FOUNTAIN UNIVERSITY, OSOGBO
(UNIVERSITY OF NASR-UL-LAHI FATHI SOCIETY OF NIGERIA)
COLLEGE OF MANAGEMENT AND SOCIAL SCIENCEStr
DEPARTMENT OF ACCOUNTING AND FINANCE
Introduction Part ACC301 : Intermediate Financial Accounting I (3 credits, compulsory), Duration of
course in Hours and Weeks; (45 hours, 15 weeks) 3 hours in a week
Lecturer’s Name: S.A. Raji, Assistant Lecturer, B.Sc. Accounting, M.Sc. International Finance and
Economic Policy; asdera223@yahoo.com.
Office address: Accounting & Finance Department. Post Graduate Building, Top Floor, Room 5 by
the left. Consultation Hour: Monday, Tuesday and Wednesday 11am-1:30p.m.
Course Content: Issue and Redemption of Shares; The Concept of Financial Reporting; Financial
Reporting Standards; Preparation of Published Accounts for Limited Liability Companies including
Banks, Insurance Companies Building and Societies and Trusts; Treatment of Taxation in Published
Accounts; Elements of Social Accounting.
Course Justification: ACC301 (Intermediate Financial Accounting) is important for the students
because the course teaches the students how to prepare financial report in compliance with the
accounting professional standard. The students are expected to pass this course because it would give
them a better understanding and prepare them for the next course in the next level.
Course Objectives: The main objective of this course is to equip the students with the required
knowledge in Financial Accounting. The specific objectives are: to enhance the ability of the students
to under and prepare Financial report of various organization, as required by professional standard; to
identify and explain common errors in the preparation and presentation of financial report.
Course Requirement: Every student of Accounting should offer this course and must have passed Acc
201 that is Financial Accounting I in 200 level first semester which is a prerequisite to this course.
Methods of Grading: The course will be graded as 30% for Continuous Assessment and 70%
examination at the end of the semester.
Course Delivery Strategies: The course is theoretical in nature, so it is better done by teaching method
using face to face as a method of delivery.
Lecture:
Week 1-2: Issue and Redemption of Shares: At the end of this topic, the students are expected to
know *method of issuing shares (either in par or premium). *conditions and method of redeem shares
. *accounting treatment of issue and redemption shares.
Reading List: Financial accounting made simple volume 1 3rd edition (2004) by Igben R.O. Published
by ROI, Nigeria. International Financial Reporting and Analysis (2011) by Alexander, Britton and
Jorissen published by Seng Lee Press, Singapore
Week 3-4: Concept of Financial Reporting: The objectives are as follows: the students are expected to
be able to *explain and discuss the scope of accounting in general and of financial reporting* describe
the major types of users of published financial information and discuss the implication of their
different needs* describe and illustrate the internal coherence or inconsistency of these conventions.
Reading List: International Financial Reporting and Analysis (2011) by Alexander, Britton and
Jorissen published by Seng Lee Press, Singapore.
Week 5: Financial Reporting Standards: Objectives; the students are expected to; Objective of
financial statement, qualitative characteristic and element of financial statement* How to prepare
financial report of an organization according to IFRS.
Reading List: ICAN Study Pack, Financial Reporting and Ethics, V/I Publishers, 2009.International
Financial Reporting and Analysis (2011) by Alexander, Britton and Jorissen published by Seng Lee
Press, Singapore
Week 6-8: Preparation of Published Accounts for Limited Liability Companies including Banks,
Insurance Companies and Building Societies and Trusts: Objective; student should be able to describe
and apply the format and disclosure requirements of IAS 1* discuss the adequacy of the requirements
of IAS 1 and suggest and appraise possible alterations thereto.
Reading List: Financial accounting made simple volume 1, 3rd edition (2004) by Igben R.O.
Published by ROI, Nigeria. International Financial Reporting and Analysis (2011) by Alexander,
Britton and Jorissen published by Seng Lee Press, Singapore.
Week 9-10: Treatment of taxation in Published Accounts: Objectives: The students are expected to:
Know what is taxation, types of taxation (with main focus on CIT and VAT) *Treatment of taxation
in published accounts according to IFRS*
Read lists: ICAN Study Pack, Taxation, V/I Publishers, 2009. International Financial Reporting and
Analysis (2011) by Alexander, Britton and Jorissen published by Seng Lee Press, Singapore
Week 11-12: Elements of Social Accounting: Objectives: At the end of the topic the students are
expect to know: definition of social accounting, Purpose of social accounting*
Reading List: ICAN Study Pack, Fundamental Principle of Accounting, V/I Publishers, 2009
Week 13: Revision Week
Practice Questions:
NORTH-SOUTH ASSURANCE PLC is a company in the Non-life insurance business with Authorised
Ordinary share capital of N80million. The following balances were extracted from its ledger as at 31
December 2008.
N’000
N’000
Ordinary share capital of N1 per share
80,000
General Reserve
3,625
Contingency Reserve at 1/1/2008
11,287.5
Reserve for outstanding claims at 1/1/2008
3,246.6
Provision for unexpired risk at 1/1/2008
14,017.7
Premium
69,432
Re-insurance premium
5,000
Claims
23,007.25
Investment income
4,356.5
Interest on loan Granted
6,258.84
Sundry income
5,238.62
Balances due from/ to Agents
14,178.97
6,683.24
Commission Receivable
12,459.67
Provision for Bad debts
4,366.50
Property at cost
14,000
Provision for depreciation on property
4,500
Audit fees
535
Actuary consulting fees
2,358
Commission paid
4,221.5
Advertising & Publicity
2,500
Entertainment
900
Vehicle running expenses
1,850
Electricity
625
Telephone Postages
489
Rent and Rates
2,356
Salaries and Wages
5,487.25
Transport and Travelling
1,625
Repairs & Renewals
875
Statutory Deposit
25,000
Director’s fees & Expenses
1,978
Depreciation
842
Legal & Other professional Fees
3,475
Staff Pension
1,658
Fed. Govt. Development Stock
23,781.2
Treasury Bills & Certificates
15,000
Cash at Bank
8,725
Loans on Policies
65,005
The following additional information were provided;
The estimated income tax liability of N2.5million is to be provided for, on the profit of the year.
