Topic: Preparation and presentation of financial statements for covered entities

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PSAF – Nov 2024 – L2 – Q2a – Valuation of Legacy Fixed Assets

Valuation and accounting treatment of legacy fixed assets in compliance with IPSAS.

Question

The Ministry of Indigenous Enterprises has been charged to collect legacy fixed assets data and value them in accordance with International Public Sector Accounting Standards (IPSAS). The Fixed Assets Coordinating Unit (FACU) of the Ministry has collected for valuation the following data for your action:

The Ministry owns a four (4) storey Office Administration block. The average cost per floor is GH¢4,741,256.25. The building was constructed on a land size of 20 plots of land owned by the Ministry. Currently, a plot of land in that area costs GH¢2,500,000. The FACU has measured the sizes of the building as follows:

Length: 87.5 meters
Width: 42.65 meters
Reference Price per Square Meter: GH¢4,432

However, a professional body, the Institute of Architects and Engineers, has given the reference price for the cost of such an office building at an estimated price of GH¢87,965,025. The building has not seen any further facelift ever since. However, a fence wall with a gate to enforce security and secure the land has just been completed in the current year at a cost of GH¢8,970,000 with a lifespan of 50 years.

The year of construction of the office building could not be determined, yet an old watchman who had been there for ages remembers that the building was constructed some 42 years ago, a time when his seventh child was born. It is the decision of the Government of Ghana on the adoption of IPSAS not to take advantage of the three-year exemption period but to account for legacy fixed assets by taking 60% of the reference cost of the legacy assets as the deemed cost, with a reduced lifespan of 30 years.

Required:

i) Calculate the cost of the land and buildings with structures to be brought into the books on the adoption of IPSAS and determine the depreciation chargeable in the first year in respect of these assets. ii) Show the extract of Statement of Financial Position of the Ministry of Indigenous
Enterprises as at that date

Answer

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Tags: Depreciation, Financial Statements, Fixed Assets, IPSAS, Public Sector, Valuation
Level: Level 2

PSAF – July 2023 – L2 – Q2 – Preparation and presentation of financial statements for covered entities

Prepare the Statement of Financial Performance and Statement of Financial Position for Ayigya Central Hospital for the year ended December 31, 2022, based on the provided trial balance and additional information.

Question

Ayigya Central Hospital is a Public Hospital established in the Ashanti Region, which serves several communities in the Municipalities. Its Trial Balance for the year ended 31 December 2022 is provided below:

Additional information:

Inventory as at 31 December 2022 consists of Drugs and Stationery amounting to GH¢50 million and GH¢20 million respectively.
Four patients who paid GH¢25 million to the Hospital intending to undertake heart surgery are scheduled to have their surgery done in February 2023. This amount is included in Surgical Fees.
The fixed assets in the trial balance were acquired at the beginning of the year. It is the policy of the Hospital to provide for the consumption of fixed assets using the straight-line method:
- Asset: Laboratory Equipment, Building, Motor Vehicles, Software
- Useful life: 5 years, 50 years, 10 years, 5 years respectively
Salaries and other emoluments outstanding relating to casual labor during the year amounted to GH¢8 million.
Provision for Bad Debt relates to NHIS Claims Receivables in the Trial balance. The Provision for Bad Debt is 2%.

Required:

a) Prepare a Statement of Financial Performance for Ayigya Central Hospital for the year ended December 31, 2022. (10 marks)

b) Prepare a Statement of Financial Position for Ayigya Central Hospital as at December 31, 2022. (10 marks)

Answer

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Tags: Financial Performance, Financial Position, Public Hospital, Public Sector Accounting, Trial Balance
Level: Level 2

Topic: Preparation and presentation of financial statements for covered entities
Series: JULY 2023

PSAF- Nov 2019 – L2 – Q2a -Preparation and presentation of financial statements for covered entities

Prepare the Statement of Financial Performance and Statement of Financial Position for Bunsu Education College as of 31/12/2018.

Question

a) The following Trial Balance relates to Bunsu Education College, a public tertiary educational institution in Ghana, as at 31/12/2018.

