Ican 2024 Financial Reporting Question 3

Lamido Limited is a courier service company which operates in Nigeria and West Africa. Initially, Lamido Limited experienced strong growth, but in recent periods the company has been criticised for under investing in its non-current assets. Lamido Limited statement of financial position as at December 31 2022 2021 ₦’000 ₦’000 Non-current assets Property, plant and equipment 317,000 174,000 Intangible assets 20,000 16,000 337,000 190,000 Current assets Inventories 580 490 Trade and other receivables 6,100 6,300 Cash and equivalents 9,300 22,100 Total current assets 15,980 28,890 Total assets 352,980 218,890 Equity and Liabilities Equity Ordinary share capital 3,000 3,000 Retained earnings 44,100 41,800 Revaluation surplus 145,000 NIL Total equity 192,100 44,800 Liabilities: Non-current liabilities 6% loan notes 130,960 150,400 Current liabilities --- PAGE BREAK --- Trade and other payables 10,480 4,250 6% loan notes 19,440 19,440 Total current liabilities 29,920 23,960 Total equity and liabilities 352,980 218,890 Other extracts from Lamido Limited financial statements for the years ended December 31. 2022 2021 ₦’000 ₦’000 Revenue 154,000 159,000 Profit from operations 12,300 18,600 Finance cost (9,200) (10,200) Cash generated from operation 18,480 24,310 The following information is also relevant: i. Lamido Limited had exactly the same delivery volumes in 2022 as in 2021 with customers’ base being the same in both years. ii. In October 2022, Lamido Limited had to renegotiate its operating licenses in three of its countries of operation. This led to increase in the fees Lamido Limited had to pay to operate in these countries. The operating licenses in five other countries are due to expire in December 2022 and Lamido Limited is currently negotiating with the concerned authorities of these countries.