Nigeria.

Required:
Briefly explain FIVE issues that must be contained in a directors’ report in accordance with CAMA 2020. (5 Marks)

c. Babanriga Nigeria Limited acquired a factory machine for N10 million on January 1, 2019. The machine had an estimated life and residual value of 10 years and N2 million, respectively, and is depreciated on a straight-line basis. In lieu of depreciation, the tax authority allows a tax expense of 40% of the cost of this type of machine to be claimed against income tax in the year of purchase, with 25% per annum of its tax base subsequently on a reducing balance basis. The prevailing company income tax rate is 30%.

Required:
Calculate the deferred tax charge or credit which will be recorded in Babanriga Nigeria Limited’s Statement of Profit or Loss and Other Comprehensive Income for the year ended December 31, 2021, and the deferred tax balance in the Statement of Financial Position at that date. (5 Marks)

Answer

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Tags: CAMA, Conceptual Framework, Deferred Tax, Financial Reporting, Statement of Financial Position, Tax computation, User Needs
Level: Level 2

Topic: Conceptual Framework for Financial Reporting
Series: MAY 2023

FR – May 2022 – L2 – SA – Q1 – Preparation of Financial Statements

Prepare a statement of profit or loss, comprehensive income, changes in equity, and financial position for Endtime PLC.

Question

Endtime PLC is a company based in Benin with the following trial balance for the year ended December 31, 2020:

Additional Information:
(i) Finance costs include full year dividends on preference shares and ordinary share dividends of 2½ kobo paid at the end of the year. Allowances for 4 doubtful debts are no longer necessary as customers paid as at when due from time to time in the past 2 years.

(ii) Severely damaged inventories, which cost N790,000,000 were included in the inventories in the trial balance. This will need to be repaired at a cost of N440,000,000 before a knowledgeable buyer will be interested to pay N940,000,000 at arm’s length transaction.

(iii) As at December 31, 2020, a valuer based in Victoria Island in Lagos was contacted by the company to review its land and buildings. The land and buildings was revalued upward by N13,000,000,000 and a certificate was issued to this effect. The board of directors approved the valuation but it has
not yet been accounted for in the trial balance. The valuer advised that the remaining useful life of the asset is reasonably and reliably estimated to be 20 years. Depreciation is on straight-line basis.

(iv) Depreciation on plant and equipment is charged at 15% on reducing balance basis. The multi-users S&P and Sage was bought on September 30, 2020. The amortisation is at the rate of 12.5% annually. The amortisation is evenly distributed over the year. Besides, software installation, customisation and
handling cost of N800,000,000, training costs of N900,000,000, consultancy fee of N600,000,000 and other general overheads of N850,000,000 on the new software were included in administrative expenses. All depreciations are treated as administrative costs.

(v) On December 30, 2020, a chartered surveyor valued investment property at N14,000,000,000 and the company uses fair value model in IAS 40 – Investment Property.

(vi) Current income tax has been estimated for the year ended December 31, 2020 at N9,000,000,000 and deferred tax provision as at December 31, 2020 is to be adjusted in the income statement to reflect the tax base of the company’s net assets of N12,000,000,000 less than the carrying amounts. The current
company income tax rate is 30%.

vii) The plant held for sale is valued in the trial balance at its carrying amount. A broker is readily available to buy the plant for N6,000,000,000 at a fee of 6% of sales proceed. The sale would take place in January, 2021. Any necessary adjustment is to be treated as cost of sales.

You are required to prepare:
a. Statement of profit or loss and other comprehensive income for the year ended December 31, 2020. (13 Marks)
b. Statement of changes in equity for the year ended December 31, 2020. (4 Marks)
c. Statement of financial position as at December 31, 2020. (13 Marks)

Answer

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Tags: Comprehensive Income, Financial Statements, Profit and Loss Statement, Statement of Financial Position
Level: Level 2

Topic: Preparation of Financial Statements
Series: MAY 2022

FR – Nov 2019 – L2 – Q1b – Presentation of Financial Statements (IAS 1)

Prepare financial statements for Uchena Nigeria Plc, including profit or loss, changes in equity, and financial position.

Question

The Chief Accountant of Uchena Nigeria plc has just forwarded the trial balance of the company to you for review before the preparation of draft financial statements for the year ended December 31, 2018.

