The following is the trial balance of Baba Ltd as at 31 December 2014.

Debit Credit

GHS000 GHS000

450,000,000 ordinary shares (issued at GHS 1 per share) 450,000

150,000,000 10% cumulative preference shares (issued at GHS 1 per share) 150,000

Retained earnings – 1 January 2014 425,200

Revaluation surplus 150,000

General reserve 75,000

Bank overdraft 76,350

Provision for doubtful debts 8,650

20% loan notes (2013-2017) 150,000

Sales 2,290,000

Deferred taxation 90,000

Patents and trademarks 323,200

Leasehold land and buildings (cost/amortization) 487,500 75,000

Factory plant and equipment (cost/depreciation) 226,500 102,750

Office fixtures and fittings (cost/depreciation) 95,000 23,250

Motor vehicles (cost/depreciation) 112,500 37,500

Trade receivables/trades payable 266,400 146,300

Inventories – 1 January 2014 488,450

Purchases of raw materials 1,173,250

Manufacturing wages 375,000

Manufacturing overheads 187,500

Cash 7,700

Administrative expenses 237,150

Selling and distribution expenses 175,200

Financial, legal and professional expenses 79,650 -

4,235,000 4,235,000

Additional information

a) Inventory at January 2014 and 31 December 2014 is GHS 636,600

b) During the year to 31 December 2014, the company acquired a new factory equipment for GHS 25, 000,000, paying in full. It is the company’s policy to charge a full year’s depreciation in the year of acquisition and no depreciation in the year of disposal. Depreciation of non- current assets is to be provided on the following bases:

I. Leasehold land and buildings 5% on cost

II. Factory plant and equipment 10% on cost

III. Office fixtures and fittings 15% on cost

IV. Motor vehicles 20% on reducing value

The motor vehicles are used equally between administrative and distribution activities.

c) Corporate income tax payable estimated on the profit for the year to 31 December 2014 is GHS 37, 400,000. Out of this tax estimate, GHS 15,000,000 was paid during the year and the remainder is payable on 31 March 2015.

d) During the year to 31 December 2014, the company made a bonus issue from retained earnings, of GHS 150,000,000. This transaction is yet to be recorded in the books.

e) Provision is to be made for a full year’s interest on the loan notes and preference shares.

f) The directors have proposed that a dividend of GHS 30,000,000, that is, 5 Gp per share be paid for the year ended 31 December 2013.

g) Manufacturing wages and overheads are treated as direct expenses in the cost of sales.

Required:

Prepare the following statements of Baba Ltd for publication in accordance with International Financial Reporting Standards:

a) Statement of profit or loss and other comprehensive income for the year ended 31 December, 2014

b) Statement of changes in equity for the year ended 31 December 2014

c) Statement of financial position as at 31 December 2014

Ignore the requirement for notes to the financial statements but clearly show all relevant workings.