Aspire CR - Conso Solution Bank - Nov 21

1
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SOLUTION 1
Abokobi Group
Consolidated Statement of Financial Position as at 31 May 2017
GH¢000 GH¢000
Assets
Non-current assets
Property. plant and equipment (275.000+20,000+26.000+6,000) 335000
(W2) +5,000(W2) +3,000(W5)
Goodwill (W6) 10360
Other Intangibles: trade mark (5,000- I,000) 4000
Investment Property 10000
359360
Current assets
Inventory (40,000+23,200+ 16,000 -5,000 (W3) 74,200
Trade receivables (I0,000+5,800+4,000) 19800 94000
453360
Total assets
Equity and liabilities
Ordinary shares 150000
Other reserves (30,000 +(5,000-4,000) = I ,000*85%) 30850
Retained earnings (W8) 146460
Equity component of convertible debt (W4) Total 1550
Total Equity 328860
Non-controlling interests (W7) 28570
357280
Non -current liabilities
Loans & Debentures{W10) 48930
Current liabilities
Bank Overdraft (35,000+7,000+5,000) 47000
Total liabilities 95930
Total equity and liabilities 453360
(a) Date of acquisition
Abokobi of Madina: 1 June 2015

Madina of Oyarifa: 1 June 2015
(b) Effective control in Oyarifa
Indirect (85% x 60%) = 51%

2
(c) Group Structure
Madina Oyarifa
Parent
Direct 60% -
Indirect 51%
NCI 40% 49%
100% 100%
(d) Cost of investment of Oyarifa
Parent (Abokobi) 85% x GHc30,000 = GHc19,890
Indirect Holding Adjustment (NCI Investment in Oyarifa) – 15% x GHc30,000 = GHc4,500
Net -assets of Madina (GH¢'000) At Acquisition At Reporting Post-Acquisition
Ordinary share 40,000 40,000

Other reserves 4,000 5,000
Retained earnings 10,000 25,000 15,000
Fair value adjustment:
Land 6,000 6,000
Trade name 5,000 5,000
Amortization (5,000/ 10 x 2years) (1,000) (1,000)
65 80,000 14,000
Net - assets of Oyarifa (GH¢’000)
At Acquisition At Reporting Post-Acquisition
Ordinary share 20,000 20,000

Other reserves 8,000 8,000
Retained earnings 6,000 10,000 4,000
Fair value adjustment-land 5 5,000
39,000 43,000 4,000
GHC'000
3. Goodwill 60000
Goodwill - Madina
Fair value of consideration 55250
Share of net assets at: acquisition [85% x GHCC65,000 (W2)] 4750
GHC'000
Goodwill – Oyarifa 25500
Fair value of consideration (85% x GH¢30,000) 19890
Share of net assets at acquisition [51% x GH¢39,000 (W2)] 5610
3
4. Group retained earnings
GHC'000
Abokobi 135000
Plant exchange (WS) 3000
Bond (W7) (480)
Unrealized profit (28,000-23,000) (5000)
Share of post-acquisition profits
Madina 85% (85% x 14,000) 11900
Oyarifa (51% x4,000) 2040
146460
5. Non-controlling Interest GHC'000
non-controlling interest -Madina

Share of net assets at reporting [15% x GH¢80,000 (W2)] 12000
Investment in Oyarifa (15% x GH¢30,000) (4500)
7500
Non-controlling interest - Oyarifa
Share of net assets at reporting 49% x GH¢43,000 (W2)] 21070
Land
The exchange has commercial substance since the land generated no immediate economic benefits as it was not being
used but the plant will. The cost of the plant will be measured fair value of the asset given up. Therefore, the plant will
be valued at GH¢ 7m. The gain will be recognised in profit or loss at GH¢3m. (GH¢7 -GH¢4)
Dr Plant GH¢ 3m
Cr Retained earnings GH¢3m
W7 CONVERTIBLE BOND
(i) Splitting the proceeds ·into equity and debt recognition

Date Details Cash flow DCF PVGH¢
2017 Interest 1,800 0.926 1,667
2018 Interest - 1,800 0.857 1,543
2019 Principal & Interest 31,800 0.794 25244
PV of financial liability 28,454
Proceeds 30,000
Equity 1,546*
*Rounded to GHC 1,550