	DR (GH¢’000)	CR (GH¢’000)
Fees Income		4,575,622
Establish Post	5,312,430
Allowance	856,670
Consultancy Fees		655,600
Legal Cost	25,059
		1,540,000
Consultancy Cost	565,500
Non-Establish Post	1,253,600
Seminars cost	500,000
Sponsorship	8,100	9,066,828
Receivables	468,050
Payables		182,840
20% loan		8,600
Books and Research Allowance	150,765
Plant and Machinery	3,000,000	250,000
Motor Vehicle	2,505,000	352,000
Building	12,300,000	756,000
Software	995,500	150,000
Other Incomes		211,430
Project Work Supervisory Allowance	48,500
Cash and Bank	294,233
Training and Workshop cost	104,000
Bad debt provision (student fees)		4,940
Work In Progress	8,251,735
Other Expenses	71,000
Withholding Tax		90,500
Accumulated Fund		11,205,270
Utilities Bills	560,053
Proceeds from Sale of Admission Forms		9,196,270
Superannuation	278,500
End of Service Benefits	298,040
Stationery Stock	399,165
	38,245,900	38,245,900

Additional Information: i) The college has adopted the accrual basis International Public Sector Accounting Standards (IPSAS) as the basis for the preparation of its financial statements. ii) Stationery stock as at 31/12/2018 was GH¢200,500,000 but had a Net Realisable Value of GH¢155,254,000. iii) Social benefits of GH¢1,720,000 yet to be paid during the year were included in the Work In Progress value. Consultancy cost amounting to GH¢234,500,000 was incurred but not yet paid. iv) Books and Research Allowance was received from Government during the period amounting to GH¢337,530,000 for disbursement to qualified Lecturers and Administrative staff. v) Provision is to be made for interest on loans. vi) 60% of the receivables represent an amount of students’ fees outstanding as at 31/12/2017. Provision for doubtful debt is estimated to be 5% of outstanding school fees. vii) The university uses a straight-line basis of depreciation for Capital Assets. Capital Assets and their useful lives are detailed out below:

Assets	Useful Life
Plant and Machinery	8 years
Motor Vehicle	5 years
Building	50 years
Software	7 years

Required: i) Prepare a Statement of Financial Performance for Bunsu Educational College for the year ended 31/12/2018. (8 marks)

ii) Prepare a Statement of Financial Position as at 31/12/2018. (6 marks)

Answer

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Tags: Educational Institution, Financial Performance, Financial Position, IPSAS, Public Sector
Level: Level 2

Topic: Preparation and presentation of financial statements for covered entities
Series: NOV 2019

PSAF – Dec 2023 – L2 – Q2a – Preparation and presentation of financial statements for covered entities

Prepare a Statement of Financial Performance and a Statement of Financial Position for Danke State University as at 31 December 2021, along with the accounting policies.

Question

The following Trial Balance relates to Danke State University, a public tertiary educational institution in Ghana, as at 31 December 2021:

Additional Information:

It is the policy of the University to prepare Financial Statements on an accrual basis in compliance with Public Financial Management Act, 2016 (Act 921), Public Financial Management Regulation 2019 (L.I 2378), and the International Public Sector Accounting Standards (IPSAS).
Utility Bills outstanding during the year amounted to GH¢15,500,000 whilst that of Established Post Salaries amounted to GH¢120,000,000. These have been omitted from the trial balance.
Loans and Advances represent Salary Loans given to some Staff of the University. These loans were granted at a concessionary interest rate of 2%. Provision is to be made for interest on Loans and Advances.
The Fees Receivables represent outstanding school fees for 870 students. Out of this, 90 students were expelled from the school for poor academic performance. As a result, it is very unlikely the University would recover the amount of School Fees owed by the expelled students. This amount constitutes 5% of Fees Receivables. The University from experience also considers that it is very unlikely to recover all the outstanding fees and they intend to set a provision of unrecoverable debt against the remaining school fees at the rate of 7%.
Included in the Other Facility User Fees is hostel fees amounting to GH¢1,050,000 paid in respect of the 2022/2023 Academic year.
Inventory of Textbooks as at 31 December 2021 amounted to GH¢ 142,500,000 at cost and having a Net Realisable Value of GH¢165,000,000, but its Replacement Cost is GH¢78,000,000. In addition, stationery inventory as at 31 December 2021 amounted to GH¢17,000,000 and having a Replacement Cost of GH¢18,000,000 with an estimated Net Realisable Value of GH¢25,000,000.
The University uses the Straight Line method of depreciation for Non-Current Assets. Details of Non-Current Assets and their respective useful lives are stated below:

