Zumah Ltd operates a defined benefit pension plan for its employees. At 1 April 2015 the fair value of the pension plan assets was GH¢8,200,000 and the present value of the pension plan liabilities was GH¢8,500,000. The Actuary estimated that, the service cost for the year to 31 March 2016 was GH¢2,100,000. The pension plan paid GH¢500,000 to retired members and Zumah Ltd paid GH¢1,900,000 in contributions to the pension plan in the year to 31 March 2016. The Actuary estimated that, the relevant discount rate for the year to 31 March 2016 was 6%.

On 31 March 2016, Zumah Ltd announced improvements to the benefits offered by the pension plan to all of its members. The Actuary estimated that, the past service cost associated with these improvements was GH¢2 million. At 31 March 2016 the fair value of the pension plan assets was GH¢10,200,000 and the present value of the pension plan liabilities (including the past service costs) was GH¢12,500,000.

Required:
In accordance with IAS 19 Employee Benefits:
i) Calculate the net actuarial gain or loss that will be included in Zumah Ltd’s other comprehensive income for the year ended 31 March 2016.                                                                                                                                                                    (3 marks)

ii) Calculate the net pension asset or liability that will be included in Zumah Ltd’s statement of financial position as at 31 March 2016.                                                                                                                                                                                 (2 marks)

Sawaba Ltd (Sawaba) is a listed entity incorporated in Ghana with the object of producing and selling Designed clothing. The functional and presentation currency of Sawaba is the Ghana cedi (GH¢). In its quest to extend its market outside Ghana, the directors of the company decided to acquire a subsidiary in Nigeria. The corporate name of the investee entity is Enugu Plc (Enugu).

In pursuit to its agenda, Sawaba acquired 4,044,000 of the shares in Enugu for GH¢1,680,000 on 31 December 2014 when Enugu’s retained earnings stood at ₦5,752,000. Enugu operates as an autonomous subsidiary. Its functional currency is the Nigerian Naira (₦). The fair value of the identifiable net assets of Enugu were equivalent to their book values at the acquisition date.

The draft financial statements of Sawaba and its subsidiary, Enugu for 2017 financial year are set out below.

i) Exchange rates moved as follows:

ii) Enugu paid an interim dividend of ₦7,488,000 on 15 May 2017. Sawaba also paid an interim dividend of GH¢1,400,000 on 30 September 2017. No other dividends were paid or declared in 2017.
iii) Assessment of consolidation goodwill for impairment indicated nil impairment in the consolidated financial statements by 31 December 2017. No goodwill impairment had been recognised in the previous years.
iv) Group policy is to measure non-controlling interests at fair value at the acquisition date. The fair value of the non-controlling interests in Enugu was measured at GH¢540,000 on 31 December 2014.

Required:
Prepare the consolidated statements of profit or loss and other comprehensive income, an extract from the statement of changes in equity for income surplus for the year ended 31 December 2017 and the consolidated statement of financial position at 31 December 2017 for Sawaba Group.                                                                                                                                  (15 marks)

b) On 30 June 2016 , Afoko Ltd acquired a 100% interest in Anyidohu Ltd, a public limited company, for a cash consideration of GH¢195 million . Anyidohu’s identifiable net assets were fair valued at GH¢160 million. On 30 November 2017, Afoko disposed of 60% of the equity of Anyidohu when its identifiable net assets were GH¢180 million. Of the increase in net assets, GH¢15 million had been reported in profit or loss and GH¢5 million had been reported in other comprehensive income as a gain on an available for sale financial asset. The sale proceeds were GH¢115 million and the remaining equity interest was fair valued at GH¢65million. Afoko could still exert significant influence after the disposal of the interest.

Required:
Calculate the consolidated gain or loss arising on the disposal of the equity interest in Anyidohu Ltd and explain how the investment in Anyidohu Ltd is accounted for after the disposal of 60% of equity.                                                         (5 marks)

c) Mr. Odorkor Asare is a partner of Fobes Chartered Accountants, an auditing firm. Mr. Asare was informed by the other partners to take a “compulsory leave” because he was in breach of the firm’s independence rules as his wife was the Finance Director of Millenium Insurance (an audit client). He was to resume after completion of the audit. Mr. Asare was disturbed by this notice even though he was not the reporting partner.
Required:
Discuss the stance taken by the other partners of the firm and its effect on the objectivity of Fobes Chartered Accountants.                                                                                                                                                                                                  (3 marks)

d) A distinguishing mark of the accountancy profession is its acceptance of the responsibility to act in the public interest. Therefore, a professional accountant’s responsibility is not exclusively to satisfy the needs of an individual client or employer. In acting in the public interest a professional accountant should observe and comply with the ethical requirements of the IFAC’s Code of Ethics. All accounting professionals are responsible for acting in the public interest, and for promoting professional ethics.
Required:
Comment on the implications of compliance or non-complianceof the ethical code of conducts by professional accountants.                                                                                                                                                                                              (6 marks)

The financial reporting process is concerned with providing information that is useful in the business and economic decision-making process. Therefore a conceptual framework will form the theoretical basis for determining which events should be accounted for, how they should be measured and how they should be communicated to the user. Although, theoretical in nature, a conceptual framework for financial reporting has practical aims.