4
ii) amortized cost at reporting
balance at start effective interest coupon payments balance at reporting

31/05/2017 28,454 2,276* -1,800 28,930.05
*rounded to GH¢2,280**rounded to GH¢ 28,900

Accrued interest GH¢2,280 - GH¢1,800 = GH¢480
SOLUTION 2
Nairobi Group
Consolidated statement of financial position as at 30 November 2018
GH¢m GH¢m
Non-current assets
Tangibles (1,230 + 505 + 256 - 5 Discount -56 revaluation) 1,930
Goodwill (W3) (34 + 89) 123
2,053
Current assets
Inventories (350 + 135 + 65 - 20 development) 530
Trade receivables (190 + I05 + 49) 344
Bank (90 + 50 + 80) 220
1,094
Total Asset 3,147
Equity attributable to owners of the parent
Ordinary share capital 1,800
Retained earnings (W4) 651.4
2,451.40
NCI (W5) 295.6
2,747
Non-current liabilities (135 + 25 + 20) 180
Current liabilities (I00 + 70 + 50) 220
Equity and Liabilities 3,147
Date of Acquisition
5
Nairobi investment in Kigali: 1 December 2015
Nairobi and Kigali investment in Niamey: 1 December 2016
Effective Control in Niamey
Direct (Nairobi) 40%

Indirect (80% x 25%) 20%
Total 100%
Group Structure
Kigali Niamey
Parent
Direct 80% 40%
Indirect 20%
NCI 20% 40%
Cost of investment of Nairobi in Niamey
Direct 160
Indirect 80
Parent (Nairobi) 80% x GHc100m = GHc80m
Indirect Holding Adjustment (NCI Investment in Kigali) – 20% x GHc100m = GHc20m
2. Before the computation of the net assets of the subsidiaries in this question, adjustments are required to be made
first
Net assets of Kigali
At acquisition At reporting Post-Acquisition movements

1.12.2015 30.1 1.2018
GH¢m GH¢m GH¢m
Share capital 600 600
Retained earnings 100 200 100
FVA- inventory (balance) 10 0 (10)
Inventory error (see below) (20) (20)
Trade discount error (see below) (5) (5)
710 775 65
The following explanatory notes are necessary:

6
Inventory error
Restatement of costs that have previously been written off to the income statement is never permissible. The
development inventory must be written off. The correcting double entry is:
Dr Retained earnings GH¢20 million

Cr Tangibles GH¢20 million
Trade discount error
The erroneous recognition of the discount in the income statement has used a corresponding overstatement of non-
current assets of GH¢6 million · at the beginning of the year. As NCA are depredating. the error is also depreciating. Over
the year GH¢1million of error has dropped off the statement of financial position into the income statement .as
depreciation. So only GH¢5 million is still left on the' statement ·of financial position in net assets at the year end. The
correcting double entry is shown as below:
GH¢ million
Dr Discount (I/S) 6 (to remove erroneous discount)

Cr Tangibles (Sop) 5 (to get the NCA back to where they should)
Cr Tangibles (I/S) 5 (to strip out the over-depreciation)
Thus, the net assets at reporting reduce by GH¢5 million.
Net Assets of Niamey
At acquisition At reporting Post-Acquisition movements

1.12.2016 30.1 1.2018
GH¢000 GH¢000 GH¢000
Share capital 250 250

Retained Earnings 50 60 10
Transfer (see below) 14 14
300 324 24
The following explanatory notes are necessary:
•Transfer
Niamey's accounting policy for property, plant and equipment (PPE) must be in synchrony with that of the parent. The
revaluation of NCA must be removed and the assets reverted back to historic cost. To remove it correctly there must be
two corrections. This is because Niamey has made two mistakes.
First, we must recognise the realization of the reserve and. put through the transfer that Niamey has ignored.
Second, we must remove the remainder of the revaluation reserve and reduce the tangibles back to their historical net
book value. Revaluation reserves should be realized over their lives. The life of the Niamey tangibles was six years at the
point of purchase. But the revaluation is one year after purchase and so the revaluation reserve has a life of only five years
from revaluation. The first of those five years is this year. So one-fifth of the GH¢70 million must be realized, therefore
GH¢ 14 million is transferred to Retained earnings, leaving GH¢56 million in the revaluation reserve. This is set against the
G H¢256 In tangibles. The revised balance is GH¢200 million, which is where it would have had Niamey not put through
the revaluation. After all, the tangibles are two years through a six-year life and had originally cost GH¢300 million. The
correcting double entry is shown below:
7
GH¢ million
Dr Revaluation reserve 70 (to remove the offending reserve)