The trial balance is as follows:

Description	Debit (N’m)	Credit (N’m)
Ordinary share capital		43,200
Revenue		125,280
Staff cost	18,720
Leasehold building	21,600
Patent rights	4,320
Work-in-progress (Jan 1, 2018)	9,000
Accum. Depreciation on building (Jan 1, 2018)		4,320
Inventories of finished goods (Jan 1, 2018)	11,160
Consultancy fee	3,168
Directors’ salaries	25,920
Computer at cost (Hardware)	3,600
Accum. Depreciation on computer (Jan 1, 2018)		1,440
Retained earnings (Jan 1, 2018)		8,712
Dividend paid	9,000
Cash and bank	31,680
Trade receivables	30,240
Trade payables		6,624
Sundry expenses	21,168
Totals	189,576	189,576

Additional information:

On January 1, 2018, buildings were revalued to N25,920 million. This has not been reflected in the accounts.
Computer (hardware) is depreciated over five years. Buildings are now to be depreciated over 30 years.
The patent rights relate to a computer software with a 3-year life span.
An allowance for bad debts of 5% is to be created.
Closing inventories of finished goods are valued at N12,960 million. Work-in-progress has increased to N10,080 million.
There is an estimated liability for current tax of N8,640 million, which has not been recognized.

Required:

Prepare a draft statement of profit or loss (analyzing expenses by nature) for the year ended December 31, 2018. (6 Marks)
Prepare a statement of changes in equity for the year ended December 31, 2018. (4 Marks)
Prepare a statement of financial position as at December 31, 2018. (6 Marks)

Answer

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Tags: Financial Statements, IAS 1, Profit or Loss, Revaluation, Statement of Changes in Equity, Statement of Financial Position
Level: Level 2

Topic: Presentation of Financial Statements (IAS 1)
Series: NOV 2019

FA – Nov 2020 – L1 – SB – Q6b – Partnership Accounts

Prepare the revaluation account, partners' capital accounts, and the statement of financial position.

Question

b. Emeka has been in business as a Japan spare part dealer. The last statement of financial position of his business as at September 30, 2019, is given below:

	N’000	N’000
Equity
Capital	1,000
Retained earnings	130
	1,130
Drawings	(60)
	1,070
Non-current assets:
PPE		1,100
Current assets:
Inventories		190
Trade payables		40
Bank		45
	1,375	1,375

On October 1, 2019, he agreed with Bode to join him, and the new business will trade under the name and style EmBo Ventures.

Terms of the new business:

Bode is to contribute capital of N1,250,000 for an equal share of profits.
The firm will take over the assets and liabilities of Emeka at their book values, except for:
- PPE: N1,250,000
- Inventories: N175,000
The partners will maintain equal capital, and any shortfall in Emeka’s capital should be made good by credit from revaluation or through additional funds.

Required:

Prepare for EmBo Ventures: i. Revaluation account (5 Marks)
ii. Partners’ capital accounts (5 Marks)
iii. Statement of financial position as at October 1, 2019 (5 Marks)

(Total: 15 Marks)

Answer

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Tags: Capital Accounts, Partnership, Revaluation, Statement of Financial Position
Level: Level 1

Topic: Partnership Accounts (Including Profit Sharing, Capital and Current Accounts)
Series: NOV 2020

FA – Nov 2020 – L1 – SA – Q13 – Elements of Financial Statements

Identifies a component that is not part of the financial statements as defined by IAS 1.

Question

Which of the following is NOT a component of financial statements under IAS 1?
A. Statement of financial position
B. Statement of profit or loss and other comprehensive income
C. Statement of equity
D. Statement of changes in equity
E. Statement of cash flows

Answer

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Tags: Financial Statements, IAS 1, Statement of Financial Position
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2020

FR – Nov 2021 – L2 – Q1a – Presentation of Financial Statements (IAS 1)

Prepare the financial statements of United Nigeria PLC including comprehensive income, changes in equity, and financial position as of December 31, 2020.

Question

The trial balance for United Nigeria Plc as at December 31, 2020 is given below:

Additional information:

Inventories at the end of the year were N120,000,000. Included in the closing inventories was a damaged item with a cost of N30,000,000, which has a net realizable value of N18,000,000.
Additional ordinary shares of 50,000,000 were issued and fully paid for at 80 kobo per share, which is yet to be recorded.
Interest on 10% loan notes is outstanding and dividend on 12% preference shares were paid on December 31, 2020. Ordinary shareholders were also paid a dividend of 5 kobo per share.
Allowances for trade receivables are to be increased to 15% per annum. Depreciation is charged on plant and equipment at 15% on reducing balance.
N5,000,000 administrative expenses were outstanding, and N25,000,000 company income tax is estimated for the year. Depreciation is charged to administrative expenses.

