Question
Harpy plc. (Harpy) is an engineering company. It purchased 75% of the shares in Sura Limited (Sura), a company with hardware shops throughout Ireland, on
Harpy plc. (Harpy) is an engineering company. It purchased 75% of the shares in Sura Limited (Sura), a company with hardware shops throughout Ireland, on 1 April 2018, for 405 million. The Financial Statements as at 31 March 2019 are as follows:
| Harpy
31 March 2019 | Sura
31 March 2019 |
| million | million | million | million |
ASSETS |
|
|
|
|
Non Current Assets (note (i) |
| 620 |
| 340 |
Investment in Sura |
| 405 |
| Nil |
|
| 1025 |
| 340 |
Current Assets |
|
|
|
|
Inventory (note iii) | 96 |
| 22 |
|
Accounts Receivables (note iv) | 84 |
| 44 |
|
Bank | Nil | 180 | 4 | 70 |
|
| 1205 |
| 410 |
|
|
|
|
|
EQUITY AND LIABILITIES |
|
|
|
|
Equity attributable to Equity holders of the Parent |
|
|
|
|
Equity Shares 1 cent each |
| 375 |
| 200 |
Share Premium |
| 150 |
| Nil |
Retained Earnings |
| 294 |
| 140 |
|
| 819 |
| 340 |
Current Liabilities: |
|
|
|
|
Accounts Payable (note iv) | 130 |
| 27 |
|
Taxation | 45 |
| 23 |
|
Overdraft | 25 | 200 | nil | 50 |
|
|
|
|
|
|
|
|
|
|
Non Current Liabilities: |
|
|
|
|
10% Loan Note |
| 186 |
| 20 |
|
| 1205 |
| 410 |
The following information is relevant:
(i) At the date of acquisition the fair values of Suras net assets were approximately equal to their carrying amounts with the exception of its properties. These properties had a fair value of 40 million in excess of their carrying amounts. The properties had a remaining useful life of 20 years from 1 April 2018.The fair values have not been reflected in Suras SOFP.
(ii) Suras equity section of its financial statements at the date of acquisition was as follows:
|
|
Ordinary Share Capital | 200 million |
Retained Earnings | 120 million |
Total | 320 million |
(ii) Harpy values NCI at fair value. The market price of Suras shares just before the date of acquisition was 2.40 share.
(iii) Sura sold Harpy goods for 15 million in the post acquisition period. 6 million of these goods are included in the Inventory of Harpy at 31 March 2019. The mark up on the goods was 33% .
(iv) Suras accounts payable account (in the records of Harpy) of 7 million does not agree with Harpys accounts receivable account (in the records of Sura) due to cash in transit of 4 million paid by Harpy.
(v) Goodwill of 27 million is impaired in the first year.
Required:
Prepare the consolidated statement of financial position of Harpy plc as at 31 March 2019.
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