UNIVERSITY OF GHANA

, ,

(AUrigh tSJes~rved)
, . . ' . .

BACIIE'LOR O~FSCIENCEIN BUSINESS ADMINISTRATION

, , '

ENDOFSEMESTER EXAMiNATIONS 2021/2022 ACADEMIC YEAR

. .' .
'DEPARTMENT
. . .
OF.DISTANCE
....
EDUCATION : '
'. . , " . . . ,

A~cT 401: CORPORATE REPORTING AND ANALYSIS (3 CREDITS),'

, TIME ALLOWED: THREE flOURS "
'INSTRUCTIONS: ATTEMPT ALL QUESTIONS

'Question 1
, "

,The follovving illfonuation relates toFITAA. Co Ltd." a food processing

cornpany and its subsidiary TUMTUM CO. ~td.
FITAA Co.' TUMTUM Co ..
ASSETS GI-IC GHC
'Investment in 'TUM'TUM Co., at cost 450,000
Property, Plant and Equipment 120,000 100,000

Cash 80,000
,. Inventories 120,000 100,000
, Receivables 180,000 150,000
950,000 350,000

Equity and liabilities

Share capital 100,000 100;000 .
Retained earnings, 650,000 100,000
Current liabilities
Bank overdraft ' 100,000 100,000
, ,Other liabilities 100,000~~--~~--
50,000 ,~~-

Totalliabilities and equity ,950,000 350,000 ·

,Additional inforlnation:
1. FITA~,whichis the parent con1pany acquired 70% of the shares bf
TUMTUM Co~ on 1 January, 202lfor GI--IC450,OOO.

EXAMINER: DRHADIJA N. NYANTE Pagel of 5

 2. The retained earnings
.
of TUMTUM as atthatdatewasGIIC50,OOQ.
. ' . . .

,3. FITAACo.'spolicy is to recognize non~control1ing interest at fair value

attheclate of acquisition
, 4. Tliemarketprice of TUMTUM CO.'s share~ just before the .dateof
acquisjtiollwasGH C3.7 5 '
. "..:'." . . .

5. GoodwiU',iS,tl()timpaired

,You arereq uire(} to prepare:

. : . '. . . . .

1. a schedule to Sh()WaSlUl1maty of the net assets of IUMTUM. Co., the

, ',subsidiary at the date of acquisiti()nand at the date ofconsolidatiQn
" 'highlighting any pre orpos~acquisitiol1 profits. (10 marks)

ii. a schedule to illustrate how lTIuch of the net assets accrues to Non-
controlling interests (5 marks)
iii. the amount, of purchased go 0 <iwill that 111ustbe shown in the consolidated
financialstatelnetlts of the group (5 marks)
iv., a consolidatedstatemerit of financial position as at 2021 for the group.
(10 marks) " 'rotal: 30 marks

Question 2
Below is a sumlnary information froni the financial statements of two
companies competing in. the san1e industry:

Dat~ from the current year end statement of financial position

BEEMAPA OBAAPA
COMPANY COMPANY
,Assets GHC GI-IC
PPE 176~900 252,300
Cash, 20,000 . 36,500 ,
, Accounts Receivable 77,100 70,500
Current NoteS Receivable 11,600 9,000
Inventory' , 86,800 82,000
'PrepCiidExpenses "
, ,
9,700 10,100
~XAMINER:DR HADIJA N. NYANTE Page 20f 5
 TotaL Assets'· 382,100 460,400

Liabilities And~quity
.. Currellt Liabilities.' . 90,500'·· . 97,000
Long~TerlnNotesPayable 93,000 93,300
COmmon Stock;GI-IC5par ,
value' 133,00Q 141,000
.Retained Earnings 65,600 129,100 '.
'TotalLiabilitiesAnd Equity . '382;100 '460,400

. . .

:Data from the current year's inc 0 rnc statement

·'BEEMAPA
COMPANY .OBAAPA·COMPANY
GHC ·GIte ..
Sales. .'. " . 393,600 . 667,500
.Cost of Goods Sold' 290,600 . 480,000
Interest Expense' 5,900 12;300
. Income Tax Expense' ·5,700 12,300 .
Net Income 33,850 .. 61,700
B.asic Earnings Per Share L27 2.19

Bcginning":Of-Year Statement Of Financial Position Data

BEEMAPA
COMPANY ·.OBAAPA COIVIPANY
GIIC . G1IC
Accounts Receivable 72,200 73,300
CUTrentNotesReceivable
Inventory 105,100 . 80,500
Total Assets 383,400 443,000
COll11TIOnStock,.GHC5 .
par value 133,000 141,000
Retained. Ealnings 49,100 109,700

l{equired: For both companies; compute the .

I.CulTent. ratio
11. Acid-test ratio
111. Inventory turuqyer
IV. Debtor's collection period
EXAMINER: DRHADIJA N.NYANTE Page3 of 5
 v. Profitl1;largin ratio

vl1.Retun~oncon1ti1onstockholder'seqllity
viii. Debt~to, eqllityratio
'NB: (Rotindtooncdccimal place) " (15 marks)
h. Idehtifyt~e cOlupanyybu consider tObebetter\Vith regardto profitability,
:liquidity and solvency. Explain why: (15 marks)' ,
(Total: 30 marks) ,

Question 3 "
. " , :.. . . ,', " . . .

Melnbers of TUCA Quicl~ Credit Ltd. Are suing the directors of the COlnpany
for misappropriation ()ffunds. The allegation against the 111elubers of the Board
. include the following:
i. G'ranting of creditto non-members of the Company
ii. Investment of the Company's shares in another company operated
',by a former employee of the company' of which the Board
Chairman ofrrUCAis an executive member
iii. Paynlent , of 'monies to' Board I11cmberswithout approval from
members

Required:
3a. Identify~and : evaluate ,any 5 typical responsibilities of the Board of,
Directors with reference to the above case of TUCA and its n1:embers? (10
marks)
3b. Explain any 3 featurcs' of an ineffective board (6 marks)
, 3c. Comme~t on one 'theory that can be used to explain the actions of the
Directors in TUCALtd.J4marks )
(Total: 20 marks)

. , . . '.. .

EXAMINER: DRHADIJAN.NYANTE Page 4 of 5

 · ' . '

QUE:STION.4. ' .
... :.... . . ' . .

:4a.Identify andexplainanyS features of a distressed firn1 {5 mark$}

,4b. ' , Disti11guish'hetween operational" restructuring and financial
restructuring (8 marks),
, , ,

4c.Discuss theliiTlitatic>ns of traditional financial accounting In relation to '

,,~orPorkteacc()unt~bility.(7 marks)
(Total: 20marks) ,

EXAMINER: DRHADIJA N.NYANTE . , Pag'eS of 5