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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 to property valuation. There are also a number of other issues that need to be finalised before the financial statements can be published JUBILEE's trial balance from the general ledger at 31 December 2012 showed the following balances: GHe'm GHe'm 2,648 3 1,669 514 345 6 444 545 434 28 Revenue Loan note interest paid Purchases Distribution costs Administrative expenses Interim dividend paid Inventories at 1 January 2012 Trade receivables Trade payables Cash and cash equivalents 50Gp ordinary shares Capital surplus Retained earnings at 1 January 2012 4% loan note repayable 2018 (issued 2010) Land and buildings: Cost (including GH60m land) Accumulated depreciation at 1/1/2012 Plant and equipment: Cost Accumulated depreciation at 1/1/2012 Investment property at 1 January 2012 Rental income Proceeds from sale of equipment 100 814 349 150 380 64 258 126 548 48 7 4,740 4,740 Further information to be taken into account: i. 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 However, shortly after the year end out-of-date inventories with a cost of GH15m were sold for GH8m. ii. 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. iii. Due to a change in the company's 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 GH 16m. 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 iv. The income tax liability for the year is estimated at GH27m. Ignore deferred tax. v. 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. vi. 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 vii. 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 company's accounting policy note are as follows: Buildings Straight line over 50 years Plant and equipment 20% reducing balance Jubilee's accounting policy is to charge a full year's depreciation in the year of an asset's purchase and none in the year of disposal. viii. 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 company's shares on the date of the bonus issue was GH0.50 each. ix. 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. a. Statement of comprehensive income for the year ended 31 December, 2012 b. Statement of changes in equity for the year ended 31 December, 2012 c. Statement of financial position as at 31 December, 2012 Notes are not required but all workings should be clearly shown