QUESTION 1

The following trial balance relates to Klean Limited Ltd as at 30 September 2018:

	Debit		Credit
	GH		GH
Revenue (Note (i))			505,000
Cost of sales	346,800
Administration expenses (Note (iii))	50,500
Selling & distribution expenses	17,400
Loan interest paid (Note (iii))	1,000
Current tax (Note (v))	2,100
Freehold property cost/depreciation (note (vi))	63,000		8,000
Plant and equipment cost/depreciation (Note (vi))	42,200		19,700
Brand cost/ amortisation (Note (vi))	30,000		9.000
Investments property (Note (ii))	26,500
Inventory at 30 September 2018	38,000
Trade receivables	44,500
Bank	33,000
Trade payables			46,400
Ordinary shares			52,000
Retained Earnings at 1 October 2017			26,060
Revaluation reserve at 1 October 2017 (Note (iv))			5,000
5% convertible loan note 2020 (Note (iv))			18,440
Deferred tax (Note (v))			5,400
	695,000		695,000

Additional Information:

Klean Ltds revenue includes GH90,000 rental income from the investment property.

The investment property was acquired in January, 2017. The company adopts fair value model in subsequent measurement of the investment property and fair value assessment at 30 September, 2018 puts the valuation at GH28,500.

Administrative expenses include an equity dividend of GH12,000 paid during the year.

The 5% convertible loan note was issued for proceeds of GH20,000 on 1 October 2016. It has an effective interest rate of 8% due to the value of its conversion option.

The balance on current tax represents the under/over provision of the tax liability for the year ended 30 September 2017. The directors have estimated the provision for income tax for the year ended 30 September 2018 at GH16,200. At 30 September 2018 the carrying amounts of Klean Ltds net assets were GH13,000 in excess of their tax base. The income tax rate of Klean Ltd is 30%.

Non-current assets:

The freehold property has a land element of GH13,000. The building element is being depreciated on a straight-line basis. Klean revalues its buildings at the end of each accounting year. At 1 October, 2017 the relevant value to be incorporated into the financial statements is GH35,900.

The buildings remaining life at the beginning of the current year (1 October, 2017) was 25 years. Klean 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.

Plant and equipment is depreciated at 40% per annum using the reducing balance method.

Klean Ltds brand in the trial balance relates to a product line that received bad publicity during the year which led to falling sales revenues. An impairment review was conducted on 30 September 2018 which concluded that, based on estimated future sales, the brand had a value in use of GH12,000 and a remaining life of only three years. However, on the same date as the impairment review, Klean Ltd received an offer to purchase the brand for GH15,000.

Prior to the impairment review, it was being depreciated using the straight-line method over a 10 year life. No depreciation/amortisation has yet been charged on any non-current asset for the year ended 30 September 2018. Depreciation, amortisation and impairment charges are all charged to cost of sales.

Required:

Prepare the following financial statements of Klean Ltd for publication in accordance with International Financial Reporting Standards (IFRS):

Statement of profit or loss and other comprehensive income for Klean Ltd for the year ended 30 September 2018;

Statement of changes in equity for the year ended 30 September 2018; and

Statement of financial position as at 30 September 2018.

Show clearly all relevant workings.

(Note: Accounting policy notes are not required)