repare the following financial statements of Akwaaba Limited for publication in accordance with International Financial Reporting Standards (IFRS):Statement of comprehensive income for the year ended 31st December, 2016; Statement of changes in equity for the year ended31st December, 2016; and Statement of financial position as at31st December, 2016.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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The following is the trial balance of Akwaaba Limited, a trading company, as at 31st December, 2016:

 

Debit

Credit

 

GH¢ 000

GH¢ 000

500,000 ordinary shares

 

14,500

8% loan notes (2012-2017)

 

2,500

10% preference shares (redeemable)

 

3,000

Revaluation surplus

 

800

General reserves

 

1,500

Retained earnings 01/01/2016

 

3,600

Administrative expenses

8,540

 

Selling & distribution expenses

5,600

 

Sales

 

68,865

Inventory 31/12/2016

3,150

 

Costs of sales

35,500

 

Loan notes interest paid

195

 

Investment income

 

360

Leasehold building at valuation 01/01/2016

14,000

 

Plant & equipment - cost/depreciation

13,750

3,200

Computer equipment - cost/depreciation

7,200

2,000

Motor vehicles – cost/depreciation

1,500

400

Investment property

8,700

 

Trade receivables

9,200

 

Bank

 

910

Trade payables

 

3,400

Deferred tax – 01/01/2016

 

2,300

 

107,335

107,335

Additional  information:

  1. 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

  • Nodepreciationhasyetbeenchargedonanynon-currentassetfortheyearended31st December,
  • Akwaaba revalue its buildings at the end of each accounting At 31st December, 2016 the relevant value to be incorporated into the financial statements is GH¢28,200,000.
  • The building’s remaining life at the beginning of the current year (1st January 2016) was 25 Akwaaba 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.
  1. The company paid ordinary dividends of GH¢4.8 per share 30thOctober, The dividend payments are included in administrative expenses in the trial balance.
  • On 4th November, 2016 the company made a bonus issue from retained earnings of one new share for every four shares in issue at GH¢10.00 This transaction is yet to be recorded in the books.
  1. Provision is to be made for a full year’s interest on the Loan

 

  1. The investment property held at 31st December, 2016 had a fair value of GH¢9,700,000. There were no acquisitions or disposals of these investments during the
  2. In June, 2016, Akwaaba’s internal audit unit discovered a fraud committed by the company’s credit manager who did not return from a foreign business The outcome of the fraud is that GH¢1,000,000 of the company’s trade receivables have been stolen by the credit manager and are not recoverable. Of this amount, GH¢400,000 relates to the year ended 31st December, 2015 and the remainder to the current year. Akwaaba is not insured against this fraud.

 

  • Corporate income tax payable estimated on the profit for the year is GH¢7,000,000.

Required:

Prepare the following financial statements of Akwaaba Limited for publication in accordance with International Financial Reporting Standards (IFRS):Statement of comprehensive income for the year ended 31st December, 2016; Statement of changes in equity for the year ended31st December, 2016; and Statement of financial position as at31st December, 2016.

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