Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
Tafo Group is a key player in the food processing industry made up only of Tafo Ltd (Tafo) and Abirem Ltd (Abirem). Below are the consolidated statement of comprehensive income of Tafo Group and the separate statements of comprehensive income of Tafo and Bonsu Ltd (Bonsu) for the year ended 31 December 2020.
| GH¢ Million | Tafo Group | Tafo | Bonsu |
|---|---|---|---|
| Revenue | 116 | 90 | 25 |
| Cost of Sales | (78) | (62) | (15) |
| Gross Profit | 38 | 28 | 10 |
| Distribution Costs | (7) | (5) | (1.6) |
| Administrative Expenses | (11) | (7.5) | (3.4) |
| Finance Costs | (8.5) | (2) | (0.5) |
| Investment Income | 6 | 5.3 | – |
| Profit Before Tax | 17.5 | 18.8 | 4.5 |
| Tax | (5.6) | (4.8) | (1.5) |
| Profit for the Year | 11.9 | 14 | 3 |
| Other Comprehensive Income | |||
| Gain on Revaluation (Net of Tax) | 4.5 | 3.4 | – |
| Total Comprehensive Income | 16.4 | 17.4 | 3 |
Additional Information:
The policy of the group is to value any non-controlling interests at fair value. For this purpose, it was agreed to use the share price of Abirem as an approximation of its fair value. Abirem’s market capitalisation figures at 1 January 2020 and 31 December 2020 stood at GH¢70 million and GH¢75 million, respectively. The appropriate discount rate for Tafo is 10%. The required unwound discount has been included in the group’s (but not Tafo’s) finance costs.
Required:
a) Calculate the goodwill in Abirem at acquisition and reporting.
(5 marks)
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
Spacefon Ltd (Spacefon), in its quest to gain dominance in the telecommunication industry, bought an 80% holding in the equity of Buzz and 40% of the equity shares of Kasapa Ltd (Kasapa) on 1 July 2017. The purchase price of the investment of Buzz Ltd (Buzz) was agreed at GH¢4,400 million, of which GH¢1,600 million was paid in cash. The remaining balance was paid by issuing 800 million equity shares each of GH¢1 nominal value to the seller at their then fair value of GH¢3.50 each. The 20% non-controlling interest in Buzz had a fair value of GH¢900 million at that date. Buzz’s net assets had a fair value of GH¢4,700 million on 1 July 2017. Spacefon applies the fair value method to calculate goodwill on acquisition.
The following statements of comprehensive income relate to Spacefon and its investee companies, Buzz and Kasapa.
| Statements of Profit or Loss for the year ended 31 October 2017 | Spacefon Ltd (GH¢ million) | Buzz Ltd (GH¢ million) | Kasapa Ltd (GH¢ million) |
|---|---|---|---|
| Revenue | 4,428 | 2,448 | 1,530 |
| Cost of Sales | (1,674) | (864) | (680.4) |
| Gross Profit | 2,754 | 1,584 | 849.6 |
| Operating expenses | (1,116) | (828) | (522) |
| Finance costs | (180) | (108) | (54) |
| Other income | 32.4 | – | – |
| Investment income | 129.6 | – | – |
| Profit before taxation | 1,620 | 648 | 273.6 |
| Taxation | (270) | (108) | (54) |
| Profit for the year | 1,350 | 540 | 219.6 |
| Other comprehensive income | |||
| Gains on revaluations of property | 226.8 | 72 | 64.8 |
| Total comprehensive income for the year | 1576.8 | 612 | 284.4 |
Additional Information:
(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: a) Calculate the goodwill arising on the acquisition of Buzz by Spacefon, and the goodwill amount that should appear in the consolidated Statement of Financial Position of Spacefon as at 31 October 2017. (3 marks)
b) Prepare a Consolidated Statement of Profit or Loss account for Spacefon Group for the year ended 31 October 2017 in accordance with IFRS. (17 marks)
Find Related Questions by Tags, levels, etc.