Cr Retained Earnings 14 (to transfer a fifth of the reserve)
Cr Tangibles 5 (to remove the remainder of the reserve)
3. Computation of Goodwill -
In Kigali
GH¢m
Costs of investment:
Direct 640
Indirect ---
Fair value of NCI at acquisition 154
794
Less fair value of net assets @ acquisition W2) (710)
Goodwill at acquisition 84
Impairment loss to date (see below) (50)
Goodwill at consolidation 34
Note
To calculate the impairment loss in Kigali, we must compare the carrying value of Kigali with the recoverable amount of
GH¢809 million, given in the question.
GH¢m
Carrying value:
Net assets at year- end (W2) 775
Goodwill (from above) 84
859
Impairment (balance) (50)
Recoverable amount 809
In Niamey
GH¢m
Costs of investment:
Direct 160
Indirect 80
389
Less; fair value of net assets @ acquisition (W2) (300)
Goodwill at acquisition and consolidation 89
4. Consolidated Retained earnings

8
Nairobi's balance at reporting- 625
Kigali
Group share of post-acquisition l/S(W2) (80% x 65) 52
Niamey
Group share of post-acquisition l/S (W2) (60% x 24) 14.4
Impairment (80% x 50) (40)
651.4
5. Non-Controlling Interest
In Kigali
GH¢m
Less:
Investment in Niamey (20% x I00) (20)
NCI share of post-acquisition movements (W2) (20% x 65) 13

NCI share of goodwill impairment (20% x 50 (W3)) (10)
137
In Niamey

NC share of post-acquisition movements (W2) (40% x 24) 9.6
158.6
Total NCI (137 + 158.6) 295.6
SOLUTION 3
9
LABADI GROUP
Labadi Consolidated Statement of Financial Position at 31 May 2012
GHc m
Assets
Non-current assets:
Property, plant and equipment (W8) 231.72
Goodwill (5 + 1) (W1 and W2) 6·00
Financial assets 29·00
Current assets (W9) 32·00
Total assets 298.72
Equity and Liabilities

Ordinary shares 25·00
Other components of equity (W3) 4·00
Retained earnings (W3) 85.64
Total equity 114.64
Non-controlling interest (W4) 27·64
Total equity 142.28
Non-current liabilities including provision (W11) 94·84
Current liabilities (W10) 61.60
Total equity and liabilities 298.72
Working 1
Teshie GHc m
Fair value of consideration for 80% interest 50·00
Fair value of non-controlling interest 15·00
65·00
Fair value of identifiable net assets acquired (60·00)
Goodwill 5·00
On consolidation, there will be a reversal of the fair value adjustments to the investment held at fair value through profit
and loss. Further, the dividend income on investment should be taken to profit or loss and no other comprehensive
income.
Therefore, the adjustments required are:
Dr Other comprehensive income 5·00

