The following trial balance relates to Obaa Yaa Ltd as at 30 September 2017:

GH'000 GH'000

Revenue 380,000

Cost of sales 246,800

Distribution costs 17,400

Administrative expenses (Note (i) 50,500

Loan interest paid (Note (ii) 1,000

Investment income 1,300

Profit on sale of investments (iii) 2,200

Current tax (Note (iv)) 2,100

Freehold property at cost 1 October 2017 (note (v) 63,000

Plant and equipment at cost (Note (v)) 42,200

Brand at cost 1 October 2013 (Note (vi)) 30,000

Accumulated depreciation 1 October 2016 building 8,000

plant and equipment 19,700

Accumulated amortisation 1 October 2016 brand 9,000

Investments in equity instruments (Note (iii) 26,500

Inventory at 30 September 2017 38,000

Trade receivables 44,500

Bank 8,000

Trade payables 42,900

Ordinary shares 52,000

Retained Earnings at 1 October 2016 26,060

Other reserve at 1 October 2016 (Note (iv) 5,000

5% convertible loan note 2020 (Note (ii) 18,440

Deferred tax (Note (iv) 5,400

570,000 570,000

Additional Information:

i) Administrative expenses include an equity dividend of 12 million paid during the year.

ii) The 5% convertible loan note was issued for proceeds of 20 million on 1 October 2015.It has an effective interest rate of 8% due to the value of its conversion option.

iii) The equity investments (the GH26.5 million in the trial balance) have a fair value of GH29 million at 30 September 2017. The other reserve in the trial balance represents the net increase in the value of the equity investments as at 1 October 2016. Obaa Yaa Ltd made an irrevocable decision at initial recognition of these instruments to recognise all changes in fair value through other comprehensive income, and makes a transfer of realised profit from the other reserve to profit or loss on disposal of the investments. Ignore deferred tax on these transactions.

iv) The balance on current tax represents the under/over provision of the tax liability for the year ended 30 September 2016. The directors have estimated the provision for income tax for the year ended 30 September 2017 at GH16.2 million. At 30 September 2017 the

carrying amounts of Obaa Yaa Ltd.s net assets were GH13 million in excess of their tax

base. The income tax rate of Obaa Yaa Ltd is 30%.

v) Non-current assets

The freehold property has a land element of GH13 million. The building element is

being depreciated on a straight-line basis at 2%. Plant and equipment is depreciated at 25% per annum using the reducing balance method.

vi) Obaa Yaa Ltd's 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 1 October 2016 which concluded that, based on estimated future sales, the brand had a value in use of GH12 million and a remaining life of only three years. However, on the same date as the impairment review, Obaa Yaa Ltd received an offer to purchase the brand for GH15 million.

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 2017.

Depreciation, amortisation and impairment charges are all charged to cost of sales.

Required:

a) Prepare the statement of profit or loss and other comprehensive income for Obaa Yaa Ltd

for the year ended 30 September 2017. (8 marks)

b) Prepare the statement of financial position of Obaa Yaa Ltd as at 30 September 2017.

(12 marks)

(Total: 20 marks)