Below are the financial statements of Panin, Kakra, and Tawia.
Prepare a consolidated statement of financial position for Panin Group as at 31 December 2021.
Find Related Questions by Tags, levels, etc.
The following financial statements relate to Stalky Ltd and Fanny Ltd:
Additional information:
1. Stalky Ltd acquired 30 million ordinary shares of Fanny Ltd on 1 January 2019 when the book value of Fanny Ltd’s share capital (including preference share capital) plus reserves stood at GH¢58 million. The recorded investment includes GH¢1.5 million due diligence costs incurred by Stalky Ltd to facilitate its acquisition of Fanny Ltd. Stalky Ltd has no interest in Fanny Ltd’s issued preference shares.
2. Fair value exercise conducted at the time of Fanny Ltd’s acquisition revealed the following:
3. During the year, Stalky Ltd sold goods worth GH¢25 million to Fanny Ltd with a mark-up of one-third. At 31 December 2020, Fanny Ltd’s inventories included GH¢4.8 million of these goods. At 31 December 2019, Fanny Ltd’s inventories included GH¢3 million worth of goods purchased from Stalky Ltd at the same mark-up. Ignore deferred tax implications on these items.
4. The trade receivables of Stalky Ltd included GH¢8 million receivable from Fanny Ltd. This balance did not agree with the equivalent trade payable in Fanny Ltd’s books due to payment of GH¢2 million made on 30 December 2020 by Fanny Ltd to Stalky Ltd.
5. The group’s policy is to measure the non-controlling interests in subsidiaries at fair value. The fair value per ordinary share in Fanny Ltd at acquisition was GH¢1.50. Goodwill was impaired by 10% for the year ended 31 December 2019. A further impairment of 10% of the remaining goodwill is required in the current period. All impairment losses are charged to operating expenses.
Required:
Prepare the Consolidated Statement of Financial Position as at 31 December 2020 for Stalky Ltd Group.
Find Related Questions by Tags, levels, etc.
The draft statements of financial position of Atia Ltd and that of Santana Ltd as at 30 June 2019 are as follows:
Additional relevant information:
1) On July 1, 2018, Atia Ltd purchased 21 million shares of Santana Ltd. At this date, the retained earnings of Santana Ltd were estimated at GH¢17 million, and the revaluation surplus was GH¢2 million.
2) Atia Ltd paid an initial cash amount of GH¢46 million and agreed to pay Santana Ltd’s shareholders a further GH¢14 million on July 1, 2020. The financial accountant has recorded both elements of the consideration in investments.
3) Atia Ltd has a cost of capital of 8% per annum.
4) During the accounting period, Atia Ltd sold goods totaling GH¢4 million to Santana Ltd at a gross profit margin of 25%. As of 30 June 2019, Santana Ltd still had GH¢0.5 million of these goods in inventory. Atia Ltd has a normal margin of 45%.
5) On the acquisition date, the fair values of Santana Ltd’s net assets were equal to their carrying amounts, except for inventory, which had a cost of GH¢1.5 million but a fair value of GH¢1.8 million. As of 30 June 2019, 10% of these goods remained in Santana Ltd’s inventory.
6) Atia Ltd values non-controlling interest (NCI) at fair value. The NCI’s value at acquisition is estimated at GH¢7.5 million.
7) No impairment was recognized for goodwill.
Required: Prepare the consolidated statement of financial position of the Atia group as at 30 June 2019.
(20 marks)
Find Related Questions by Tags, levels, etc.
