Ican 2025 Corporate Reporting Question 2

Kankanfo Group Plc, is a well established company that is planning to expand through acquisition of some companies. The Directors of the company have identified two potential target companies, Gombe Limited and Uzor Limited. Extracts from the financial statements of the two companies are as follows: Statement of profit or loss and other comprehensive income for the year ended December 31, 2021. Gombe Limited Uzor Limited N’000 N’000 Revenue 272,000 264,000 Cost of sales (168,000) (183,800) Gross profit 104,000 80,200 Administrative expenses (72,000) (56,000) Profit from operations 32,000 24,200 Finance costs (12,000) (16,000) Net profit before tax 20,000 8,200 Income tax expense (6,000) (4,000) Profit for the year 14,000 4,200 Other comprehensive income: Items that will not be reclassified to P or L Surplus on revaluation -- 24,000 Total comprehensive income 14,000 28,200 Statement of financial position as at December 31, 2021 Gombe Limited Uzor Limited N’000 N’000 Non-current assets: Property, plant and equipment 128,000 140,200 Current assets: Inventories 24,000 28,000 Receivables 48,000 40,000 Current assets 72,000 68,000 Total assets 200,000 208,200 Equity and liabilities: Equity Ordinary share capital (N1 each) 64,000 48,000 Revaluation reserves -- 20,000 Retained earnings 30,000 20,200 94,000 88,200 Non-current liabilities: Loan notes 64,000 72,000 Current Liabilities: Trade payables 20,000 20,000 Income tax 6,000 4,000 Borrowings 16,000 24,000 42,000 48,000 Equity and liabilities 200,000 208,200 Statement of changes in equity for year ended December 31, 2021 Gombe Limited Uzor Limited N‟000 N‟000 Bal. b/f January 1, 2021 88,000 64,000 Total comprehensive income 14,000 28,200 Dividend paid (8,000) (4,000) Bal. December 31, 2021 94,000 88,200