The Prestige Bank Limited has presented the following trial balance for the 2019 financial year:

Interest income

Interest on customers deposits

Commission and fee income

Dividends from investments

Profit on foreign exchange transaction

Operating expenses

Staff costs

Directors Remuneration

Rental income from investment property

Motor vehicles/Accumulated depreciation Equipment & Furniture/accumulated depreciation Computers/Accumulate depreciation

Land and buildings/Accumulated depreciation Corporate tax

Investment property

Sundry payables

Amounts due to other banks

Customers Current accounts

Customers Savings accounts

Fixed/time deposits of customers

Interim dividend paid

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

Trade investments

Government Treasury bills

Deposits with other banks

Cash in hand

Balance with Bank of Ghana

Additional information:

Debit GHS000

10,545

3,033 6,639 117

981 1,764 1,170 2,328 540 2,940

413 28,000

4,029 58,779 38,382

4,887 13,998 178,545

Credit GHS000 23,259

4,164 165 423

300

546

489

399

249

1,785 11,613 67,905 23,457 10,746

1,842 14,469 3,438 11,964 1,332

_____ 178,545

i) 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.

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 5% on cost. Equipment and furniture 20% on cost. Computers 20% on cost. Motor vehicles 20% on cost.

iii) Provide for Audit fees of GHS180,000.

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.

v) In compliance with the Banking Act 12.5% of profit after tax is to be transferred to

statutory reserve.

vi) Interim tax for 2019 based on self-assessment was settled at GHS540,000. Corporate

tax applicable to the bank is 25%.

vii) 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

31st December, 2019, it was fair valued at GHS4,000,000.

viii) 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.

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. (8 marks)

b) The statement of changes in equity for the year ended 31st December, 2019. (4 marks)

c) The statement of financial position as at 31st December, 2019. (8 marks)

d) Show clearly all relevant workings.