Below are the financial statements of Monko Plc and its investee company, Danke Plc for
the year ended 30 September 2023:
Statements of Profit or Loss and other Comprehensive Income for the year ended 30
September 2023
Additional information:
i) On 1 April 2023, Monko Plc acquired 75% of the equity shares of Danke Plc. Danke Plc had been experiencing difficult trading conditions and making significant losses. Taking into consideration Danke Plc’s difficulties, Monko Plc made an immediate cash payment of only GH¢1.50 per share. In addition, Monko Plc will pay a further amount in cash on 30 September 2024 if Danke Plc returns to profitability by that date. The value of this contingent consideration at the date of acquisition was estimated to be GH¢1,800,000 but in the light of continuing losses, it value was
estimated at only GH¢1,500,000 as at 30 September 2023. The contingent consideration has not been recorded by Monko Plc. At the date of acquisition, shares in Danke Plc had a listed market price of GH¢1.20 each.
ii) On 1 April 2023, the fair values of Danke Plc’s assets were equal to their carrying amounts with the exception of a leased property. This had a fair value of GH¢2,000,000 above its
carrying amount and a remaining lease term of 10 years at that date. Depreciation is charged to cost of sales.
iii) Monko Plc transferred raw materials at their cost of GH¢4,000,000 to Danke Plc in June 2023. Danke Plc processed all of these materials incurring additional direct costs of GH¢1,400,000 and sold them back to Monko Plc in August 2023 for GH¢9,000,000. At 30 September 2023, Monko Plc had GH¢1,500,000 of these goods still in inventory.
iv) Monko Plc has recorded its investment in Danke Plc at the cost of the immediate cash payment. Other equity investments (included in the financial assets-equity investments) are carried at fair value through profit or loss as at 1 October 2022. The other equity investments have fallen in value by GH¢200,000 during the year ended 30 September 2023.
v) Monko Plc’s policy is to value the non-controlling interest at fair value at the date of
acquisition. Danke Plc’s share price at that date can be deemed to be representative of the
fair value of the shares held by the non-controlling interest.
vi) All items in the above statements of profit or loss are deemed to accrue evenly over the year unless otherwise indicated.
Required:
a) Compute the Goodwill on acquisition of Danke Plc. (4 marks)
b) Prepare the Consolidated Statement of Profit or Loss and other Comprehensive Income for
Monko Plc Group for the year ended 30 September 2023. (16 marks)
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
Tafo Group is a key player in the food processing industry made up only of Tafo Ltd (Tafo) and Abirem Ltd (Abirem). Below are the consolidated statement of comprehensive income of Tafo Group and the separate statements of comprehensive income of Tafo and Bonsu Ltd (Bonsu) for the year ended 31 December 2020.
| GH¢ Million | Tafo Group | Tafo | Bonsu |
|---|---|---|---|
| Revenue | 116 | 90 | 25 |
| Cost of Sales | (78) | (62) | (15) |
| Gross Profit | 38 | 28 | 10 |
| Distribution Costs | (7) | (5) | (1.6) |
| Administrative Expenses | (11) | (7.5) | (3.4) |
| Finance Costs | (8.5) | (2) | (0.5) |
| Investment Income | 6 | 5.3 | – |
| Profit Before Tax | 17.5 | 18.8 | 4.5 |
| Tax | (5.6) | (4.8) | (1.5) |
| Profit for the Year | 11.9 | 14 | 3 |
| Other Comprehensive Income | |||
| Gain on Revaluation (Net of Tax) | 4.5 | 3.4 | – |
| Total Comprehensive Income | 16.4 | 17.4 | 3 |
Additional Information:
The policy of the group is to value any non-controlling interests at fair value. For this purpose, it was agreed to use the share price of Abirem as an approximation of its fair value. Abirem’s market capitalisation figures at 1 January 2020 and 31 December 2020 stood at GH¢70 million and GH¢75 million, respectively. The appropriate discount rate for Tafo is 10%. The required unwound discount has been included in the group’s (but not Tafo’s) finance costs.
Required:
a) Calculate the goodwill in Abirem at acquisition and reporting.
(5 marks)
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
Spacefon Ltd (Spacefon), in its quest to gain dominance in the telecommunication industry, bought an 80% holding in the equity of Buzz and 40% of the equity shares of Kasapa Ltd (Kasapa) on 1 July 2017. The purchase price of the investment of Buzz Ltd (Buzz) was agreed at GH¢4,400 million, of which GH¢1,600 million was paid in cash. The remaining balance was paid by issuing 800 million equity shares each of GH¢1 nominal value to the seller at their then fair value of GH¢3.50 each. The 20% non-controlling interest in Buzz had a fair value of GH¢900 million at that date. Buzz’s net assets had a fair value of GH¢4,700 million on 1 July 2017. Spacefon applies the fair value method to calculate goodwill on acquisition.
