QUESTION 16 a. Daaho Ltd (Daaho) manufactures and distributes security equipment. Daaho prepares financial statements in accordance with International Financial Reporting Standards (IFRS) up to 31 August each year. On 31 August 2019, the taxation liability account in the books of Daaho Ltd showed a debit balance of GH¢17,500 after paying the 2018 liability. The estimated liability for 2019 is GH¢84,500 and no entry has yet been made to record this. Required: Explain the appropriate accounting treatment of the above transaction for the year end 31 August 2019. b. RoyCo acquired a brand new property (land and buildings) on 1 January 2016 for GH¢40 million (including GH¢15 million in respect of the land). The asset was revalued on 31 December 2017 to GH¢43 million (including GH¢16.6 million in respect of the land). The buildings element was depreciated over a 50-year useful life to a zero residual value. The useful life and residual value did not subsequently need revision. On 31 December 2018 the property was revalued downwards to GH¢35 million as a result of the recession (including GH¢14 million in respect of the land). The company makes a transfer from revaluation surplus to retained earnings in respect of realised profit. Required: Calculate the amounts recognised in profit or loss and in other comprehensive income for the years ended 31 December 2017 and 31 December 2018

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Transcribed Image Text:QUESTION 16 a. Daaho Ltd (Daaho) manufactures and distributes security equipment. Daaho prepares financial statements in accordance with International Financial Reporting Standards (IFRS) up to 31 August each year. On 31 August 2019, the taxation liability account in the books of Daaho Ltd showed a debit balance of GH¢17,500 after paying the 2018 liability. The estimated liability for 2019 is GH¢84,500 and no entry has yet been made to record this. Required: Explain the appropriate accounting treatment of the above transaction for the year end 31 August 2019. b. RoyCo acquired a brand new property (land and buildings) on 1 January 2016 for GH¢40 million (including GH¢15 million in respect of the land). The asset was revalued on 31 December 2017 to GH¢43 million (including GH¢16.6 million in respect of the land). The buildings element was depreciated over a 50-year useful life to a zero residual value. The useful life and residual value did not subsequently need revision. On 31 December 2018 the property was revalued downwards to GH¢35 million as a result of the recession (including GH¢14 million in respect of the land). The company makes a transfer from revaluation surplus to retained earnings in respect of realised profit. Required: Calculate the amounts recognised in profit or loss and in other comprehensive income for the years ended 31 December 2017 and 31 December 2018

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