The following analysis was provided;
Fire
motor
General
Total
Accident
N
N
N
N
Claims
6,258,000
10,257,000
6,492,250
23,007,250
Premiums
20,844,380
34,855,890
13,731,730
69,432,000
Agent Commission
875,500
2,316,000
1,030,000
4,221,500
Re-insurance Premium
1,492,540
2,537,310
970,150
5,000,000
Commission Receivable
2,624,710
5,621,380
4,213,580
12,459,670
Outstanding Reserves – 31/12/2008;
Contingency
3,624,000
5,682,120
1,981,380
11,287,500
Outstanding claims
855,600
1,382,520
1,008,480
3,246,600
Unexpired Risk
3,726,700
7,580,600
2,710,400
14,017,700
Provision for Bad debts is to be increased to 7,641,300.
Unallocated management expenses to be apportioned on the basis of premium received.
Dividend of 10k per ordinary share is proposed on the ordinary share capital.
The following transfers are to be made;
Fire
motor
Accident
N
N
Contingency
1,875,000
3,724,500
Outstanding claims
245,050
423,150
Unexpired Risk
1,872,000
2,650,050
You are required to prepare published;
a)
Comprehensive income statement
b)
Statement of Financial Position as at that date
General
Total
N
824,000
203,800
898,000
N
6,423,500
872,000
5,420,050
QUESTION 2
Excel Plc is a manufacturing company. Its Trial Balance as at 30 April, 2008, is as follows:
Goodwill
Land and Building
Plant and Machinery
Furniture & Fittings
Accumulated Depreciation:
Land & Building
Plant & Machinery
Furniture & Fittings
Investments – Quoted
Unquoted
Ordinary share capital @ 50k/share
General Reserve
Profit and Loss account
Provision for Deferred Tax
Stocks – Raw Material
Work-in-progress
Finished Goods
Sales
Rent Received
Investment income
DR
N ‘000
500
15,950
68,880
44,530
CR
N ‘000
2,700
51,350
33,500
2,370
3,020
63,000
500
750
3,040
10,800
9,780
11,530
73,470
170
800
Other Interest Received
Profit on sales of Plant
Purchase of Raw Materials
External charges on raw materials
Wages and Salaries
Pension cost on employees
Depreciation charge for the year:
Land & Building
Plant &machinery
Furniture & Fittings
Rents, Rates and Insurance
Power and Lighting
Distribution Expenses
Audits Fees
Sundry expenses
Interest paid on bank overdraft
Bills of exchange payable
Trade creditors
Other Creditors
Company income tax brought forward
Creditors due after one year:
6% Debenture 2004 – 2020
Others
Rationalization cost
Prepayment
Bank balance
Trade debtors
Other debtors
600
3,600
28,620
180
9,060
1,220
410
5,940
3,250
3,900
6,940
2,660
320
400
200
100
12,850
2,060
3,080
5,550
680
2,070
2,410
9,210
13,560
90
257,800
257,800
The following additional information are also relevant:
N’000
Stocks at 30 April 2008 - Raw materials
12,810
Work in progress
11,050
Finished Goods
12,580
During the year, additions on fixed assets were as follows:
Plant & machinery
8,530
Furniture & Fittings
780
Disposals were made as follows:
Plant & machinery- at cost (Acc. Depreciation N2.670.000)
3,020
Furniture & Fittings – at cost (Acc. Depreciation 910,000)
1,250
Proposed dividend is 6 kobo per share.
Provision in the accounts for company income tax of 2,400,000 and capital Gains tax on sale of plant
of 450,000 is made.
Under – provision for company income tax in respect of year ended 30/4/07 was 250,000.
Included in salaries and wages are Directors’ fees of 0.5million and Executive Directors’ salaries of
2.5million.
You are required to prepare published Comprehensive Income statement and statement of Financial
Position as at that date
QUESTION 3
Samba Nigeria PLC is an Electrical Components assembly outfit with authorised and issued share
capital of 200million, made up of 400million ordinary share of 50kobo each. The following is the
company’s trail balance as at 30 April 2008.
DR
CR
‘000
‘000
Freehold Land
25,000
Short – term Deposits
50,000
Sundry Debtors
60,000
Cash and bank
50,000
Furniture and Fittings – cost
44,720
Accumulated depreciation
11,180
Machinery and equipment – cost
164,000
Accumulated depreciation
32,800
Stock at 1 May 2003
27,160
Sundry Creditors
39,420
Bank overdraft
25,000
Wages
97,280
Postages and Telephone
2,100
General expenses
6,060
Bad debt written off
560
Auditors’ remuneration
2,000
Distribution expenses
2,140
Insurance
2,060
Bank interest paid and received
4,100
1,000
Electricity
3,800
Salaries (including directiors’ remuneration 2m)
76,850
Rates
1,580
Purchases
306,832
Sales
640,124
Dividends (interim)
24,000
Profit and Loss account
2,400
Share Capital
200,00
951,924
951,924
You are require to prepare published;
Comprehensive income statement
Statement of Financial Position as at that date
4) IAS 1 states that financial statement should clearly distinguished from any other information that
is included in the same published document. State eight elements contain in a published statement.