Ican 2026 Strategic Business Reporting Question 7

On December 31, 2024, Fiwajoye Plc. was the subject of litigation proceeding involving a customer claiming damages in the sum of N250million, because she was allegedly injured when drinking BitterSweet, one of the company’s products. She had claimed that the company bottled a sharp object inside the content of the product which she swallowed and had to be operated upon in order to remove the object. Fiwajoye Plc. is disputing the claim, maintaining that any injury was due solely to negligence on the customer’s part. At December 31, 2024, the case was yet to be decided.

Fiwajoye Plc signed a ten-year lease agreement on a premises requiring annual payment of N5million in advance on January 1, 2020. The premises were used over the years as event centre to generate rental income. As a result of escalating costs of maintenance, especially on power generation, security concerns and changing lifestyle of patrons, continuing operation of the centre has been found unsustainable. Fiwajoye Plc. discovered that it has no further use of the building. It is not possible to sub-lease the building to another tenant and remodeling cannot be done due to certain provisions of the lease agreement. At December 31, 2024, the present value cost of outstanding lease installments amounted to N22.5million.

The Managing Director made a proposal that the Fiwajoye Plc’s brand name is unique and of significant market persuasion and should, therefore, be included as an asset in the financial statements. Due diligence, including market research by a certified consultant, has been done on this proposal. A valuation of N250million was determined to be included in the financial statements at December 31, 2024.