+ Ash plc. has produced a draft Statement of Profit or Loss for the year ending 31 March 2017 and a draft Statement of Financial Position as at the same date. The draft Statement of Financial Position is given below. Draft Statement of Financial Position as at 31 March 2017 Assets Non-current assets Property, plant and equipment 752,00 Current assets Inventory 46,500 Trade and other receivables 51,000 Bank 21,500 119,000 Total assets 871,000 Equity and Liabilities Equity Share capital Retained earnings Non-current liabilities Debentures Current liabilities Trade and other payables Current tax payable Total equity and liabilities 550,000 211,600 761,600 50,000 23,700 35,700 59,400 871.00 To assist with the finalisation of the financial statements the following additional information has been prepared and needs to be taken into account (i) On 1 April 2016 Ash issued 50,000 7% 10 convertible bonds at par. The bonds can be redeemed for cash on 31 March 2020 or converted into ordinary shares converted at the rate of four ordinary shares for each 10 bond. Interest is payable annually in arrears. The market rate of interest for similar debt without the conversion option is 9%. (ii) On 1 April 2016 the company entered into a finance lease agreement for a machine with a cash price of 12,680. The terms of the agreement require Ash to pay 4,000 on the 31 March annually for four years and be responsible for the maintenance of the machine. At the end of the lease the asset will be returned to the lessor. The machine is deemed to have a useful economic life of five years. The rate of interest implicit in the lase is 10% Present value factors are as follows: End of year 5% 7% 9% 1 0.952 0.935 0.917 2 0.907 0.873 0.842 3 0.864 0.816 0.772 4 0.823 0.763 0.708 5 0.784 0.713 0.650 Required: (a) Prepare a revised Statement of Financial Position as at 31 March 2017 to take into account the above information. Show all relevant workings. (20 marks) (b) Critically consider how well IAS 17 Leases applies the concept of substance over form. (10 marks)