You are required to prepare the following:

a. (i) Statement of Comprehensive Income for United Nigeria Plc for the year ended December 31, 2020. (10 Marks)
(ii) Statement of Changes in Equity for the year ended December 31, 2020. (5 Marks)
(iii) Statement of Financial Position as at December 31, 2020. (10 Marks)

Answer

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Topic: Presentation of Financial Statements (IAS 1)
Series: NOV 2021

AAA – Nov 2018 – L3 – Q2 – Regulatory Investigations and Disciplinary Actions

Assessment of joint audit advantages, agenda setup, and addressing regulatory issues in audit planning

Question

Your assessment of the documents obtained from the other auditor revealed the following, amongst others:

Part of the penalty was on improper disclosure relating to a material property, plant, and equipment (PPE) acquired during the previous year and a substantial loan above the limit authorised for a sector of the economy;
The classification of unresolved transactions as debit balances in the statement of financial position, resulting in an increase in operating profit and the payment of higher taxes than projected;
The IT operations of the bank had weak controls such that it was possible for some staff to over-ride some of them;
The net current assets have continued to fall and, in the preceding year, have fallen below industry average despite an increase in gross earnings.

Required:

a. Evaluate the advantages and disadvantages of joint audit. (8 Marks)

b. Prepare an agenda for the scheduled meeting between the two audit firms. (4 Marks)

c. Develop the appropriate audit approach to address each of the issues identified from the review of the documents obtained from Yusuf Olatunji & Co. (8 Marks)

Answer

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Tags: Audit risks, IT Controls, Joint Audit, PPE Disclosure, Regulatory Compliance, Statement of Financial Position
Level: Level 3

Topic: Regulatory Investigations and Disciplinary Actions

FR – Nov 2023 – L2 – Q7b – Presentation of Financial Statements (IAS 1)

Lists minimum line items for the statement of financial position and changes in equity as per IAS 1

Question

IAS 1- Presentation of Financial Statements provides a list of line items that, as a minimum, must be shown on the face of the statement of financial position.

Required:

Answer

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Tags: Changes in Equity, Equity Components, IAS 1, Minimum Line Items, Statement of Financial Position
Level: Level 2

Topic: Presentation of Financial Statements (IAS 1)

FM – Nov 2017 – L3 – Q1 – Financial Planning and Forecasting

Prepare forecast financials for Lekki Plc and suggest divestment options for a poorly performing subsidiary.

Question

Despite the global recession, demand for the company’s products has recently increased and is expected to grow over the next two years.

As part of a recent strategic review, the directors made the following projections for the years ending March 31, 2018, and March 31, 2019:

An anticipated annual revenue increase of 8% for each year.
Operating costs (excluding depreciation) expected to rise by 4% per year.
Tax rate to remain at 21%, payable in the year liability arises.
The trade receivables/revenue and trade payables/operating costs ratios will stay the same.
Inventory levels to increase by 10% in the year ending March 31, 2018, and then remain stable.
Non-current assets, including Lekki Plc.’s headquarters and factory, are not depreciated, and capital allowances are negligible.
Dividend growth rate to remain at 6% annually, with dividends declared at the year-end and paid the following year.
Purchase of new machinery at N8 million, financed through existing overdraft facilities. Machinery to be depreciated straight-line over 8 years with a N1 million residual value; capital allowances will apply at 18% reducing balance.
Finance costs are projected to increase by 50% in the year ending March 31, 2018, and remain stable thereafter.

Financial Statement Extracts (March 31, 2017):

Income Statement:
- Revenue: N60,240,000
- Operating Costs: N49,500,000
- Operating Profit: N10,740,000
- Finance Costs: N800,000
- Profit before Tax: N9,940,000
- Tax: N2,286,000
- Profit after Tax: N7,654,000
Statement of Financial Position:
- Assets:
  - Non-current Assets: N28,850,000
  - Current Assets:
    - Inventories: N9,020,000
    - Trade Receivables: N9,036,000
    - Cash and Equivalents: N396,000
- Equity and Liabilities:
  - Ordinary Share Capital: N16,700,000
  - Retained Earnings: N12,482,000
  - Non-current Liabilities: N8,000,000 (6% Debentures)
  - Current Liabilities: N10,120,000 (Trade Payables, Dividends)

Assume today is April 1, 2017.

a. Prepare a Forecast Financial Statement (Income Statement, Statement of Financial Position, and Cash Flow Statement) for each of the years ending March 31, 2018, and March 31, 2019.
(24 Marks)

Note: All calculations should be rounded up to the nearest N’000.