Cr Investment in Teshie 5·00
Dr Other comprehensive income 2·00
Cr Retained earnings 2·00
10
Working 2
Nungua
GHc m
Consideration: at 1 June 2009 2·00
at 1 June 2011 16·00
Increase in fair value to 31 May 2011 1·00
Investment in Nungua in Labadi’s financial statements 19·00
Increase in fair value of equity interest (5·00 – 2·00 – 1·00) 2·00
Fair value of consideration 21·00
Fair value of non-controlling interest 9·00
30·00
Fair value of identifiable net assets (26·00)
Increase in value (3·00)
Goodwill 1·00
Working 3
Retained earnings
GHc m
Labadi:
Balance at 31 May 2012 70·00
Dividend from Teshie 2·00
Increase in fair value of equity interest – Nungua 2·00
Post-acquisition reserves: Teshie 8·80
Nungua 2·16
Joint operation 0·68
85.64
Teshie:
Group reserves – 80% of 11 8·80
NCI – 20% of 11 2·20
Post-acquisition reserves (27 – 16) 11·00
Nungua:
Post-acquisition reserves (19 – 15) 4·00
Less increase in depreciation (W2) (0·40)
3·60
Group reserves – 60% of 3·60 2·16
NCI – 40% of 3·60 1·44
3·60
11
Other components of equity
GHc m
Labadi:
Balance at 31 May 2012 11·00
Dividend to retained earnings (2·00)
Profit on revaluation of investment in Teshie (5·00)
4·00
Working 4
Non-controlling interest
GHc m
Teshie:
At acquisition 15·00
Post-acquisition share 2·20
17·20
Nungua:
At acquisition 9·00
Post-acquisition share 1·44
10·44
Total 27·64
Working 7
Joint operation
SOFP 1 June Dismantling Depreciation Unwinding 31 May
2011 cost of discount 2012
GHcm GHcm GHcm GHcm GHcm
PPE 6 2 x 40% (6·8 x 1/10) 6·12

Trade receivables 8
Trade payables (0·2 + 6·4) 6·6
Provision 0·8 0·04 0·84
Income statement
Revenue (20·00 x 40%) 8
Cost of sales (16·00 x 40%) (6·4)
Operating cost (0·50 x 40%) (0·2)
Depreciation (0·68)
Finance expense (0·04)
Net profit 0·68
12
Working 8
Property, plant and equipment
GHcm GHcm
Labadi 112·00
Teshie 60·00
Nungua 26·00
198·00
Increase in value of land – Teshie (60 – 20 – 16) 24·00
Increase in value of PPE – Nungua (26 – 10 – 15) 1·00
Further increase in value of PPE at acquisition 3·00
Less: increased depreciation (1 + 3)/5 x 6/12 (0·40)
Joint operation (W7) 6·12
231.72
Working 9
Current assets
GHcm GHcm
Labadi 5·00
Teshie 7·00
Nungua 12·00
24·00
Joint operation (W7) 8·00
32·00
Working 10
Current liabilities
GHcm
Labadi 47·00
Teshie 6·00
Nungua 2·00
Joint operation (W7) (6·40 trade payable + 0·20 operating costs) 6·60
61.6
Working 11
Non-current liabilities
GHcm
Labadi 53·00
Teshie 20·00
Nungua 21·00
Joint operation (0·80 provision + unwinding of discount 0·04) (W7) 0·84
94·84
13
SOLUTION 4
TAKORADI PLC
Consolidated Statement of Financial Position at 30 November 2011
GHcm
Assets:
Non-current assets:
Property, plant and equipment (W9) 1,845
Goodwill (W3) 69·2
Financial assets (W4) 138
Defined benefit asset (W8) 72
Current assets (W10) 2,126
Total assets 4,250.5
Equity and liabilities
Equity attributable to owners of parent
Share capital 1,120
Retained earnings (W5) 1058
Other components of equity (W5) 91·7
2,269.70
Non-controlling interest (W7) 343·5
2,613.2
Total non-current liabilities (W10) 851

Current liabilities (W6) 786
Total liabilities 1,637
Total equity and liabilities 4,250.20
Working 1
Sunyani
GHcm GHcm
Fair value of consideration for 60% interest 600

Fair value of non-controlling interest 395
Fair value of identifiable net assets acquired:
Share capital 600
Retained earnings 299
OCE 26
FV adjustment – land (balance) 10
(935)
Goodwill 60
14
Further acquisition of 20%
GHcm GHcm
Fair value of consideration 220
NCI at 1 December 2010 395
Increase in net assets to 30 November 2011:
((1,079 + 10) – 935) x 40% 61·6
NCI 30 November 2011 456·6
Transfer to equity 20/40 228·3
Positive movement in equity 8·3
The net assets of Sunyani have increased from GHc935 to GHc1,089 million GHc(1,079 + fair value adjustment 10), i.e.
GHc154 million.
The NCI proportion is 40% of GHc154 million, i.e. GHc61·6 million.
Working 2
Bolga
GHcm GHcm
Purchase consideration 541