Required:
Discuss whether an agreed international framework for financial reporting is needed in order to resolve practical accounting issues.                                                                                                                                                                                 (6 marks)

In recent years, the discourse has shifted from Corporate Social Responsibility to Sustainability Reporting. Indeed, some critics would argue that there is very little difference between the two. However, sustainability in this context is a complex and contested concept as it is about ensuring that there are sufficient resources available for future generations. It is very difficult for this to be addressed at individual level of the firm. There are huge external pressures for companies to disclose information in relation to their impacts on carbon emissions, waste management, protection of biodiversity and health and safety. Expectations of key users (stakeholders) are changing.
Required:
i) Identify FOUR limitations of financial reporting in the context of reporting the social and environmental impacts of corporate activity to users of financial statements.                                                                                                              (6 marks)

ii) What are companies currently doing to report their social and environmental performance?                                      (4 marks)

Ahomka Ltd is a public listed manufacturing company. Its summarised financial statements for the year ended 30 April 2017 (and 2016 comparatives) are as follows:

The following additional information is available:
i) There were no additions to, or disposals of, non-current assets during the year.
ii) In order to help cash flows, the company made a rights issue of shares during the year ending 30 April 2017, all of which ranked for dividend. No shares were issued during the year ended 30 April 2016.
iii) The dividend per share has been reduced by 50% for year ended 30 April 2017.
Required:
a) Prepare a statement of changes in equity for years ended 30 April 2016 and 2017 for Ahomka Ltd as the above information permits.                                                                                                                                                                                (5 marks)

b) Analyse and discuss the financial performance and financial position of Ahomka Ltd as portrayed in the financial statements and in the additional information provided. Your analysis should be supported by relevant ratios.               (10 marks)

Santader Limited intends to take over Agos Limited. The financial statements of Agos Limited for the year ended 30 June 2016 are as follows:

Additional Information:
i) Turnover, profits before tax and dividend of Agos Limited over the past 5 years were as follows:

ii) The patent represents a license to produce and sell a special product. This product is expected to generate a pre-tax profit of GH¢12,000 per annum in perpetuity.
iii) The discount rate of Agos Limited is 10% per annum.
iv) Nhyira Limited, a major competitor of Agos Limited, is listed on the Stock Exchange and has a P/E ratio of 8 and a dividend yield of 10%.
v) Nhyira Limited expects a return of 11% of the net assets.

Required:

Note:
1. You may assume that it is about 10% more risky investing in unlisted entity than investing in listed entity.
2. Unless otherwise deemed inappropriate, the current year’s financial statements (appropriately adjusted) may form the basis of the valuation. 
i) Estimate the value per share of Agos Limited as at 30 June, 2016 using the Net Assets method:                                  (4 marks)

Santader Limited intends to take over Agos Limited. The financial statements of Agos Limited for the year ended 30 June 2016 are as follows:

Additional Information:
i) Turnover, profits before tax and dividend of Agos Limited over the past 5 years were as follows:

ii) The patent represents a license to produce and sell a special product. This product is expected to generate a pre-tax profit of GH¢12,000 per annum in perpetuity.
iii) The discount rate of Agos Limited is 10% per annum.
iv) Nhyira Limited, a major competitor of Agos Limited, is listed on the Stock Exchange and has a P/E ratio of 8 and a dividend yield of 10%.
v) Nhyira Limited expects a return of 11% of the net assets.

Required:

Note:
1. You may assume that it is about 10% more risky investing in unlisted entity than investing in listed entity.
2. Unless otherwise deemed inappropriate, the current year’s financial statements (appropriately adjusted) may form the basis of the valuation. 

Required:
iii) Estimate the value per share of Agos Limited as at 30 June, 2016 using the Price/earning ratio method:                (4 marks)

Santader Limited intends to take over Agos Limited. The financial statements of Agos Limited for the year ended 30 June 2016 are as follows:

Additional Information:
i) Turnover, profits before tax and dividend of Agos Limited over the past 5 years were as follows:

ii) The patent represents a license to produce and sell a special product. This product is expected to generate a pre-tax profit of GH¢12,000 per annum in perpetuity.
iii) The discount rate of Agos Limited is 10% per annum.
iv) Nhyira Limited, a major competitor of Agos Limited, is listed on the Stock Exchange and has a P/E ratio of 8 and a dividend yield of 10%.
v) Nhyira Limited expects a return of 11% of the net assets.

Required:

Note:
1. You may assume that it is about 10% more risky investing in unlisted entity than investing in listed entity.
2. Unless otherwise deemed inappropriate, the current year’s financial statements (appropriately adjusted) may form the basis of the valuation. 
ii) Estimate the value per share of Agos Limited as at 30 June, 2016 using the Dividend valuation method:                 (4 marks)

A company is said to be listed when its securities are approved to be bought and sold on the Stock Exchange. Newly issued shares cannot trade in the Over-The-Counter (OTC) Market before getting listed on the Ghana Stock Exchange (GSE). You need to communicate this intention to the GSE and work with the Exchange’s listing requirements before the public floatation.

Required:
Identify and explain THREE requirements a company is expected to meet before it gets listed on the Ghana Stock Exchange.                                                                                                                                                                                         (3 marks)