The following financial statements relate to Conso Bank Ghana Limited for the year ended 31 December 2017.

i) The reporting entity
Conso Bank Ghana Limited is a limited liability company incorporated and domiciled in Ghana. The financial statements of the Bank as at and for the year ended 31 December 2017 comprise statement of comprehensive income and the statement of financial position together with the notes accompanying the financial statements.
ii) Basis of Preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). Additional information required under the Companies Act, 1963 (Act 179) and the Banking Act, 2004 (Act 673) as amended by the Banking (Amendment) Act, 2007 (Act 738) have been included, where appropriate.

Required:
Using the indirect method, prepare a statement of cash flows for the year ended 31 December 2017, in accordance with IAS 7: Statement of Cash Flows.                                                                                                                                                 (16 marks)

In accordance with IAS: 12 Income Taxes, deferred tax liabilities are the amounts of income taxes payable in future periods in respect of taxable temporary differences.
Required:
Explain temporary differences.                                                                                                                                           (2 marks)

The following events occurred after the year end, but before the financial statements were authorised for issue:
i) Enactment by the government of a revised tax rate affecting the amount of the settlement of the deferred tax liability included in the financial statements.
ii) A share split in respect of the earnings per share calculation.
iii) Criteria being met in order to classify non-current assets as held for sale.
iv) A material, but not fundamental, error arising in the comparative figures.
Required:
In accordance with IAS 10: Events after the reporting period, explain with justification whether each of the above is an adjusting or a non-adjusting event after the reporting period.                                                                                           (4 marks)

Talensi, a company reporting under IFRS, is considering making the following changes to its financial statements for the year ended 31 December 2017. Talensi presents one year of comparative information.
i) Changing the method of depreciation of its plant from straight line depreciation over five years (with a nil residual value) to reducing balance at 20% per annum with effect from1 January 2017. The plant originally cost GH¢100 million on 1 January 2015.
ii) Changing the basis of valuation of certain non-seasonal inventories from first-in first-out (FIFO) to weighted average cost (WAC). Inventories were valued as follows under the two different methods:

                         31 December 2015            31 December 2016              31 December 2017
                            GH¢ million                         GH¢ million                        GH¢ million
FIFO                          64                                           66                                          71
WAC                          62                                           63                                          67

iii) Changing the revenue recognition basis for certain seasonal goods that were first sold in 2015 such that revenue is recognised on delivery to the customer rather than on shipment. This has arisen as a result of a change in delivery arrangements such that, with effect from 1 January 2017, risks are now borne by Talensi until delivery has been made to the customer.
                                                                        2015                         2016                           2017
                                                                  GH¢ million            GH¢ million              GH¢ million
Revenue based on shipment date                     50                              86                               90
Revenue based on delivery date                       46                              84                               88

The cost of the seasonal goods is consistently 80% of sales price.

Profit (calculated using existing policies and accounting estimates) was GH¢240 million for the year ended 31 December 2017.
Required:
Calculate the adjustment to opening retained earnings in the statement of changes in equity (including 2016 comparative figures) in the financial statements for the year ended 31 December 2017; and profit or loss for the year ended 31 December 2017.                                                                                                                                                                                    (6 marks)

Due to a change in Pusiga Ltd’s production plans, an item of machinery with a carrying value of GH¢11 million at 31 December 2017 (after adjusting for depreciation for the year) may be impaired due to a change in use. An impairment test conducted on 31 December 2017, revealed its fair value less cost of disposal to be GH¢5 million. The machine is now expected to generate
an annual net income of GH¢2 million for the next three years at which point the asset would be sold for GH¢2.4 million. An appropriate discount rate is 10%. Pusiga charges depreciation at 20% on reducing balance method on machinery.
Note:

• The present value of ordinary annuity of GH¢1 at 10% for one year, two years and three years are 0.909,1.736 and 2.487 respectively.
• The present value of GH¢1 at 10% for one year, two years and three years 0.909, 0.826 and 0.751 respectively

Required:
In accordance with IAS 36: Impairment of Assets, explain with justification the required accounting treatment in the financial statements of Pusiga Ltd for the year ended 31 December 2017.                                                                                       (3 marks)

Saboba Ltd (Saboba) manufactures plastic water tanks for the farming industry. On 31 May  2018, its closing inventory consisted of 950kg of plastic resin raw material, and also 250 finished units (plastic water tanks). Further information is provided as follows:
i) Plastic: The purchase price of plastic resin was GH¢3 per kg throughout the year to 31 May 2018, plus an additional GH¢0.50 per kg of delivery cost. Saboba has a policy of always keeping plenty of plastic resin in inventory, as its supply can be unreliable. However, close to the year-end, the price of plastic resin reduced due to supply exceeding demand. The purchase
price of Saboba’s raw material is now GH¢2.10 per kg plus the GH¢0.50 per kg delivery charge. The existing inventory of plastic resin can be sold in the market for GH¢1.80 per kg net of all costs.
ii) Tanks: Each tank requires 10 kg of plastic to manufacture, and each unit incurs GH¢25 in conversion costs (labour and overhead). Saboba sells the tanks for GH¢100. It is expected that this price will drop to GH¢90 as a result of the fall in the market price of plastic. All completed units sold by Saboba incur a GH¢6 selling and distribution cost.

