3. Crowell Company Limited is a conglomerate with investments in various sectors including hospitality, manufacturing, telecommunication, and stockbrokerage. A summary of its investments is shown below: -

Kes 000	Crowell Company Limited	Usafi Company Ltd	Telair Company Ltd	Topaz Company Ltd	Bima Company Ltd
Income statement for the year ended 30 June 2022
Dividend income	200,000	-	-	-	2,000,000
Interest income	500,000	-	-	-	1,000,000
Sales income	-	2,000,000	1,000,000	5,000,000	-
Total income	700,000	2,000,000	1,000,000	5,000,000	3,000,000
Cost of sales	-	(1,500,000)	(700,000)	(2,000,000)	-
Gross profit	700,000	1,500,000	300,000	3,000,000	3,000,000
Operating & Administration expenses	(500,000)	(1,000,000)	(200,000)	(2,000,000)	(2,000,000)
Finance costs	(100,000)	-	(10,000)	(500,000)	(500,000)
Profit before income tax	100,000	500,000	90,000	500,000	500,000
Income tax expense	-	(150,000)	(27,000)	(150,000)	(150,000)
Profit after income tax	100,000	450,000	53,000	350,000	350,000
Fair value gains on subsidiaries	600,000	-	-	-	-
Deferred tax on revaluation of subsidiaries	(30,000)	-	-	-	-
Total comprehensive income	670,000	450,000	53,000	350,000	350,000
	Crowell Company Limited	Usafi Company Ltd	Telair Company Ltd	Topaz Company Ltd	Bima Company Ltd

Balance sheet as at 30 June 2022
Assets
Non-current assets Investment portfolio	230,000,000 5,000,000	- 500,000,000	- 20,000,000	- 1,000,000,000
-
Property, plant, and equipment	20,000,000
Right of use asset	1,000,000	20,000,000	5,000,000	10,000,000	-
Deferred tax asset	-	7,000,000	-	-	30,000,000
Intangible assets	1,000,000	50,000,000	5,000,000	240,000,000	60,000,000
Total non- current assets	237,000,000	577,000,000	30,000,000	1,250,000,000	110,000,000
Current assets
Receivables & prepayments	180,000,000	1,000,000	2,000,000	500,000,000	5,000,000
Due from related parties	20,000,000	16,000,000	4,000,000	-	-
Current income tax recoverable	90,000,000	-	3,000,000	55,000,000	2,000,000
Cash and cash equivalents	100,000,000	50,000,000	7,000,000	5,000,000	5,000,000
Total current assets	400,000,000	67,000,000	32,000,000	560,000,000	12,000,000
Total assets	637,000,000	644,000,000	62,000,000	1,810,000,000	122,000,000
Equity
Share Capital	40,000,000	500,000	1,000,000	100,000,000	700,000
Share Premium	360,000,000	1,000,000	2,000,000	200,000,000	1,400,000
Investment revaluation reserve	50,000,000	-	8,000,000	201,000,000	-
Retained earnings	50,000,000	63,500,000	22,000,000		19,900,000
Total Equity	500,000,000	65,000,000	33,000,000	501,000,000	22,000,000
Liabilities
Non-current liabilities
Borrowings	57,000,000	10,000,000	5,000,000	500,000,000	-
Lease liability	900,000	19,000,000	3,000,000	9,000,000	-
Total non- current liabilities	57,900,000	29,000,000	8,000,000	509,000,000	-
Current liabilities
Payables and accruals	43,000,000	500,000,000	5,000,000	600,000,000	60,000,000
Bank overdraft	10,000,000	46,000,000	-	198,900,000	20,000,000
Due to related parties	21,100,000	4,000,000	16,000,000	1,100,000	20,000,000
Total current liabilities	79,100,000	550,000,000	21,000,000	800,000,000	100,000,000
Total liabilities	137,000,000	579,000,000	29,000,000	1,309,000,000	100,000,000

Additional information

Usafi Company Limited is listed on the Nairobi Securities Exchange and as at 31 December 2022, its share was trading at Kes 45. Cromwell Company owns 10,000 shares in Usafi;

The dividend income of Kes 200 million for Cromwell was received from Usafi Company Ltd (Kes 100 million) and Bima Insurance (Kes 100 million);

The interest income earned by Cromwell includes Kes 200m from Bima Insurance Company Limited. The outstanding loan balance as at 31 December 2022 is Kes 20mn.

I. Compute the carrying value of the investment portfolio in Cromwell Company Limited as at 30 June 2022. (20 points )

II. Prepare the consolidated financial statements of Cromwell Company Limited i.e the statement of comprehensive income and the statement of financial position as at 30 June 2022. (20 points)

Expert Answer