Consolidated Statement of Financial Position

Extracts from the draft financial statements of Machira, Jira and Chari are presented below.

Statements of financial position as at 31 March 2014 Machira Jira Chari
ASSETS $m $m $m
Non-current assets
Property, plant and equipment 210 88 110
Investment in Jira 148 – –
Investment in Chari – 76 –
358 164 110
Current assets 60 46 28
Total assets 418 210 138
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Share capital ($1 equity shares) 200 80 60
Share premium 50 20 10
Other reserves 18 6 –
Retained earnings 65 60 46
Total equity 333 166 116

Non-current liabilities
25
10
4
Current liabilities 60 34 18
Total liabilities 85 44 22
Total equity and liabilities 418 210 138

Additional information:

1.Machira acquired 75% of the equity share capital of Jira on 1 April 2011 when the retained earnings of Jira were $45 million and the balance on Jira’s other reserves was nil. This acquisition resulted in Machira having power over Jira which when exercised affects its return from the investment. Jira has not issued any shares since the acquisition date. The non- controlling interest in Jira was valued at fair value at the date of acquisition. The fair value of one equity share in Jira was $2.00 on 1 April 2011.The fair value of the net assets of Jira was deemed to be the same as the carrying value at the date of acquisition with one exception. A contingent liability which could be reliably measured, had a fair value of $5 million at the date of acquisition and a fair value of $2 million at 31 March 2014.

2.Jira acquired 80% of the equity share capital of Chari on 1 January 2012 when the retained earnings of Chari were $20 million and the balance on Chari’s other reserves was nil. This acquisition resulted in Jira having power over Chari which when exercised affects its return from the investment. Chari has not issued any shares since the acquisition date. The non- controlling interest in Chari was valued at fair value at the date of acquisition. The fair value of one equity share in Chari was $1.75 on 1 January 2012.

3.Machira concluded that the goodwill on the acquisition of Jira was impaired by 20% on 31 March 2014. No other impairments of goodwill have arisen.

4.The balance on “other reserves” for both Machira and Jira relate solely to movements in the values of their
investments in Jira and Chari respectively

5.Machira issued a debt instrument on 1 April 2013 at its nominal value of $25,000,000. The instrument carries a fixed coupon interest rate of 5.5%, which is payable annually in arrears. The loan is repayable at a premium in 7 years time. Transaction costs of $250,000 were paid on the issue of the debt instrument and charged to administrative expenses. The effective interest rate applicable to this instrument has been calculated at approximately 9.5%. The interest due was paid in March 2014.

Required:

Prepare the consolidated statement of financial position for the Machira group as at 31 March 2014.