Required:
Calculate the value of closing inventory in the books of Saboba Ltd at 31 May 2018 applying the principles of IAS 2: Inventories.                                                                                                                                                                         (5 marks)

a) Explain the accounting treatment for ‘deferred consideration’ and ‘contingent consideration’ in the context of the acquisition of a subsidiary by a parent entity.                                                                                                                                        (4 marks)

b) You are the Financial Accountant of Faisal Ltd (Faisal), a Ghanaian listed company, involved in food retailing. During 2017, Faisal acquired interests in Zaytuna Ltd (Zaytuna) and Medeama Ltd (Medeama).The Statement of profit or loss for Faisal, Zaytuna and Medeama for the year ended 31 December 2017 are as follows:

Additional information:
i) On 1 April 2017, Faisal purchased 12 million of the 15 million GH¢1 ordinary shares in Zaytuna at a cost of GH¢8 per ordinary share. At the date of acquisition the fair values of Zaytuna’s net assets were equal to their book value with the exception of property, the details of which are as follows:

The property, which had a useful economic life of 25 years on 1 January 2015, is in a prime commercial location and has increased dramatically in value since it was purchased by Zaytuna on 1 January 2015. The replacement cost of a similar building, with a similar remaining useful economic life at 1 April 2017, is GH¢100 million. The fair value at acquisition has not been reflected in the records of Zaytuna.
ii) On 1 July 2017, Faisal purchased 4 million of the 10 million GH¢1 ordinary shares in Medeama at a cost of GH¢6 per ordinary share. At the date of acquisition the fair values of Medeama’s net assets were equal to their book value with the exception of property that had a fair value of GH¢9 million in excess of its book value and a remaining useful life of four years.
iii) In August 2017, Faisal sold goods to Zaytuna for GH¢7.5 million and 20% of these goods remained unsold at 31 December 2017. Faisal prices its sales at cost plus 50%.

iv) On 23 January 2018, Faisal sold its former head office administrative building for GH¢1.25 million. At 31 December 2017, the building was for sale and unoccupied, with staff having moved to a new premises. The book value of the building in the statement of financial position of Faisal as at 31 December 2017 was GH¢2 million.
v) Each company charges depreciation on a time apportionment basis to operating expenses.
vi) The directors of Faisal believe that any goodwill arising on the acquisition of Zaytuna and Medeama has been impaired by 25% as at 31 December 2017. The directors have a policy of measuring non-controlling interests at the proportionate share of identifiable net assets.
(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:
Prepare the consolidated statement of profit or loss account of Faisal Group for the year ended 31 December 2017 in accordance with International Financial Reporting Standards (IFRS).                                                                                               (16 marks)

The following trial balances for the year ended 31 December 2017 were obtained from the Head Office and Branch of Compassionate Grounds Ltd.

Additional information was as follows:
i) The branch deposited GH¢800,000 on behalf of the head office in the bank on 31 December 2017. No record of this transaction had been made in head office books.
ii) All goods sold by the branch are supplied from the head office at cost plus 25%. At 31 December 2017 goods to the value of GH¢10 million were in transit to the branch.
iii) Inventories at 31 December 2017, excluding goods in transit were as follows:
                                              GH¢’000
Branch at mark up                    8,000
Head office at cost                   14,500
Required:
Prepare for the head office, branch and combined entity of Compassionate Grounds Limited: Statement of profit or loss for the year ended 31 December 2017 and Statement of financial position as at 31 December 2017.                                         (15 marks)

b) According to the IASB Conceptual Framework, the concept of capital maintenance is concerned with how an entity defines the capital it seeks to maintain. The concept of capital gives rise to financial capital maintenance and physical capital maintenance. The selection of the appropriate concept of capital by an entity should be based on the needs of the users of its financial statements.
Required:
Distinguish between financial capital maintenance and physical capital maintenance.                                                  (6 marks)

c) Once an entity has recognized an item of Property, Plant and Equipment as an asset in its books, the entity can choose between two models (or methods) to account for the asset in subsequent measurement periods, that is, the period(s) after the asset has been acquired and before its disposition. The two models are the cost model and the revaluation model. The entity shall apply the same model to the entire class of property, plant and equipment to which that asset is of similar nature and use in the entity’s operations.
Required:
Identify TWO differences between the cost and revaluation model for the measurement of Property, Plant and Equipment.   (4 marks)

Obiya ltd assembles computer equipment from bought in components and distributes them to various wholesalers and retailers. It has recently subscribed to an inter-firm comparison service. Members submit accounting ratio as specified by the operator of the service, and in return, members receive the average figures for each of the specified ratios taken from all of the companies in the same sector that subscribe to the service. The specified ratios and the average figures for Obiya’s sector are shown below.

Notes:
i) The details of the non-current assets are:
                                                Cost             Accumulated depreciation             Net book value
                                             GH¢000                      GH¢000                                   GH¢000
At 30 September 2017           3,600                           3,060                                         540
ii) The exceptional item relates to losses on the sale of a batch of computers that had become worthless due to improvements in microchip design.
iii) The market price of Obiya’s shares throughout the year averaged GH¢6.00 each.
Required:
a) Calculate the ratios for Obiya equivalent to those provided by the inter-firm comparison service.                               (5 marks)

b) Write a report analysing the operational performance, gearing, investment and liquidity of Obiya based on a comparison with the sector averages.                                                                                                                                                            (10 marks)