QUESTION I The Prestige Bank Limited has presented the following trial balance for the 2019 financial year: Debit Credit GHS'000 GHS'000 Interest income 23,259 Interest on customers' deposits 10,545 Commission and fee income 4,164 Dividends from investments 165 Profit on foreign exchange transaction Operating expenses 423 3,033 Staff costs 6,639 Directors Remuneration 117 Rental income from investment property Motor vehicles/Accumulated depreciation 300 981 546 Equipment & Furniture/accumulated depreciation Computers/Accumulate depreciation Land and buildings/Accumulated depreciation Corporate tax Investment property Sundry payables 1,764 489 1,170 399 2,328 249 540 2,940 1,785 Amounts due to other banks 11,613 Customers' Current accounts 67,905 Customers' Savings accounts Fixed/time deposits of customers Interim dividend paid 23,457 10,746 413 Loan, advances and overdraft granted Loan impairment provision 01/01/2019 Stated Capital Retained profit, 01/01/2019 Statutory reserves, 01/01/2019 Revaluation surplus 28,000 1,842 14,469 3,438 11,964 1,332 Trade investments Government Treasury bills Deposits with other banks 4,029 58,779 38,382 Cash in hand 4,887 Balance with Bank of Ghana 13,998 178,545 178,545 Additional information: Prestige Limited has been sued for the following two alleged infringements of law: (1) Unauthorized use of a brand; the claim is for GHS 50,000 (2) Non-payment of end-of-service severance pay and gratuity to 7 employees whose appointments were terminated without Prestige giving any reason; the class action lawsuit is claiming GHS 150,000. i) 1 Legal counsel of the bank is of the opinion that not all the legal cases are tenable in law and has communicated to Prestige. This assessment of the two lawsuits are: Lawsuit 1: The chances of this lawsuit are remote. Lawsuit 2: It is probable that Prestige would have to pay the displaced employees, but the best estimate of the amount that would be payable if the plaintiff succeeds against the entity is GHS 100,000. ii) Provide for depreciation at the following rates: Land and buildings Equipment and furniture Computers Motor vehicles Provide for Audit fees of GHS180,000. 5% 20% on cost. on cost. 20% on cost. 20% on cost. iii) iv) The bank has advanced GHS2,553,000 loan to a customer. The customer is currently suffering from Corona virus and it has been established by the doctors that it is virtually certain the customer will die. In compliance with the Banking Act 12.5% of profit after tax is to be transferred to statutory reserve. Interim tax for 2019 based on self-assessment was settled at GHS540,000. Corporate tax applicable to the bank is 25%. The investment property was acquired in February, 2019. The directors have adopted fair valuation model of accounting for investment properties in line with IAS 40. At 31s December, 2019, it was fair valued at GHS4,000,000. On 31st December, the Directors of the bank further declared dividend of GHS2 per share. On that same date, the directors agreed to pay end-of-year bonus to staff estimated at GHS216,000. This is yet to be paid. This should be accounted for as an operating expense. v) vi) vii) viii) Required: Prepare the following financial statements of Prestige Bank Limited for publication in accordance with relevant legislations and International Financial Reporting Standards (IFRS): a) The statement of profit or loss and other comprehensive income for the year ended 31st December, 2019. The statement of changes in equity for the year ended 31st December, 2019. (4 marks) The statement of financial position as at 31st December, 2019. Show clearly all relevant workings. (8 marks) b) c) d) (8 marks)