Required: Discuss three non-liquidation methods to divest the subsidiary.
(6 Marks)

Answer

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Tags: Cash Flow Statement, Divestment Options, Finance Strategy, Forecast Financial Statements, Income Statement, Statement of Financial Position, Subsidiary
Level: Level 3

Topic: Financial Planning and Forecasting
Series: NOV 2017

PSAF – Nov 2015 – L2 – Q4 – Public Sector Financial Statements

Prepare the financial statements of Egbin Electricity Board for 2014, including statement of financial performance and position.

Question

The following information has been extracted from the books of Egbin Electricity Board, a public sector-owned electricity generating company, for the year ended December 31, 2014:

Item	N’000
Accumulated Depreciation, January 1, 2014	45,224
Sale of Electricity	114,392
Purchase of Electricity	95,784
Meter reading, billing, and collection	1,624
Non-Current Assets Expenditure	84,102
Debtors for electricity consumption	12,006
Training and welfare	692
Stock and work-in-progress	1,234
Rents, Rates, and Insurance	2,126
Electricity Estimated unread consumption	7,222
Administration and General Expenses	1,476
Electricity Council Grant	21,556
Preparation of Electricity Council’s Expenses	362
Bank Balance and Cash	1,284
Depreciation for the year	3,634
Hire purchase and deferred payment	2,672
Interest and Financing Expenses	2,434
Creditors and accrued liabilities	13,926
Profit on contracting and sale of appliance poles	534
Reserves	23,116
Rental of Meters Application	556
Distribution cost	4,476
Customer Service	1,810

Required:

Prepare in vertical form the Statement of Financial Performance and Statement of Financial Position for Egbin Electricity Board for the year ended December 31, 2014.

Answer

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Tags: Financial Reporting, Public Sector Accounting, Statement of Financial Performance, Statement of Financial Position
Level: Level 2

Topic: Public Sector Financial Statements
Series: NOV 2015

FR – May 2024 – L2 – SA – Q2 – Conceptual Framework for Financial Reporting

Discusses the information needs of financial statement users, CAMA director report requirements, and deferred tax calculations.

Question

Required:
Identify and discuss the information needs of the different users of financial statements. (10 Marks)

b. The Companies and Allied Matters Act (CAMA) 2020 is the primary source of company law that establishes the requirements for financial reporting by all companies in Nigeria.

Required:
Briefly explain FIVE issues that must be contained in a directors’ report in accordance with CAMA 2020. (5 Marks)

Answer

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Tags: CAMA, Conceptual Framework, Deferred Tax, Financial Reporting, Statement of Financial Position, Tax computation, User Needs
Level: Level 2

Topic: Conceptual Framework for Financial Reporting
Series: MAY 2023

FR – May 2022 – L2 – SA – Q1 – Preparation of Financial Statements

Prepare a statement of profit or loss, comprehensive income, changes in equity, and financial position for Endtime PLC.

Question

Endtime PLC is a company based in Benin with the following trial balance for the year ended December 31, 2020:

(v) On December 30, 2020, a chartered surveyor valued investment property at N14,000,000,000 and the company uses fair value model in IAS 40 – Investment Property.

Answer

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Tags: Comprehensive Income, Financial Statements, Profit and Loss Statement, Statement of Financial Position
Level: Level 2

Topic: Preparation of Financial Statements
Series: MAY 2022

FR – Nov 2019 – L2 – Q1b – Presentation of Financial Statements (IAS 1)

Prepare financial statements for Uchena Nigeria Plc, including profit or loss, changes in equity, and financial position.

Question

The trial balance is as follows:

Description	Debit (N’m)	Credit (N’m)
Ordinary share capital		43,200
Revenue		125,280
Staff cost	18,720
Leasehold building	21,600
Patent rights	4,320
Work-in-progress (Jan 1, 2018)	9,000
Accum. Depreciation on building (Jan 1, 2018)		4,320
Inventories of finished goods (Jan 1, 2018)	11,160
Consultancy fee	3,168
Directors’ salaries	25,920
Computer at cost (Hardware)	3,600
Accum. Depreciation on computer (Jan 1, 2018)		1,440
Retained earnings (Jan 1, 2018)		8,712
Dividend paid	9,000
Cash and bank	31,680
Trade receivables	30,240
Trade payables		6,624
Sundry expenses	21,168
Totals	189,576	189,576

Additional information:

On January 1, 2018, buildings were revalued to N25,920 million. This has not been reflected in the accounts.
Computer (hardware) is depreciated over five years. Buildings are now to be depreciated over 30 years.
The patent rights relate to a computer software with a 3-year life span.
An allowance for bad debts of 5% is to be created.
Closing inventories of finished goods are valued at N12,960 million. Work-in-progress has increased to N10,080 million.
There is an estimated liability for current tax of N8,640 million, which has not been recognized.

