ASSIGNMENT 1
In 2019, the shareholders of Alewa Ltd. Decided to dispose of their shares in the company.
The summarized financial statements of Alewa Ltd. For the year 2019 are given below:
Balance Sheet as at December 31st, 2019
Patents
Tangible Assets
Current Assets
Current Liabilities
Long term loan
Stated Capital
Income Surplus
GH¢ million
10,000
146,000
53,500
(32,000)
(87,500)
90,000
50,000
40,000
90,000
Profit and Loss Account for the year ended December 31st, 2019
GH¢million
Profit before tax
62,000
Tax
20,000
Profit after tax
42,000
Proposed dividends
8,000
Retained profit
34,000
Additional information:
i. The stated capital of Alewa Ltd. is made up of 20,000,000 ordinary shares of no par value.
The company is not listed.
ii. The fair value of the tangible fixed assets of Alewa Ltd. was GH¢290 billion. Current
assets include obsolete stock of GH¢16.5 billion.
iii. The patents represent a license to produce and sell a special product. This product is
expected to generate a pre-tax profit of GH¢2 billion per annum over the next 5 years.
iv. The discounted present value of future cash payments in respect of the long-term loan is
GH¢122 billion.
v. Profits after tax of Alewa Ltd. over the past 4 years were as follows:
Year
1999
2000
GH¢million
28,000
30,000
2001
16,000
2002
36,000
vi. The discount rate of Alewa Ltd. is 10% per annum.
vii. Happy Ltd., a major competitor of Alewa Ltd., is listed with a P/E ratio of 11 and
dividend yield of 7.2.
Required:
Using three (3) methods of valuation, advise the directors of Alewa Ltd. on the values to be
placed on the ordinary shares.
ASSIGNMENT 2
You are provided with the information set out below relating to Bishop group of companies.
Consolidated income statement for Bishop Group for the year ended 31 December 2022
2022
2021
$000
$000
Revenue
19,308
18,173
Cost of sales
(4,315)
(4,620)
Gross profit
14,993
13,553
Distribution costs
(6,439)
(6,126)
Administrative expenses
(5,705)
(6,719)
Profit before tax and finance costs (note 1) 2,849
708
Finance income
90
75
Finance costs (note 2)
(350)
(230)
Profit before taxation
2,589
553
Income tax expense (note 3)
(800)
(125)
Profit for the year
1,789
428
Attributable to:
Equity holders of the parent
Non‐controlling interest
1,369
420
1,789
318
110
428
Summary statement of changes in equity for the year to 31 December 2022
Issued
capital
B/fwd 1January
Issue of shares
Profit for year
Dividends
Exchange gain
Share
premium
Foreign
currency
translation
Retained
Earnings
Total
$000
$000
$000
$000
$000
7,500
77
2,100
4,905 14,582
3,500
324
3,824
1,369
1,369
(600)
(600)
700
700
11,000
401
2,800
5,674 19,875
NCI
Equity
$000 $000
2,500 17,082
3,824
420
1,789
(295)
(895)
175
875
2,800 22,675
Consolidated statement of financial position as at 31 December 2022
2022
2021
$000
$000
Non‐current assets
Tangible assets
11,720
7,520
Investments
3,000
2,700
Current assets
Inventories
6,135
5,740
Receivables
5,720
4,380
Cash at bank and in hand
820
169
27,395
20,509
Equity and liabilities
Ordinary share capital
11,000
7,500
Share premium
401
77
Foreign currency translation
2,800
2,100
Retained earnings
5,674
4,905
Equity attributable to parent
19,875
14,582
Non‐controlling interest
2,800
2,500
Total equity
22,675
17,082
Current liabilities
Payables
1,420
1,760
Tax
700
167
Obligations under finance leases
110
50
Non‐ current liabilities
Loans
1,200
800
Obligations under finance leases
740
250
Deferred tax
550
400
27,395
20,509
Notes to the accounts
2022
$000
960
240
1,200
2021
$000
840
120
960
$000
120
205
25
350
$000
80
132
18
230
(3) Tax on profits on ordinary activities
$000
Tax on income at 30%
600
Deferred tax
150
Under provision in respect of previous years 50
800
$000
90
35
‐
125
(1) Operating profit after charging
Depreciation: Owned assets
Assets held under finance leases
(2) Finance costs
Loan interest
Finance charge on finance leases
Exchange rate losses on long‐term loans
(4) Foreign exchange differences
$000
$000
Gains arising on re‐translation
700
400
The exchange rate gain relates to the translation of an 80% owned overseas subsidiary,
Louise, under the closing rate method. The gain comprises:
$000
Non current assets
424
Inventories
117
Receivables
339
Cash
53
Trade payables
(58)
875
Attributable to NCI
(175)
Attributable to owners of parent company
700
(5) During the year non-current assets additions of $700,000 were acquired under finance
leases. Payments on finance leases are made in arrears. The net book value of non-current
assets disposed of was $720,000, with sale proceeds of $810,000.
Required
Prepare the group statement of cash flows of Bishop in accordance with IAS 7 together with
any required notes for the year ended 31 December 2022.
TO BE SUBMITTED
1. IN A GROUP OF THREE (3) STUDENTS
2. LATEST BY 17TH AUGUST 2024