The following is the trial balance of Kwadaso Ltd, a trading company, as at 30 September 2015:
Additional information:
i) On 31 March 2015 the company made a bonus issue from retained earnings of one new share for every four shares in issue at GH¢ 10.00 each. This transaction is yet to be recorded in the books.
The company paid ordinary dividends of GH¢2.2 per share on 31 January 2015 and GH¢2.6 per share on 30 June 2015. The dividend payments are included in administrative expenses in the trial balance.
ii) Provision is to be made for a full year’s interest on the Loan notes.
iii) The finance charge relating to the preference shares is equal to the dividend payable.
iv) Non-current assets:
- Depreciation of Property, plant and equipment is to be provided on the following bases:
Plant and equipment 10% on cost
Computer equipment 25% on cost
Motor vehicles 20% on reducing balance
- No depreciation has yet been charged on any non-current asset for the year ended 30 September 2015.
- Kwadaso revalues its buildings at the end of each accounting year. At 30 September 2015 the relevant value to be incorporated into the financial statements is GH¢14,100,000.
- The building’s remaining life at the beginning of the current year (1 October 2014) was 25 years. Kwadaso does not make an annual transfer from the revaluation reserve to retained earnings in respect of the realisation of the revaluation surplus. Ignore deferred tax on the revaluation surplus.
v) The available-for-sale investments held at 30 September 2015 had a fair value of GH¢ 8,400,000. There were no acquisitions or disposals of these investments during the year.
vi) In February 2015, Kwadaso’s internal audit unit discovered a fraud committed by the company’s credit manager who did not return from a foreign business trip. The outcome of the fraud is that GH¢500,000 of the company’s trade receivables have been stolen by the credit manager and are not recoverable. Of this amount, GH¢200,000 relates to the year ended 30 September 2014 and the remainder to the current year. Kwadaso is not insured against this fraud.
vii) Corporate income tax payable estimated on the profit for the year is GH¢3,500,000. An amount of GH¢1,200,000 is to be transferred to the deferred taxation account.
Required: (20 marks)
Prepare the following financial statements of Kwadaso Ltd for publication in accordance with International Financial Reporting Standards (IFRS): (Note: Accounting policy notes are not required)
a) Statement of profit or loss and other comprehensive income for the year ended 30 September 2015;
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b) Statement of changes in equity for the year ended 30 September 2015; and
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c) Statement of financial position as at 30 September 2015.
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Kwadaso Limited
Statement of financial position as at 30 September 2015.
d) Show clearly all relevant workings.