Question Two JUBILEE is a quoted company reporting under IFRSs During the year end 31 December 2012, the company changed its accounting policy with respect to property valuation There are also a number of other issues that need to be finalised before the financial statements can be published JUBILEEs trial balance from the general ledger at 31 December 2012 showed the following balances GHm GHm Revenue 2,648 Loan note interest paid 3 Purchases 1,669 Distribution costs 514 Administrative expenses 345 Interim dividend paid 6 Inventories at 1 January 2012 444 Trade receivables 545 Trade payables 434 Cash and cash equivalents 28 50Gp ordinary shares 100 Capital surplus 814 Retained earnings at 1 January 2012 349 4 loan note repayable 2018 (issued 2010) 150 Land and buildings Cost (including GH60m land) 380 Accumulated depreciation at 1 1 2012 64 Plant and equipment Cost 258 Accumulated depreciation at 1 1 2012 126 Investment property at 1 January 2012 548 Rental income 48 Proceeds from sale of equipment 7 , 4,740 4,740 Further information to be taken into account Closing inventories were counted and amounted to GH388m at cost However, shortly after the year end out of date inventories with a cost of GH15m were sold for GH8m The company decided to change its accounting policy with respect to its 10 year old land and buildings from the cost model to the revaluation model The revalued amounts at 1 January 2012 were GH800m (including GH100m for the land) No further revaluation was necessary at 31 December 2012 The company wishes to treat the revaluation surplus as being realised over the life of the asset 3 Due to a change in the companys product portfolio plans, an item of plant with a carrying value GH22m at 31 December 2012 (after adjusting for depreciation for the year) may be impaired due to a change in use An impairment test conducted at 31 December, revealed its fair value less costs to sell to be GH16m The asset is now expected to generate an annual net income stream of GH3 8m for the next 5 years at which point the asset would be disposed for GH4 2m an appropriate discount rate is 8 5 year discount factors at are Simple Cumulative 0 677 3 993 The income tax liability for the year is estimated at GH27m Ignore deferred tax An interim dividend of 3Gp per share was paid on 30 June 2012 A final dividend of 1 5Gp per share was declared by the directors on 28 January 2013 No dividends were paid or declared in 2011 During the year, Jubilee disposed of some malfunctioning equipment for GHC7m the equipment had cost GH15m and had accumulated depreciation brought forward at 1 January 2012 of GH3m There were no other additions or disposals to property, plant and equipment The company treats depreciation on plant and equipment as a cost of sale and land and buildings as an administration cost Depreciation rates as per the companys accounting policy note are as follows Buildings Straight line over 50 years Plant and equipment 20 reducing balance Jubilees accounting policy is to charge a full years depreciation in the year of an assets purchase and none in the year of disposal During the year on 1 July 2012, Jubilee made a 1 for 4 bonus issue, capitalising its general reserve This transaction had not yet been accounted for The fair value of the companys shares on the date of the bonus issue was GH0 50 each Jubilee uses the fair value model of IAS 40 The fair value of the investment property at 31 December 2012 was GH586m Required Prepare the following financial statements in with IFRSs insofar as the information permits Statement of comprehensive income for the year ended 31 December, 2012 Statement of changes in equity for the year ended 31 December, 2012 Statement of financial position as at 31 December, 2012 Notes are not required but all workings should be clearly shown

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Question Two JUBILEE is a quoted company reporting under IFRSs. During the year end 31 December 2012, the company changed its accounting policy with respect

Question Two

JUBILEE is a quoted company reporting under IFRSs. During the year end 31 December 2012, the company changed its accounting policy with respect to property valuation. There are also a number of other issues that need to be finalised before the financial statements can be published.

JUBILEEs trial balance from the general ledger at 31 December 2012 showed the following balances:

	GHm	GHm
Revenue		2,648
Loan note interest paid	3
Purchases	1,669
Distribution costs	514
Administrative expenses	345
Interim dividend paid	6
Inventories at 1 January 2012	444
Trade receivables	545
Trade payables		434
Cash and cash equivalents	28
50Gp ordinary shares		100
Capital surplus		814
Retained earnings at 1 January 2012		349
4% loan note repayable 2018 (issued 2010)		150
Land and buildings: Cost (including GH60m land)	380
Accumulated depreciation at 1/1/2012		64
Plant and equipment: Cost	258
Accumulated depreciation at 1/1/2012		126
Investment property at 1 January 2012	548
Rental income		48
Proceeds from sale of equipment		7
,	4,740	4,740

Further information to be taken into account:

Closing inventories were counted and amounted to GH388m at cost. However, shortly after the year end out-of-date inventories with a cost of GH15m were sold for GH8m.

The company decided to change its accounting policy with respect to its 10 year old land and buildings from the cost model to the revaluation model. The revalued amounts at 1 January 2012 were GH800m (including GH100m for the land). No further revaluation was necessary at 31 December 2012. The company wishes to treat the revaluation surplus as being realised over the life of the asset.

Due to a change in the companys product portfolio plans, an item of plant with a carrying value GH22m at 31 December 2012 (after adjusting for depreciation for the year) may be impaired due to a change in use. An impairment test conducted at 31 December, revealed its fair value less costs to sell to be GH16m. The asset is now expected to generate an annual net income stream of GH3.8m for the next 5 years at which point the asset would be disposed for GH4.2m. an appropriate discount rate is 8%. 5 year discount factors at are:

Simple Cumulative

0.677 3.993

The income tax liability for the year is estimated at GH27m. Ignore deferred tax.

An interim dividend of 3Gp per share was paid on 30 June 2012. A final dividend of 1.5Gp per share was declared by the directors on 28 January 2013. No dividends were paid or declared in 2011.

During the year, Jubilee disposed of some malfunctioning equipment for GHC7m. the equipment had cost GH15m and had accumulated depreciation brought forward at 1 January 2012 of GH3m.

There were no other additions or disposals to property, plant and equipment

The company treats depreciation on plant and equipment as a cost of sale and land and buildings as an administration cost. Depreciation rates as per the companys accounting policy note are as follows:

Buildings

Straight line over 50 years

Plant and equipment

20% reducing balance

Jubilees accounting policy is to charge a full years depreciation in the year of an assets purchase and none in the year of disposal.

During the year on 1 July 2012, Jubilee made a 1 for 4 bonus issue, capitalising its general reserve. This transaction had not yet been accounted for. The fair value of the companys shares on the date of the bonus issue was GH0.50 each.