Non-Current Assets	Useful Life
Property, Plant, and Machinery	20 years
Investment Property	10 years
Software	10 years

Required: a) Prepare a Statement of Financial Performance for Danke State University for the year ended 31 December 2021. (8 marks)
b) Prepare a Statement of Financial Position for Danke State University as at 31 December 2021. (8 marks)
c) State FOUR (4) accounting policies applied in preparing the financial statement. (4 marks)

Answer

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Tags: Financial Performance, Financial Position, Public Tertiary Institution
Level: Level 2

Topic: Preparation and presentation of financial statements for covered entities
Series: DEC 2023

PSAF – Nov 2018 – L2 – Q4a – Preparation and presentation of financial statements for covered entities

Prepare the Statement of Income and Expenditure and Statement of Financial Position for DFG for the year ended 31 December 2016.

Question

Destitute Foundation Ghana (DFG) is a Non-Governmental Organisation established in 1980 with the mission of protecting and securing the economic and social interest of the underprivileged and vulnerables. Below is the trial balance as at 31 December, 2016.

i) It is the policy of management to prepare financial statements on a modified accrual basis. ii) The current chart of accounts of DFG has seven items of expenditure: compensation of employees, administration and general expenses, finance cost, legal cost, capital assets, project cost, and other expenses. iii) Under the current chart of accounts, income is classified as fund-raising, grants/supports, and fees and charges.

Required: a) Prepare Statement of Income and Expenditure for the year ended 31 December 2016, suitable for publication. (8 marks)

b) Prepare Statement of Financial Position as at 31 December 2016. (8 marks)

c) Disclose relevant notes to the accounts. (4 marks)

Answer

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Tags: Financial Statements, Income and Expenditure, Non-Governmental Organization, Public Sector Accounting
Level: Level 2

Topic: Preparation and presentation of financial statements for covered entities
Series: NOV 2018

PSAF – Nov 2021 – L2 – Q2 – Preparation and presentation of financial statements for covered entities

Prepare the Statement of Financial Performance, Statement of Financial Position, and Notes to the Accounts for a Municipal Hospital based on the provided trial balance and additional information.

Question

Kologo Municipal Hospital is a Public Hospital established in the Upper East Region, which serves several communities. Its Trial Balance for the year ended 31 December 2020 is provided below.

Trial Balance as at 31 December 2020

Additional Information

i) The hospital’s policy is to apply the Accrual Basis of Accounting in preparing its Financial Statements in compliance with the Public Financial Management Act, 2016 (Act 921), Public Financial Management Regulation 2019 L.I 2378, and the International Public Sector Accounting Standards (IPSAS).

ii) The hospital purchased equipment at the cost of GH¢200,000 on 1 April 2020.

iii) A new equipment valuing GH¢100,000 was donated to the hospital on 1 July 2020. The equipment was assessed to have a useful life of ten (10) years. This has not yet been accounted for in the Trial Balance.

iv) The Fixed Deposit attracts an interest of 15% per annum.

v) Inventory of drugs as at 31 December 2020 amounted to GH¢95,000,000 at cost and had a net realizable value of GH¢110,000,000 but its replacement cost is GH¢78,000,000. In addition, stationery stock as at 31 December 2020 cost GH¢28,000,000 and has a replacement cost of GH¢25,000,000 with an estimated net realizable value of GH¢35,000,000.

vi) Redundancy pay outstanding as at the end of the year amounted to GH¢25,950,000.

vii) Provision for undertaking is estimated at 10%.

viii) The hospital currently owes Healer Pharmaceuticals for Drugs amounting to GH¢1,950,000 supplied to the hospital during the years 2020 and 2021 in respect of the following months:

November 2020: GH¢820,000
December 2020: GH¢610,000
January 2021: GH¢520,000
Totals: GH¢1,950,000

ix) Consumption of Fixed Assets is charged on a straight-line basis with time apportionment in the year of acquisition.