Less fair value of identifiable net assets:
Share capital 390
Retained earnings 90
OCE 24
FV adjustment – land (balance) 22
526 x 80% 420·8
Goodwill 120·2
The assets transferred as part of the consideration need to be removed from non-current assets, and the gain on
disposal needs to be calculated. The proceeds of GHc64m credited to profit needs to be removed. The sale consideration
is GHc64 million and the carrying amount is GHc56 million, giving a gain on disposal of GHc8 million. The adjustment
required to arrive at the gain is:
Dr Retained earnings GHc56m
Cr Non-current assets GHc56m

15
Working 3
Impairment of goodwill
Sunyani
Goodwill 60
Identifiable net assets
Net assets 1,079
FV adjustment – land 10
1,089
Total 1,149
Recoverable amount (1,099)
Goodwill impairment 50
The goodwill impairment relating to Sunyani will be split 80/20 between the group and the NCI. Thus, retained earnings
will be debited with GHc40 million and NCI with GHc10 million.
Note: IAS 36 Appendix C, paragraphs C5 to C9 states that when NCI is valued at fair value, any goodwill impairment
should be allocated on the basis of the allocation used for profit or loss. Given that the impairment review arose at the
year end when Takoradi’s shareholding was 80%, this is now the basis of profit allocation and hence has been used in
determining the split between group and NCI. It could be argued that a 60:40 allocation between group and NCI is also
appropriate as this was how profits that arose in the year have been apportioned and the impairment is a loss that arose
in the year, albeit at the year end.
Bolga
GHcm GHcm
Goodwill 120·2
Unrecognized non-controlling interest (20%) 30·05
Identifiable net assets
Net assets 604
FV adjustment – land 22
626
Total 776·25
Recoverable amount (700)
Goodwill impairment on grossed up amount 76·25
Goodwill impairment on Takoradi’s share (80% x 76·25) 61
Goodwill is therefore GHc (60 + 120·2 – 50 – 61) million, i.e., GHc69·2 million.
16
Working 4
Financial asset
The carrying value will be GHc (108 + 10 + 20) m, i.e., GHc138m
Working 5
Retained earnings
GHcm
Takoradi – Balance at 30 November 2011 1,066
Sale of non-current asset (W2) (56)
Impairment of goodwill (W3) GHc(40 + 61) m (101)
Post-acquisition reserves: Sunyani (60% of GHc(442 – 299) m) 85·8
Bolga (80% of GHc(169 – 90) m) 63·2
1,058
Other components of equity GHcm

Takoradi – Balance at 30 November 2011 60
Sunyani post acqn (60% of GHc(37 – 26) m) 6·6
Bolga (80% x GHc(45 – 24) m) 16·8
Positive movement in equity 8·3
91·7
Working 6
Current liabilities GHcm
Takoradi 274
Sunyani 199
Bolga 313
786
Working 7
Non-controlling interest
GHcm
Sunyani (W1) 228·3
Impairment of Sunyani goodwill (W3) (10)
Bolga (20% x GHc (604 + 22) m) 125·2
343·5
17
Working 8
Defined benefit pension fund = 72
Working 9
Property, plant and equipment
GHcm GHcm
Takoradi 439
Sunyani 810
Bolga 620
1,869
Increase in value of land – Sunyani (W1) 10
Increase in value of land – Bolga (W2) 22
Less disposal of asset (W2) (56)
1,845.00
Working 10
Non-current liabilities
GHcm GHcm
Takoradi 455
Sunyani 323
Bolga 73
851
Current assets
GHcm GHcm
Takoradi 995
Sunyani 781
Bolga 350
2,126
18
SOLUTION 5
Consolidated Statement of Cash Flows for the Year ended 30 September 2013
GHS’000 GHS’000
Cash flows from operating activities
Profit before tax 1,115
Finance costs 35
Gain on sale of subsidiary (100)
Income from associate (115)
Depreciation 385
Impairment of goodwill [w1] 80
Gain on disposal of PPE [275-250] (25)
Increase in inventory (w2) (50)
Decrease in receivables (w2) 60
Decrease in payables (w2) (65)
-------
1,320
Finance cost paid (35)
Taxation paid (w3) (180)
--------
Net cash inflows from operating activities 1,105
Cash flows from investing activities