Required:

Prepare a draft statement of profit or loss (analyzing expenses by nature) for the year ended December 31, 2018. (6 Marks)
Prepare a statement of changes in equity for the year ended December 31, 2018. (4 Marks)
Prepare a statement of financial position as at December 31, 2018. (6 Marks)

Answer

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Tags: Financial Statements, IAS 1, Profit or Loss, Revaluation, Statement of Changes in Equity, Statement of Financial Position
Level: Level 2

Topic: Presentation of Financial Statements (IAS 1)
Series: NOV 2019

FA – Nov 2020 – L1 – SB – Q6b – Partnership Accounts

Prepare the revaluation account, partners' capital accounts, and the statement of financial position.

Question

b. Emeka has been in business as a Japan spare part dealer. The last statement of financial position of his business as at September 30, 2019, is given below:

	N’000	N’000
Equity
Capital	1,000
Retained earnings	130
	1,130
Drawings	(60)
	1,070
Non-current assets:
PPE		1,100
Current assets:
Inventories		190
Trade payables		40
Bank		45
	1,375	1,375

On October 1, 2019, he agreed with Bode to join him, and the new business will trade under the name and style EmBo Ventures.

Terms of the new business:

Bode is to contribute capital of N1,250,000 for an equal share of profits.
The firm will take over the assets and liabilities of Emeka at their book values, except for:
- PPE: N1,250,000
- Inventories: N175,000
The partners will maintain equal capital, and any shortfall in Emeka’s capital should be made good by credit from revaluation or through additional funds.

Required:

Prepare for EmBo Ventures: i. Revaluation account (5 Marks)
ii. Partners’ capital accounts (5 Marks)
iii. Statement of financial position as at October 1, 2019 (5 Marks)

(Total: 15 Marks)

Answer

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Tags: Capital Accounts, Partnership, Revaluation, Statement of Financial Position
Level: Level 1

Topic: Partnership Accounts (Including Profit Sharing, Capital and Current Accounts)
Series: NOV 2020

FA – Nov 2020 – L1 – SA – Q13 – Elements of Financial Statements

Identifies a component that is not part of the financial statements as defined by IAS 1.

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Tags: Financial Statements, IAS 1, Statement of Financial Position
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2020

FR – Nov 2021 – L2 – Q1a – Presentation of Financial Statements (IAS 1)

Prepare the financial statements of United Nigeria PLC including comprehensive income, changes in equity, and financial position as of December 31, 2020.

Question

The trial balance for United Nigeria Plc as at December 31, 2020 is given below:

Additional information:

Inventories at the end of the year were N120,000,000. Included in the closing inventories was a damaged item with a cost of N30,000,000, which has a net realizable value of N18,000,000.
Additional ordinary shares of 50,000,000 were issued and fully paid for at 80 kobo per share, which is yet to be recorded.
Interest on 10% loan notes is outstanding and dividend on 12% preference shares were paid on December 31, 2020. Ordinary shareholders were also paid a dividend of 5 kobo per share.
Allowances for trade receivables are to be increased to 15% per annum. Depreciation is charged on plant and equipment at 15% on reducing balance.
N5,000,000 administrative expenses were outstanding, and N25,000,000 company income tax is estimated for the year. Depreciation is charged to administrative expenses.

You are required to prepare the following:

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Topic: Presentation of Financial Statements (IAS 1)
Series: NOV 2021

Question Tag: Statement of Financial Position

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AAA – Nov 2018 – L3 – Q2 – Regulatory Investigations and Disciplinary Actions

Assessment of joint audit advantages, agenda setup, and addressing regulatory issues in audit planning

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FR – Nov 2023 – L2 – Q7b – Presentation of Financial Statements (IAS 1)

Lists minimum line items for the statement of financial position and changes in equity as per IAS 1

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Prepare forecast financials for Lekki Plc and suggest divestment options for a poorly performing subsidiary.

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Prepare the financial statements of Egbin Electricity Board for 2014, including statement of financial performance and position.