Asset | Useful life
- Laboratory Equipment | 20 years
- Building | 50 years
- Motor Vehicles | 10 years
- Software | 5 years

Required:

Prepare in compliance with the IPSAS and relevant legislation:

a) Statement of Financial Performance for the year ended 31 December 2020.
(8 marks)

b) Statement of Financial Position as at 31 December 2020.
(8 marks)

c) Notes to the Accounts.
(4 marks)

Answer

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Tags: Financial Statements, IPSAS, Municipal Hospital, Public Sector Accounting, Trial Balance
Level: Level 2

Topic: Preparation and presentation of financial statements for covered entities
Series: NOV 2021

PSAF – Nov 2024 – L2 – Q2a – Valuation of Legacy Fixed Assets

Valuation and accounting treatment of legacy fixed assets in compliance with IPSAS.

Question

Length: 87.5 meters
Width: 42.65 meters
Reference Price per Square Meter: GH¢4,432

Required:

Answer

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Tags: Depreciation, Financial Statements, Fixed Assets, IPSAS, Public Sector, Valuation
Level: Level 2

PSAF – July 2023 – L2 – Q2 – Preparation and presentation of financial statements for covered entities

Prepare the Statement of Financial Performance and Statement of Financial Position for Ayigya Central Hospital for the year ended December 31, 2022, based on the provided trial balance and additional information.

Question

Additional information:

Inventory as at 31 December 2022 consists of Drugs and Stationery amounting to GH¢50 million and GH¢20 million respectively.
Four patients who paid GH¢25 million to the Hospital intending to undertake heart surgery are scheduled to have their surgery done in February 2023. This amount is included in Surgical Fees.
The fixed assets in the trial balance were acquired at the beginning of the year. It is the policy of the Hospital to provide for the consumption of fixed assets using the straight-line method:
- Asset: Laboratory Equipment, Building, Motor Vehicles, Software
- Useful life: 5 years, 50 years, 10 years, 5 years respectively
Salaries and other emoluments outstanding relating to casual labor during the year amounted to GH¢8 million.
Provision for Bad Debt relates to NHIS Claims Receivables in the Trial balance. The Provision for Bad Debt is 2%.

Required:

a) Prepare a Statement of Financial Performance for Ayigya Central Hospital for the year ended December 31, 2022. (10 marks)

b) Prepare a Statement of Financial Position for Ayigya Central Hospital as at December 31, 2022. (10 marks)

Answer

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Tags: Financial Performance, Financial Position, Public Hospital, Public Sector Accounting, Trial Balance
Level: Level 2

Topic: Preparation and presentation of financial statements for covered entities
Series: JULY 2023

PSAF- Nov 2019 – L2 – Q2a -Preparation and presentation of financial statements for covered entities

Prepare the Statement of Financial Performance and Statement of Financial Position for Bunsu Education College as of 31/12/2018.

Question

a) The following Trial Balance relates to Bunsu Education College, a public tertiary educational institution in Ghana, as at 31/12/2018.

	DR (GH¢’000)	CR (GH¢’000)
Fees Income		4,575,622
Establish Post	5,312,430
Allowance	856,670
Consultancy Fees		655,600
Legal Cost	25,059
		1,540,000
Consultancy Cost	565,500
Non-Establish Post	1,253,600
Seminars cost	500,000
Sponsorship	8,100	9,066,828
Receivables	468,050
Payables		182,840
20% loan		8,600
Books and Research Allowance	150,765
Plant and Machinery	3,000,000	250,000
Motor Vehicle	2,505,000	352,000
Building	12,300,000	756,000
Software	995,500	150,000
Other Incomes		211,430
Project Work Supervisory Allowance	48,500
Cash and Bank	294,233
Training and Workshop cost	104,000
Bad debt provision (student fees)		4,940
Work In Progress	8,251,735
Other Expenses	71,000
Withholding Tax		90,500
Accumulated Fund		11,205,270
Utilities Bills	560,053
Proceeds from Sale of Admission Forms		9,196,270
Superannuation	278,500
End of Service Benefits	298,040
Stationery Stock	399,165
	38,245,900	38,245,900