Sale proceeds from PPE 275
Purchase of PPE (W4) (800)
Dividends received from associate (w5) 85
Acquisition of subsidiary (1500-80) (1,420)
Sale of subsidiary (850-50) 800
--------
Net cash outflows from investing activities (1,060)
Cash flows from financing activities

Increase in loans (500-300) 200
Dividends paid to members of parent company (125)
Dividends paid to non-controlling shareholders (50)
------
Net cash inflow from financing activities 25
------
Increase in cash and cash equivalent during the year 70
Opening cash and cash equivalents 140
-----
Closing cash and cash equivalents 210
====
19
Working [all figures are in GHS’000]
W. 1(a) Goodwill impairment
Balance b/f 1,850
Acquisition of subsidiary during the year 350
Disposal of subsidiary during the year (190)
---------
2,010
Balance c/d (1,930)
---------
Goodwill impairment 80
=====
W.1 (b) Goodwill of acquired subsidiary
Cost of investment 1,500
-------
1,840
Net assets of subsidiary (1,490)
---------
======
W1 (c) Goodwill of disposed subsidiary

Cost of investment 600
NCI holding at fair value 320
Fair value of subsidiaries net assets at disposal (730)
-------
Goodwill at disposal 190
====
W.2 Movements in working capital elements
Inventories Receivables Payables
Balance b/f 435 330 725
Acquisition of subsidiary 150 240 220
Disposal of subsidiary (165) (120) (80)
------- ------- -------
420 450 865
Balance c/f (470) (390) (800)
------ ----- -------
(Increase) /Decrease during the year (50) 60 65
=== === ====
W.3 Taxation paid

Balance b/f [360+105] 465
Acquisition of subsidiary 40
Income statement charge 225
----
730
Balance c/d [400+150] (550)
--------
Tax paid 180
====
20
W.4 Purchase of PPE
Balance b/f 1,625
Depreciation (385)
Revaluation gain 200
Disposal of plant (250)
Acquisition of subsidiary 1,280
Disposal of subsidiary (725)
-------
1,745
Balance c/d (2,545)
--------
Purchase during the year (800)
=====
W.5 Dividends received from Associate
Investment in Associate b/f 540
Share of profit of associate 115
Other Comprehensive income from associate 50
------
705
Balance c/d (620)
-------
Dividend received 85
====
21
SOLUTION 6
Consolidated statement of profit or loss and other comprehensive income for the Mankessim Group for the year ended
30 June 2017
Total
GHcm
Revenue 887
Cost of sales (531)
Gross profit 356
Administrative costs (122)
Other expenses (80·9)
Operating profit 143·1
Net finance costs (22)
Profit before tax 121·3
Income tax expense (37)
Profit for the year 84·1
Other comprehensive income
Items that will not be reclassified to profit or loss
Gains on property revaluation 17
Items that may be reclassified to profit or loss
Exchange losses (85·9)

Other comprehensive income (68.9)
Total comprehensive income for year 15.2
Non-controlling interest profits (W9) 13·4

Shareholders of Mankessim profits (balance) 70·7
Profit for the year 84·1
Non-controlling interest total comprehensive income (W9) 20·2
Shareholders of Mankessim total comprehensive interest (W10) (5)
Total comprehensive income for the year 15.2
22
Working 1: Consolidation schedule
Mankessim Swedru Winneba Adjust Consol
(W5) (W5)
GHcm GHcm GHcm
Revenue 580 202 135 (30) 887

Cost of sales (376) (96) (89) 30 (531)
Gross profit 204 106 46 356
Administrative costs (95) (24) (13) (132)
Incorrect capitalization of legal fee (W2) (2)
Gain on step acquisition (W2) 7
Other expenses (39) (20) (10) (80·9)
Goodwill impairment Swedru (W3) (10·5)
Goodwill impairment Winneba (W4) (6·4) ––––––
Operating profit 75 51·5 16·6 143·1
Net finance costs (12) (6) (4) (22)
––––– –––––– –––––– –––––
Profit before tax 63 45·5 12·6 121.1