You're reporting an error for "PSAF – Nov 2015 – L2 – Q4 – Public Sector Financial Statements"

FR – May 2024 – L2 – SA – Q2 – Conceptual Framework for Financial Reporting

Discusses the information needs of financial statement users, CAMA director report requirements, and deferred tax calculations.

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FR – May 2022 – L2 – SA – Q1 – Preparation of Financial Statements

Prepare a statement of profit or loss, comprehensive income, changes in equity, and financial position for Endtime PLC.

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FR – Nov 2019 – L2 – Q1b – Presentation of Financial Statements (IAS 1)

Prepare financial statements for Uchena Nigeria Plc, including profit or loss, changes in equity, and financial position.

You're reporting an error for "FR – Nov 2019 – L2 – Q1b – Presentation of Financial Statements (IAS 1)"

FA – Nov 2020 – L1 – SB – Q6b – Partnership Accounts

Prepare the revaluation account, partners' capital accounts, and the statement of financial position.

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FA – Nov 2020 – L1 – SA – Q13 – Elements of Financial Statements

Identifies a component that is not part of the financial statements as defined by IAS 1.

You're reporting an error for "FA – Nov 2020 – L1 – SA – Q13 – Elements of Financial Statements"

FR – Nov 2021 – L2 – Q1a – Presentation of Financial Statements (IAS 1)

Prepare the financial statements of United Nigeria PLC including comprehensive income, changes in equity, and financial position as of December 31, 2020.

You're reporting an error for "FR – Nov 2021 – L2 – Q1a – Presentation of Financial Statements (IAS 1)"

AAA – Nov 2018 – L3 – Q2 – Regulatory Investigations and Disciplinary Actions

Assessment of joint audit advantages, agenda setup, and addressing regulatory issues in audit planning

You're reporting an error for "AAA – Nov 2018 – L3 – Q2 – Regulatory Investigations and Disciplinary Actions"

FR – Nov 2023 – L2 – Q7b – Presentation of Financial Statements (IAS 1)

Lists minimum line items for the statement of financial position and changes in equity as per IAS 1

You're reporting an error for "FR – Nov 2023 – L2 – Q7b – Presentation of Financial Statements (IAS 1)"

FM – Nov 2017 – L3 – Q1 – Financial Planning and Forecasting

Prepare forecast financials for Lekki Plc and suggest divestment options for a poorly performing subsidiary.

You're reporting an error for "FM – Nov 2017 – L3 – Q1 – Financial Planning and Forecasting"

PSAF – Nov 2015 – L2 – Q4 – Public Sector Financial Statements

Prepare the financial statements of Egbin Electricity Board for 2014, including statement of financial performance and position.

You're reporting an error for "PSAF – Nov 2015 – L2 – Q4 – Public Sector Financial Statements"

FR – May 2024 – L2 – SA – Q2 – Conceptual Framework for Financial Reporting

Discusses the information needs of financial statement users, CAMA director report requirements, and deferred tax calculations.

You're reporting an error for "FR – May 2024 – L2 – SA – Q2 – Conceptual Framework for Financial Reporting"

FR – May 2022 – L2 – SA – Q1 – Preparation of Financial Statements

Prepare a statement of profit or loss, comprehensive income, changes in equity, and financial position for Endtime PLC.

You're reporting an error for "FR – May 2022 – L2 – SA – Q1 – Preparation of Financial Statements"

FR – Nov 2019 – L2 – Q1b – Presentation of Financial Statements (IAS 1)

Prepare financial statements for Uchena Nigeria Plc, including profit or loss, changes in equity, and financial position.

You're reporting an error for "FR – Nov 2019 – L2 – Q1b – Presentation of Financial Statements (IAS 1)"

FA – Nov 2020 – L1 – SB – Q6b – Partnership Accounts

Prepare the revaluation account, partners' capital accounts, and the statement of financial position.

You're reporting an error for "FA – Nov 2020 – L1 – SB – Q6b – Partnership Accounts"

FA – Nov 2020 – L1 – SA – Q13 – Elements of Financial Statements

Identifies a component that is not part of the financial statements as defined by IAS 1.

You're reporting an error for "FA – Nov 2020 – L1 – SA – Q13 – Elements of Financial Statements"

FR – Nov 2021 – L2 – Q1a – Presentation of Financial Statements (IAS 1)

Prepare the financial statements of United Nigeria PLC including comprehensive income, changes in equity, and financial position as of December 31, 2020.

You're reporting an error for "FR – Nov 2021 – L2 – Q1a – Presentation of Financial Statements (IAS 1)"

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