Assets	Useful Life
Plant and Machinery	8 years
Motor Vehicle	5 years
Building	50 years
Software	7 years

Required: i) Prepare a Statement of Financial Performance for Bunsu Educational College for the year ended 31/12/2018. (8 marks)

ii) Prepare a Statement of Financial Position as at 31/12/2018. (6 marks)

Answer

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Tags: Educational Institution, Financial Performance, Financial Position, IPSAS, Public Sector
Level: Level 2

Topic: Preparation and presentation of financial statements for covered entities
Series: NOV 2019

PSAF – Dec 2023 – L2 – Q2a – Preparation and presentation of financial statements for covered entities

Prepare a Statement of Financial Performance and a Statement of Financial Position for Danke State University as at 31 December 2021, along with the accounting policies.

Question

The following Trial Balance relates to Danke State University, a public tertiary educational institution in Ghana, as at 31 December 2021:

Additional Information:

It is the policy of the University to prepare Financial Statements on an accrual basis in compliance with Public Financial Management Act, 2016 (Act 921), Public Financial Management Regulation 2019 (L.I 2378), and the International Public Sector Accounting Standards (IPSAS).
Utility Bills outstanding during the year amounted to GH¢15,500,000 whilst that of Established Post Salaries amounted to GH¢120,000,000. These have been omitted from the trial balance.
Loans and Advances represent Salary Loans given to some Staff of the University. These loans were granted at a concessionary interest rate of 2%. Provision is to be made for interest on Loans and Advances.
The Fees Receivables represent outstanding school fees for 870 students. Out of this, 90 students were expelled from the school for poor academic performance. As a result, it is very unlikely the University would recover the amount of School Fees owed by the expelled students. This amount constitutes 5% of Fees Receivables. The University from experience also considers that it is very unlikely to recover all the outstanding fees and they intend to set a provision of unrecoverable debt against the remaining school fees at the rate of 7%.
Included in the Other Facility User Fees is hostel fees amounting to GH¢1,050,000 paid in respect of the 2022/2023 Academic year.
Inventory of Textbooks as at 31 December 2021 amounted to GH¢ 142,500,000 at cost and having a Net Realisable Value of GH¢165,000,000, but its Replacement Cost is GH¢78,000,000. In addition, stationery inventory as at 31 December 2021 amounted to GH¢17,000,000 and having a Replacement Cost of GH¢18,000,000 with an estimated Net Realisable Value of GH¢25,000,000.
The University uses the Straight Line method of depreciation for Non-Current Assets. Details of Non-Current Assets and their respective useful lives are stated below:

Non-Current Assets	Useful Life
Property, Plant, and Machinery	20 years
Investment Property	10 years
Software	10 years

Answer

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Tags: Financial Performance, Financial Position, Public Tertiary Institution
Level: Level 2

Topic: Preparation and presentation of financial statements for covered entities
Series: DEC 2023

PSAF – Nov 2018 – L2 – Q4a – Preparation and presentation of financial statements for covered entities

Prepare the Statement of Income and Expenditure and Statement of Financial Position for DFG for the year ended 31 December 2016.

Question

Required: a) Prepare Statement of Income and Expenditure for the year ended 31 December 2016, suitable for publication. (8 marks)

b) Prepare Statement of Financial Position as at 31 December 2016. (8 marks)

c) Disclose relevant notes to the accounts. (4 marks)

Answer

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Tags: Financial Statements, Income and Expenditure, Non-Governmental Organization, Public Sector Accounting
Level: Level 2

Topic: Preparation and presentation of financial statements for covered entities
Series: NOV 2018

PSAF – Nov 2021 – L2 – Q2 – Preparation and presentation of financial statements for covered entities

Prepare the Statement of Financial Performance, Statement of Financial Position, and Notes to the Accounts for a Municipal Hospital based on the provided trial balance and additional information.

Question

Kologo Municipal Hospital is a Public Hospital established in the Upper East Region, which serves several communities. Its Trial Balance for the year ended 31 December 2020 is provided below.