Income tax expense (18) (12) (7) (37)
––––– ––––– ––––– –––––
Profit for the year 45 33·5 5·6 84·1

Other comprehensive income
Items that will not be reclassified to profit or loss
Gains on property revaluation 17 0 17
Items that may be reclassified to profit or loss
Exchange loss on translation of Winneba (W6) (85·9) (85·9)
Other comprehensive income (85.9) 17 (68.9)
Total comprehensive income for year (40.9) 50·5 5·6 15.2
Working 2: Swedru – step acquisition
Mankessim obtains control over Swedru on 1 July 2016. Swedru therefore should be consolidated for the whole year
(W1).
On a step acquisition IFRS 3 Business Combinations requires the original 40% investment to be recognized at its
acquisition-date fair value and the resulting gain or loss in profit or loss or other comprehensive income. The original
shareholding would have been equity accounted as follows:
GHc million
Cost of investment (40%) 100

Plus 40% of (GHc250m – GHc230m) 8
Investment in associate at 30 June 2016 108
23
Since the fair value of a 40% interest at 1 July 2016 is GHc115 million, a gain of GHc7 million (GHc115m – GHc108m)
should be recorded within profit or loss of Mankessim (W1). In addition, the legal fees of GHc2 million should not have
been included in the cost of investment but should be expensed (W1).
Working 3: Swedru – goodwill impairment
The goodwill impairment of Swedru will be calculated as follows:
GHc million
Fair value of original 40% investment at 1 July 2016 115

Fair value of extra 20% acquired (GHc64m – GHc2m) 62
Fair value of 40% non-controlling interest at 1 July 2016 115
Less net assets at acquisition (250)
Impairment at 25% (W1) (10·5)
Goodwill for consolidated SFP (not required) 31·5
Working 4: Winneba goodwill
The goodwill impairment of Winneba will be calculated as follows:
dinar million
Cost 990
Less net assets at acquisition (888)
Impairment at 25% (25·5)
Goodwill for consolidated SFP 76·5
An exchange difference will arise on goodwill in the current year by comparing goodwill at the opening rate of exchange
with goodwill at the closing rate of exchange.
GHcm
Goodwill of dinar 102m at opening rate of GHc1:3·5 dinar 29·1
Impairment of dinar 25·5m at average rate of GHc1:4 dinar (6·4)
Exchange loss on goodwill (balancing figure) (7·4)
Goodwill of dinar 76·5m at closing rate of GHc1:5 dinar 15·3
Consequently GHc6·4 million will be expensed to other expenses (W1). A loss arises in other comprehensive income of
GHc7·4 million (W6).
Working 5: Winneba translation
The intra-group transaction between Winneba and Mankessim will need to be cancelled in the consolidated financial
statements. Since the profits of Winneba will be translated at the average rate of exchange of GHc1: dinar 4, the
adjustment will be GHc30m (120m dinar/4 (W1)). Unrealized profit of dinar 36m ((dinar 120m x 60/160) x 80%) will arise
on the group transaction. Winneba’s profit for the year will be adjusted for the extra depreciation arising from the fair
value adjustment. Additional depreciation of dinar 24m will be expensed (48m/2) as part of cost of sales.
24
Winneba’s profits will then be translated at the average rate of exchange as follows:
dinar (millions) GHc (millions)
Revenue 540 135

