ICAN 2023 Financial Reporting | Mixed

The following trial balance was extracted from the books of Adama Plc as at June 30, 2022: Freehold land and building at valuation 1/7/21 1,065,600 Office equipment 865,800 Delivery van 301,400 Accumulated depreciation at 1/7/21: Office equipment 199,800 Delivery van 120,560 Ordinary share capital of 50k each fully paid 790,000 Bank balances 142,310 49,950 Investment income 65,246 Financial assets 244,200 Dividend paid 119,880 Cost of sales 995,003 Distribution costs 161,128 Gain on translation of foreign operations 47,108 Trade receivables/payables 579,065 353,846 Revenue 2,142,819 Intangibles 50,600 Administrative expenses 173,727 Interest on loan notes 14,763 General reserve 109,809 Deferred tax at 1/7/21 100,078 Inventories at 30/06/2022 622,812 Retained earnings 231,572 3% redeemable loan notes 843,000 Revaluation reserve-freehold land and buildings 80,500 Share premium 142,000 Suspense account 60,000 5,336,288 5,336,288

The Conceptual Framework for Financial Reporting sets out the concepts that underlie the preparation and presentation of financial statements and it also considers the various users of these financial statements.

Olu Nigeria PLC has a subsidiary, Oba Limited, which it acquired on January 1, 2022. The financial statements of the companies are detailed below: Statements of profit or loss for the year ended September 30, 2022 Olu PLC Oba LTD Revenue 446,250 233,100 Cost of sales (330,750) (174,600) Gross profit 115,500 58,500 Other income 40,250 - Distribution costs (10,250) (11,100) Administrative expenses (31,650) (14,760) Finance costs (8,575) (7,200) Profit before taxation 105,275 25,440 Income tax expense (28,670) (5,790) Profit for the year 76,605 19,650 Other comprehensive Income: Gain on revaluation of property 26,600 5,000 Total comprehensive Income 103,205 24,650 Statement of financial position as at September 30, 2022 Olu PLC Oba LTD Non-current assets: N’000 N’000 Property, plant and equipment 253,750 82,530 Intangibles 31,420 - Current assets Inventories 72,200 30,440 Trade receivables 65,250 25,560 Cash and bank balances 12,550 6,450 435,170 144,980 Equity and liabilities N’000 N’000 Ordinary shares of N1 each 100,000 40,000 Retained earnings 235,600 50,550 Non-current liabilities 10% Loan notes 30,000 32,600 Deferred tax 6,400 4,180 Current liabilities Trade payables 34,500 11,860 Income tax payable 28,670 5,790 435,170 144,980

Accounting for deferred tax is based on the identification of the temporary differences.

IFRS 9 - Financial Instruments defined a financial instrument as contract that gives rise to both a financial asset in one entity and a financial liability or equity instrument in another entity.

IAS 2 - Inventories sets out the requirements to be followed when accounting for inventory and specifies two methods of recording inventory so as to allow the calculation of cost of sales.

The Conceptual Framework for Financial Reporting states the qualitative characteristics of financial information.