The following statements of comprehensive income relate to Spacefon and its investee companies, Buzz and Kasapa.
| Statements of Profit or Loss for the year ended 31 October 2017 | Spacefon Ltd (GH¢ million) | Buzz Ltd (GH¢ million) | Kasapa Ltd (GH¢ million) |
|---|---|---|---|
| Revenue | 4,428 | 2,448 | 1,530 |
| Cost of Sales | (1,674) | (864) | (680.4) |
| Gross Profit | 2,754 | 1,584 | 849.6 |
| Operating expenses | (1,116) | (828) | (522) |
| Finance costs | (180) | (108) | (54) |
| Other income | 32.4 | – | – |
| Investment income | 129.6 | – | – |
| Profit before taxation | 1,620 | 648 | 273.6 |
| Taxation | (270) | (108) | (54) |
| Profit for the year | 1,350 | 540 | 219.6 |
| Other comprehensive income | |||
| Gains on revaluations of property | 226.8 | 72 | 64.8 |
| Total comprehensive income for the year | 1576.8 | 612 | 284.4 |
Additional Information:
(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: a) Calculate the goodwill arising on the acquisition of Buzz by Spacefon, and the goodwill amount that should appear in the consolidated Statement of Financial Position of Spacefon as at 31 October 2017. (3 marks)
b) Prepare a Consolidated Statement of Profit or Loss account for Spacefon Group for the year ended 31 October 2017 in accordance with IFRS. (17 marks)
Find Related Questions by Tags, levels, etc.
Below are the financial statements of Panin, Kakra, and Tawia.
Prepare a consolidated statement of financial position for Panin Group as at 31 December 2021.
Find Related Questions by Tags, levels, etc.
The following financial statements relate to Stalky Ltd and Fanny Ltd:
Additional information:
1. Stalky Ltd acquired 30 million ordinary shares of Fanny Ltd on 1 January 2019 when the book value of Fanny Ltd’s share capital (including preference share capital) plus reserves stood at GH¢58 million. The recorded investment includes GH¢1.5 million due diligence costs incurred by Stalky Ltd to facilitate its acquisition of Fanny Ltd. Stalky Ltd has no interest in Fanny Ltd’s issued preference shares.
2. Fair value exercise conducted at the time of Fanny Ltd’s acquisition revealed the following:
3. During the year, Stalky Ltd sold goods worth GH¢25 million to Fanny Ltd with a mark-up of one-third. At 31 December 2020, Fanny Ltd’s inventories included GH¢4.8 million of these goods. At 31 December 2019, Fanny Ltd’s inventories included GH¢3 million worth of goods purchased from Stalky Ltd at the same mark-up. Ignore deferred tax implications on these items.
4. The trade receivables of Stalky Ltd included GH¢8 million receivable from Fanny Ltd. This balance did not agree with the equivalent trade payable in Fanny Ltd’s books due to payment of GH¢2 million made on 30 December 2020 by Fanny Ltd to Stalky Ltd.
5. The group’s policy is to measure the non-controlling interests in subsidiaries at fair value. The fair value per ordinary share in Fanny Ltd at acquisition was GH¢1.50. Goodwill was impaired by 10% for the year ended 31 December 2019. A further impairment of 10% of the remaining goodwill is required in the current period. All impairment losses are charged to operating expenses.
Required:
Prepare the Consolidated Statement of Financial Position as at 31 December 2020 for Stalky Ltd Group.
Find Related Questions by Tags, levels, etc.
The draft statements of financial position of Atia Ltd and that of Santana Ltd as at 30 June 2019 are as follows:
Additional relevant information:
1) On July 1, 2018, Atia Ltd purchased 21 million shares of Santana Ltd. At this date, the retained earnings of Santana Ltd were estimated at GH¢17 million, and the revaluation surplus was GH¢2 million.
