Relevant statements of financial position as at 31 March 2017 are set out below:

You have recently been appointed chief accountant of Jasmin (Holdings) plc and are about to prepare the group statement of financial position at 31 March 2017. The following points are relevant to the preparation of those accounts.
(i) Jasmin (Holdings) plc owns 90% of the ordinary £1 shares and 20% of the 10% £1 preference shares of Kasbah plc. On 1 April 2016 Jasmin (Holdings) plc paid £96 million for the ordinary £1 shares and £1.6 million for the 10% £1 preference shares when Kasbah’s reserves were a credit balance of £45 million.
(ii) Jasmin (Holdings) plc sells part of its output to Kasbah plc. The inventory of Kasbah plc on 31 March 2017 includes £1.2 million of inventory purchased from Jasmin (Holdings) plc at cost plus one-third.
(iii) The policy of the group is to revalue its tangible non-current assets on a yearly basis. However, the directors of Kasbah plc have always resisted this policy, preferring to show tangible noncurrent assets at historical cost. The market value of the tangible non-current assets of Kasbah plc at 31 March 2017 is £90 million. The directors of Jasmin (Holdings) plc wish to follow the requirements of IFRS 3 (Business combinations) and IAS 16 (Property, plant and equipment) in respect of the value of tangible non-current assets to be included in the group accounts.
(iv) The ordinary £1 shares of Fortran plc are split into 6 million ‘A’ ordinary £1 shares and 4 million ‘B’ ordinary £1 shares. Holders of ‘A’ shares are assigned one vote and holders of ‘B’ ordinary shares are assigned two votes per share. On 1 April 2016 Jasmin (Holdings) plc acquired 80% of the ‘A’ ordinary shares and 10% of the ‘B’ ordinary shares when the retained profits of Fortran plc were £1.6 million and the revaluation reserve was £2 million. The ‘A’ ordinary shares and ‘B’ ordinary shares carry equal rights to share in the company’s profits and losses.
(v) The fair values of Kasbah plc and Fortran plc were not materially different from their book values at the time of acquisition of their shares by Jasmin (Holdings) plc.
(vi) Kasbah plc has paid its preference dividend for the current year but no other dividends are proposed by the group companies. The preference dividend was paid shortly after the interim results of Kasbah plc were announced and was deemed to be a legal dividend by the auditors.

Required:
(a) Prepare a consolidated statement of financial position for Jasmin (Holdings) Group plc for the year ending 31 March 2017. (All calculations should be made to the nearest thousand pounds.)
(b) Comment briefly on the possible implications of the size of Kasbah plc’s losses for the year for the group accounts and the individual accounts of Jasmin (Holdings) plc.

Transcribed Image Text:

Tangible non-current assets Investments Shares in Kasbah (at cost) Shares in Fortran (at cost) Current assets Inventory Cash Total assets Current liabilities Creditors Net assets Equity Called-up share capital Ordinary £1 shares 10% £1 Preference shares Revaluation reserve Retained profits Jasmin (Holdings) plc £000 289,400 97,600 8,000 395,000 285,600 319,000 604,600 999,600 (289,600) 710,000 60,000 40,000 610,000 710,000 Kasbah plc £000 91,800 91,800 151,400 500 151,900 243,700 (238,500) 5,200 20,000 4,000 (18,800) 5,200 Fortran plc £000 7,600 7,600 2,600 6,800 9,400 17,000 (2,200) 14,800 10,000 1,200 3,600 14,800