COLLEGE OF BUSINESS EDUCATION

DAR ES SALAAM CAMPUS

TNC/TFC OCTOBER 2015 BACC III

SUPPLEMENTARY EXAMINATIONS

SUBJECT: ADVANCED FINANCIAL REPORTING

PAPER CODE: ACB 080101

DATE: 19.09.2018

Time Allowed: 3 HOURS

Instructions:

a) This paper consists of five questions, attempt all questions

b) Do not write or draw on the question paper
c) Cellular phones are not allowed in the examination room
d) All questions carry equal mark

1|Page
Question One
Goba Ltd is involved in the manufacture of agricultural products and its financial statements are
as follows:

2016 2015
Tshs.'000' Tshs.'000'
Non-Current Assets:
Property, Plant & Equipment (PPE) 5120 3940
Total Non-Current Assets 5120 3940

Current Assets:
Inventories 1380 1220
Trade Receivables 780 680
Cash & Cash Equivalents 50 112
Total Current Assets 2210 2012

Total Assets 7330 5952

Equity & Liabilities

Equity
Share capital 240 200
Share Premium 60 50
Retained Earnings 3798 2402
Revaluation Surplus 120 80
Total Equity 4218 2732

Non-Current Liabilities
Long Term loan 1500 1600
Total Non-Current Libilities 1500 1600

Current Liabilities
Trade Payables 1470 1500
Bank Overdraft 32 60
Tax Payable 110 60
Total Current Liabilities 1612 1620

Total Equity & Liabilities 7330 5952

Notes:
(i) The company’s profit for the year before tax amounted to Tshs. 1,476,000.
(ii) The company’s income tax expense for the year was Tshs. 80,000
(iii) The cost of Property, Plant & Equipment (PPE) at January I 2016 amounted to Tshs.
4,860,000. The company’s depreciation policy is to depreciate all assets at 20% straight
line on cost from the date of purchase to the date of sale. The additions to PPE occurred
on 31 December 2016. On 1st July 2016 the company sold PPE which originally had cost
Tshs. 1,000,000. On the date this PPE was sold, its carrying value was Tshs. 600,000 and

2|Page
 the firm made a loss on the sale of the PPE of Tshs. 40,000. The revaluation was perfomed
on 31st December 2016.
(iv) The company’s finance cost for the year equals its cash payment of Tshs. 92,000

Required;
a) Discuss the benefits of Goba ltd. preparing the statement of cash flows to the users of
financial statements. (5 marks)
b) Prepare the Statement of Cash Flows for the year ended 31st December 2016 for Goba
Ltd in accordance with IAS 7 statement of Cash Flows. (15 marks)
Question Two

The chief accountant of Geronimo Co. ltd have prepared the following financial statements from
company’s records for the financial year ended 31st December, 2016.

Geronimo co. ltd.

Statement of financial position as at 31st Dec.
2016 2015
TZS TZS
000' 000'
Non-Current assets 1,048 750
Accumulated Depreciation (190) (120)
858 630
Current assets:
Inventory 98 105
Trade receivables 102 86
Dividend receivables 57 50
Cash 42 18
299 259
Total assets 1,157 889
Capital and reserves:
Share capital 200 120
Share premium 106 80
Revaluation reserve 212 12
Accumulated profits 283 226
801 438
Non current liabilities
Loan 200 300
Current liabilities:
Trade payables 47 52
Dividend payable 30 27
Interest Payable 3 5
Tax payable 76 67
156 151
Total liabilities 1,157 889

3|Page
 Geronimo Co Ltd
Income statement for the period ending 31st December 2016
TZS
"000"
Sales revenue 1,100
Cost of sales (678)
Gross Profit 422
Operating expenses (309)
Operating profit 113
Investment Income:
Interest 15
Dividends 57
Interest expenses 22
Income tax (71)
Net profit for the year 92

Additional Information:

1. Operating expenses include a loss on disposal of non current assets of TZS. 5000
2. During the year plant which originally cost TZS.80,000 and depreciation of TZS. 15000
was disposed of.

Required:

Prepare cash flow statement for the year ending 31st December, 2016 using indirect method
and in accordance with IAS 7.

Question Three
The following financial statements was part of the final accounts of Rosee Co Ltd. for the year
ended 31st December, 2015:

Rosee Co. Ltd

Balance sheet as on 31.12.2015
2015 2014
"000" "000"
TZS TZS
Assets

Cash & Bank 2770 2,525

Short term Investments 670 135
Sundry Debtors 1,700 1,200

Interest receivable 100 -

4|Page
 Inventories 900 1,950
Fixed Assets (cost) 2180 1,910
Accumulated Depreciation (1,450) (1,060)
Fixed assets (net) 730 850
Total Assets 6,870 6,660

Liabilities & Equity

Sundry creditors 220 1,890
Interest payable 230 100
Income taxes payable 400 1,000
Long term debt 1,110 1,040
Total Liabilities 1,960 4,030
Shareholders funds:
Share capital 1,500 1,250
Retained earnings 3,410 1,380
Total shareholders funds 4,910 2,630
Total liabilities & Shareholders funds 6,870 6,660

Rosee Co. Ltd

Income Statement for the period ending 31 December 2015
"000" TZS
Sales 30,650
Cost of sales (26,000)
Gross Profit 4,650
Administrative and selling expenses (1,220)
Interest expense (400)
Interest income 300
Dividend Income 200
Net Profit before Taxation 3,530
Income Tax (300)
Net Profit 3,230

Additional Information:
1. An amount of TZS. 250,000 was raised from the issue of share capital and a further TZS.
250,000 was raised from long term borrowings.
2. Interest expense was 400,000 for the period of which 170,000 was paid along with
100,000 relating to prior years.
3. During the period fixed assets worth TZS. 550,000 were acquired.
4. Plant with original cost of TZS. 80,000 and accumulated depreciation of TZS. 60,000 was
sold for TZS. 20,000
5. Sundry debtors and sundry creditors relate to credit sales and credit purchases only.

You are required to:

5|Page
Prepare cash flow statement of Rosee Co. ltd for the period ending 31st December 2015 in
accordance with IAS 7 - (20 marks)

Question Four
The following is the summarized Statement of Financial Position of Gamma ltd. as on 31 December
2013 and 31 December 2014.

2013 2014 2013 2014

TZS TZS TZS TZS
Liabilities &
Assets: Capital:
Plant &
Machinery 400,000 320,000 Share Capital 450,000 450,000

Investments 50,000 60,000 General reserve 300,000 310,000

Inventories 240,000 210,000 Profit & Loss a/c 56,000 68,000

Debtors 210,000 455,000 Creditors 168,000 134,000

Cash & Provision for
bank 149,000 197,000 Taxation 75,000 10,000

Mortgage Loan - 270,000

1,049,000 1,242,000 1,049,000 1,242,000

AdditionalInformation:
1. During the year Investments costing TZS. 8,000 were sold for TZS 8,500.
2. Provision for taxation made for the year was TZS 9,000
3. During the year part of plant costing TZS 10,000 was sold for TZS 12,000 and the
profit was included in the profit and loss account
4. Dividend paid during the year amounted to TZS.44,080
5. Net profit during the year amounted to TZS 56,080.

Required:
Prepare Gamma ltd. Cash flow statement for the period ending 31.12.2014 using
indirect method. (20 marks)

6|Page