2) Atia Ltd paid an initial cash amount of GH¢46 million and agreed to pay Santana Ltd’s shareholders a further GH¢14 million on July 1, 2020. The financial accountant has recorded both elements of the consideration in investments.
3) Atia Ltd has a cost of capital of 8% per annum.
4) During the accounting period, Atia Ltd sold goods totaling GH¢4 million to Santana Ltd at a gross profit margin of 25%. As of 30 June 2019, Santana Ltd still had GH¢0.5 million of these goods in inventory. Atia Ltd has a normal margin of 45%.
5) On the acquisition date, the fair values of Santana Ltd’s net assets were equal to their carrying amounts, except for inventory, which had a cost of GH¢1.5 million but a fair value of GH¢1.8 million. As of 30 June 2019, 10% of these goods remained in Santana Ltd’s inventory.
6) Atia Ltd values non-controlling interest (NCI) at fair value. The NCI’s value at acquisition is estimated at GH¢7.5 million.
7) No impairment was recognized for goodwill.
Required: Prepare the consolidated statement of financial position of the Atia group as at 30 June 2019.
(20 marks)
Find Related Questions by Tags, levels, etc.
Below are the financial statements of Monko Plc and its investee company, Danke Plc for
the year ended 30 September 2023:
Statements of Profit or Loss and other Comprehensive Income for the year ended 30
September 2023
Additional information:
i) On 1 April 2023, Monko Plc acquired 75% of the equity shares of Danke Plc. Danke Plc had been experiencing difficult trading conditions and making significant losses. Taking into consideration Danke Plc’s difficulties, Monko Plc made an immediate cash payment of only GH¢1.50 per share. In addition, Monko Plc will pay a further amount in cash on 30 September 2024 if Danke Plc returns to profitability by that date. The value of this contingent consideration at the date of acquisition was estimated to be GH¢1,800,000 but in the light of continuing losses, it value was
estimated at only GH¢1,500,000 as at 30 September 2023. The contingent consideration has not been recorded by Monko Plc. At the date of acquisition, shares in Danke Plc had a listed market price of GH¢1.20 each.
ii) On 1 April 2023, the fair values of Danke Plc’s assets were equal to their carrying amounts with the exception of a leased property. This had a fair value of GH¢2,000,000 above its
carrying amount and a remaining lease term of 10 years at that date. Depreciation is charged to cost of sales.
iii) Monko Plc transferred raw materials at their cost of GH¢4,000,000 to Danke Plc in June 2023. Danke Plc processed all of these materials incurring additional direct costs of GH¢1,400,000 and sold them back to Monko Plc in August 2023 for GH¢9,000,000. At 30 September 2023, Monko Plc had GH¢1,500,000 of these goods still in inventory.
iv) Monko Plc has recorded its investment in Danke Plc at the cost of the immediate cash payment. Other equity investments (included in the financial assets-equity investments) are carried at fair value through profit or loss as at 1 October 2022. The other equity investments have fallen in value by GH¢200,000 during the year ended 30 September 2023.
v) Monko Plc’s policy is to value the non-controlling interest at fair value at the date of
acquisition. Danke Plc’s share price at that date can be deemed to be representative of the
fair value of the shares held by the non-controlling interest.
vi) All items in the above statements of profit or loss are deemed to accrue evenly over the year unless otherwise indicated.
Required:
a) Compute the Goodwill on acquisition of Danke Plc. (4 marks)
b) Prepare the Consolidated Statement of Profit or Loss and other Comprehensive Income for
Monko Plc Group for the year ended 30 September 2023. (16 marks)
Find Related Questions by Tags, levels, etc.
Elevate your professional expertise across key business domains with our comprehensive training programs
Follow us on our social media and get daily updates.
This feature is only available in selected 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.
If you’re not subscribed to a plan, click on the button below to choose a plan