Trial Balance as at 31 December 2020

Additional Information

ii) The hospital purchased equipment at the cost of GH¢200,000 on 1 April 2020.

iv) The Fixed Deposit attracts an interest of 15% per annum.

vi) Redundancy pay outstanding as at the end of the year amounted to GH¢25,950,000.

vii) Provision for undertaking is estimated at 10%.

viii) The hospital currently owes Healer Pharmaceuticals for Drugs amounting to GH¢1,950,000 supplied to the hospital during the years 2020 and 2021 in respect of the following months:

November 2020: GH¢820,000
December 2020: GH¢610,000
January 2021: GH¢520,000
Totals: GH¢1,950,000

ix) Consumption of Fixed Assets is charged on a straight-line basis with time apportionment in the year of acquisition.

Asset | Useful life
- Laboratory Equipment | 20 years
- Building | 50 years
- Motor Vehicles | 10 years
- Software | 5 years

Required:

Prepare in compliance with the IPSAS and relevant legislation:

a) Statement of Financial Performance for the year ended 31 December 2020.
(8 marks)

b) Statement of Financial Position as at 31 December 2020.
(8 marks)

c) Notes to the Accounts.
(4 marks)

Answer

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Tags: Financial Statements, IPSAS, Municipal Hospital, Public Sector Accounting, Trial Balance
Level: Level 2

Topic: Preparation and presentation of financial statements for covered entities
Series: NOV 2021

Topic: Preparation and presentation of financial statements for covered entities

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PSAF – Nov 2024 – L2 – Q2a – Valuation of Legacy Fixed Assets

Valuation and accounting treatment of legacy fixed assets in compliance with IPSAS.

PSAF – July 2023 – L2 – Q2 – Preparation and presentation of financial statements for covered entities

Prepare the Statement of Financial Performance and Statement of Financial Position for Ayigya Central Hospital for the year ended December 31, 2022, based on the provided trial balance and additional information.

PSAF- Nov 2019 – L2 – Q2a -Preparation and presentation of financial statements for covered entities

Prepare the Statement of Financial Performance and Statement of Financial Position for Bunsu Education College as of 31/12/2018.

PSAF – Dec 2023 – L2 – Q2a – Preparation and presentation of financial statements for covered entities

Prepare a Statement of Financial Performance and a Statement of Financial Position for Danke State University as at 31 December 2021, along with the accounting policies.

PSAF – Nov 2018 – L2 – Q4a – Preparation and presentation of financial statements for covered entities

Prepare the Statement of Income and Expenditure and Statement of Financial Position for DFG for the year ended 31 December 2016.

PSAF – Nov 2021 – L2 – Q2 – Preparation and presentation of financial statements for covered entities

Prepare the Statement of Financial Performance, Statement of Financial Position, and Notes to the Accounts for a Municipal Hospital based on the provided trial balance and additional information.

PSAF – Nov 2024 – L2 – Q2a – Valuation of Legacy Fixed Assets

Valuation and accounting treatment of legacy fixed assets in compliance with IPSAS.

PSAF – July 2023 – L2 – Q2 – Preparation and presentation of financial statements for covered entities

Prepare the Statement of Financial Performance and Statement of Financial Position for Ayigya Central Hospital for the year ended December 31, 2022, based on the provided trial balance and additional information.

PSAF- Nov 2019 – L2 – Q2a -Preparation and presentation of financial statements for covered entities

Prepare the Statement of Financial Performance and Statement of Financial Position for Bunsu Education College as of 31/12/2018.

PSAF – Dec 2023 – L2 – Q2a – Preparation and presentation of financial statements for covered entities

Prepare a Statement of Financial Performance and a Statement of Financial Position for Danke State University as at 31 December 2021, along with the accounting policies.

PSAF – Nov 2018 – L2 – Q4a – Preparation and presentation of financial statements for covered entities

Prepare the Statement of Income and Expenditure and Statement of Financial Position for DFG for the year ended 31 December 2016.

PSAF – Nov 2021 – L2 – Q2 – Preparation and presentation of financial statements for covered entities

Prepare the Statement of Financial Performance, Statement of Financial Position, and Notes to the Accounts for a Municipal Hospital based on the provided trial balance and additional information.

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