Question 1 Best Builders Plc is a company incorporated in Ghana under the Companies Act, 1963,(Act 179) and operates under a franchised name. The companys main business is to import, distribute and sell imported building materials ( iron rods, ceramic tiles, doors, etc) The following trial balance relates to Best Builders Ltd at 31 December 2020: DR CR GHS'000 GHS'000 Business Premises [at cost] -[Land GHS10 m; Building GHS50 m] 60,000 Vehicles and Haulage equipment at cost 76,600 Intangible Asset Trade mark [at cost] 20,000 Building accumulated depreciation at 1 January 2020 10,000 Vehicles and Equipment accumulated depreciation at 1 January 2020 24,600 Intangible asset accumulated amortisation at 1 January 2020 6,000 Inventory at 1 January 2020 19,000 Investment in shares of Adom Ltd 28,000 Trade receivables 23,000 Bank 2,000 Trade payables 23,000 Revenue 300,000 Dividend income 4,000 Purchases 204,000 Distribution costs 14,000 Administrative expenses 21,000 Interest on loans paid 2,000 Interest on bank overdraft 700 Equity dividend paid 6,000 Research costs 1,700 Stated capital 200 million shares 50,000 20% Loan Notes [2020 -2024] 20,000 Retained earnings (Retained Earnings) at 1 January 2020 31,000 Share Deals 5,400 --------- --------- 476,000 476,000 ====== ====== 2 The following notes are relevant: i) The inventory at 31 December 2020 was valued at GHS24 million (ii) The company, since its incorporation has measured all non-current assets at cost. The depreciation policy had been applied as follows: a) Buildings Estimated to have a useful life of fifty years; b) Vehicles and Equipment - 20% per annum on reducing balance; c) Trademark The right of usage was acquired for 10 years and to be amortised on straight line basis over the legal life; and d) Land is treated as non-depreciable asset During Directors meeting on 30th December 2020, they decided to reflect the fair value of the business premise in the year end statement of financial position. An experts valuation conducted by Expert Valuers Ltd on 31 December 2020 put the fair value of the business premises at GHS54 million. The estimated useful life however remained unchanged. The depreciation/amortisation charges of buildings, vehicles and equipment and trade mark are charged as admin expense, distribution cost and cost of sale respectively. iii) The 20% loan note was issued on 1st January 2020 and would be redeemed at par on 31 December 2024. The interest is accrued and paid half yearly on 1st July and 1st January. iv) The Directors declared and paid interim dividend of 3 pesewas per share in September 2020. They have proposed final dividend of 2 pesewas per share to be considered and approved by shareholders at Annual General Meeting to be held in March 2020 v) The companys stated capital consists of 300 million shares of no par value. As at 1 January 2020, 150 million shares had been issued for a total consideration of GHS37.5 million. On 1 April 2020, 50 million new shares were issued to an institutional investor for cash consideration of 25 pesewas per share. Additional 40 million bonus shares were issued on 1 October 2020 [utilizing retained earnings balance] on the basis of 1 new share for any 5 existing shares, credited as to 25 pesewas per share. The bonus share issue has not yet been recorded in the accounting books. All shares in issue as at 31st August 2020 ranked for the interim dividend. All shares in issue as at 31 December 2020 ranked for the proposed dividends. iii5 vi) The directors have estimated the provision for income tax for the year ended 31 December 2020 at GHS11 million. Ignore deferred tax implications Required: In accordance with the format prescribed by IAS 1 Presentation of Financial Statements and complying with relevant International Financial Reporting Standards, (a) Prepare the statement of profit or loss and other comprehensive income for the year ended 31 December 2020. (8marks) b) Prepare statement of changes in equity for the year ended 31 December 2020 (4 marks) (c) Prepare the statement of financial position as at 31 December 2020.