Practice Activity 18.8 Preparation of separate and consolidated financial statements for the head of

Practice Activity 18.8 Preparation of separate and consolidated financial statements for the head office and branch

The following trial balances of the head office and branch of Ever Blessed Enterprises are given below:

Note the subsequent information:

1. The functional currency of the head office and branch is Nigerian Naira.

2. The head office of Ever Blessed Enterprises is in Lagos, Nigeria. A branch of Ever Blessed Enterprises is in Delta State, Nigeria.

3. The entire inventory is purchased by the head office. The inventory sent to the branch in Delta is invoiced at cost plus 20%.

4. Inventory in the head office were valued at ₦20,400 on 31 December 2017.

5. Inventory in the branch was valued at ₦25,500 at their invoiced price on 31 December 2017.

6. Depreciation on property, plant and equipment is at the rate of 10%.

7. Provision for doubtful debts is 5% of trade receivable’s closing balance.

8. On 31 December 2017 there was cash-in-transit of ₦85,000 from the branch to the head office. The cash was received in Lagos on 5 January 2018. There was inventory-in-transit from the head office to the branch. Invoice price of inventory-in-transit worth ₦8,500. The branch received the inventory on 5 February 2018.

Required:

i. Prepare the head office, branch and consolidated statements of profit or loss for the year ended 31 December 2017.

ii.Prepare the head office, branch and consolidated statements of financial positions as at 31 December 2017.

See the suggested answers to practice activity 18.8 here.

Suggested answers to practice activity 18.8