Cost of sales (296) (74)
Depreciation adjustment (24) (6)
PURP (36) (9)
Administrative costs (52) (13)
Other expenses (40) (10)
Net finance costs (16) (4)
Income tax expense (28) (7)
Profit after tax 48 12
Note that cost of sales will be GHc89m (GHc74m + GHc6m +GHc9m) (W1).
Working 6: Other exchange differences on Winneba
Further exchange differences will be recorded in other comprehensive income on the opening net assets of Winneba
and their profit for the year.
The opening net assets are given as dinar 888 million. The exchange difference is calculated by translating this at the
opening and closing exchange rates.
dinar 888 million at opening rate of GHc1: dinar 3·5 = GHc253·7 million.
dinar 888 million at closing rate of GHc1: dinar 5 = GHc177·6 million.
An exchange loss of GHc76·1 million arises (GHc253·7 m – GHc177·6 m).
The revised profit of Winneba for the year is dinar 48 million (W5).
An exchange difference arises by comparing the profit at the average rate of exchange (GHc12 million (W5)) with the
closing rate of GHc1:5 dinar. Profit of dinar 48 million at closing rate of 5 = GHc9·6 million. A further exchange loss arises
of GHc2·4 million (GHc12m – GHc9·6m). (Tutorial note: This excludes the goodwill impairment of Winneba since this
forms part of the exchange difference on goodwill (W6))
Total exchange differences to total comprehensive income are therefore GHc85·9 million (GHc7·4 million (W4) +
GHc76·1 million + GHc2·4 million).
25
Working 9: Non-controlling interests
Non-controlling interest share of profits:
GHcm
Swedru: 40% x GHc33·5m (W1) 13·4
Non-controlling interest share of total comprehensive income:
GHcm
Swedru 40% x GHc50·5m (W1) 20·2
Working 10: Total comprehensive income Mankessim
GHcm
Mankessim profit for the year (W1) 15

Mankessim property revaluation 44·8
Pension remeasurement loss (4·2)
Swedru (60% x GHc50·5m) (W1) 30·3
Winneba (100 % x GHc5·6m) (W1) 5·6

Exchange loss (W6) (85·9)
5·6

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1

Enquiries: www.aspireproconsult.com 0555213559

Consolidated Statement of Financial Position as at 31 May 2017

(a) Date of acquisition

Abokobi of Madina: 1 June 2015

(b) Effective control in Oyarifa

Indirect (85% x 60%) = 51%

NCI 40% 49%

(d) Cost of investment of Oyarifa

Parent (Abokobi) 85% x GHc30,000 = GHc19,890

Indirect Holding Adjustment (NCI Investment in Oyarifa) – 15% x GHc30,000 = GHc4,500

Net -assets of Madina (GH¢'000) At Acquisition At Reporting Post-Acquisition

Ordinary share 40,000 40,000

Ordinary share 20,000 20,000

5. Non-controlling Interest GHC'000

non-controlling interest -Madina

Cr Retained earnings GH¢3m

(i) Splitting the proceeds ·into equity and debt recognition

*Rounded to GHC 1,550

balance at start effective interest coupon payments balance at reporting

*rounded to GH¢2,280**rounded to GH¢ 28,900

Consolidated statement of financial position as at 30 November 2018

Effective Control in Niamey

Direct (Nairobi) 40%

NCI 20% 40%

Cost of investment of Nairobi in Niamey

Parent (Nairobi) 80% x GHc100m = GHc80m

Indirect Holding Adjustment (NCI Investment in Kigali) – 20% x GHc100m = GHc20m

Net assets of Kigali

At acquisition At reporting Post-Acquisition movements

The following explanatory notes are necessary:

Dr Retained earnings GH¢20 million

Trade discount error

Dr Discount (I/S) 6 (to remove erroneous discount)

Net Assets of Niamey

At acquisition At reporting Post-Acquisition movements

Share capital 250 250

Dr Revaluation reserve 70 (to remove the offending reserve)

Impairment loss to date (see below) (50)

4. Consolidated Retained earnings

NCI share of post-acquisition movements (W2) (20% x 65) 13

Fair value of NCI at acquisition 149

Equity and Liabilities

Therefore, the adjustments required are:

Dr Other comprehensive income 5·00

2011 cost of discount 2012

GHcm GHcm GHcm GHcm GHcm

PPE 6 2 x 40% (6·8 x 1/10) 6·12

Consolidated Statement of Financial Position at 30 November 2011

Total non-current liabilities (W10) 851

Fair value of consideration for 60% interest 600

The NCI proportion is 40% of GHc154 million, i.e. GHc61·6 million.

Purchase consideration 541

526 x 80% 420·8

Dr Retained earnings GHc56m

Cr Non-current assets GHc56m

The carrying value will be GHc (108 + 10 + 20) m, i.e., GHc138m

Other components of equity GHcm

Defined benefit pension fund = 72

Cash flows from investing activities

Cash flows from financing activities

W1 (c) Goodwill of disposed subsidiary