Poppy plc (POPPY) is a company which manufactures rain harvesting containers It purchased shares in Downa Limited (DOWNA), a company with hardware shops throughout Ireland, on 1 January 2017 Its results at 31 December 2017 are as follows POPPY 31 December 2017 DOWNA 31 December 2017 000 000 000 000 ASSETS Non current Assets Property, Plant and Equipment (PPE) 2,100 1,200 Investment in DOWNA 1,800 Total non current assets 3,900 1,200 Current assets Inventories 500 800 Trade receivables 400 900 Bank 690 260 Total current assets 1,590 1,960 Total assets 5,490 3,160 EQUITY AND LIABILITIES Equity Ordinary share capital (1 each) 2,000 400 Share premium 200 Nil Retained earnings 2,090 2,040 Total equity 4,290 2,440 Current Liabilities Trade payables 1,200 720 Total current liabilities 1,200 720 Total equity and Liabilities 5,490 3,160 POPPY paid 1,800,000 for 320,000 Shares in DOWNA on 1 st January 2017 At the date of acquisition, the Property, Plant and Equipment (PPE) of DOWNA had a fair value which exceeded its carrying value by 250,000 At that date the PPE had a remaining useful life of 5 years The fair value of the PPE at acquisition had not been adjusted for in the accounts of DOWNA DOWNAs equity section of its financial statements (at the date of acquisition) was as follows Ordinary share capital 400,000 Retained earnings 1,240,000 Total 1,640,000 DOWNA sold goods to POPPY from the date of acquisition to the value of 600,000 DOWNA applies a mark up of 40 on selling price At the year end, POPPY still had inventory in stock to the value of 280,000 from DOWNA DOWNA had an intercompany amount of 160,000 owed by POPPY included in its trade receivables at year end POPPY has an amount included in its trade payables at year end of 120,000 The difference was due to cash in transit at the year end POPPYs policy is to measure non controlling interests at acquisition at their fair value The Share price of DOWNA on 1 st January 2017 was 5 per share Requirement Set out consolidated statement of financial position of POPPY for the year ended 31 December 2017 IFRS 3 Goodwill allows 2 methods for the calculation of NCI at the date of acquisition Explain these 2 methods and calculate the alternative to the method used in part (a)

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jul 29, 2024

Poppy plc. (POPPY) is a company which manufactures rain harvesting containers. It purchased shares in Downa Limited (DOWNA), a company with hardware shops throughout Ireland,

Poppy plc. (POPPY) is a company which manufactures rain harvesting containers. It purchased shares in Downa Limited (DOWNA), a company with hardware shops throughout Ireland, on 1 January 2017. Its results at 31 December 2017 are as follows:

POPPY

31 December 2017

DOWNA

31 December 2017

	000	000	000	000
ASSETS
Non-current Assets
Property, Plant and Equipment (PPE)		2,100		1,200
Investment in DOWNA		1,800
Total non-current assets		3,900		1,200
Current assets
Inventories	500		800
Trade receivables	400		900
Bank	690		260
Total current assets		1,590		1,960
Total assets		5,490		3,160

EQUITY AND LIABILITIES
Equity
Ordinary share capital (1 each)	2,000		400
Share premium	200		Nil
Retained earnings	2,090		2,040
Total equity		4,290		2,440
Current Liabilities
Trade payables	1,200		720
Total current liabilities		1,200		720
Total equity and Liabilities		5,490		3,160

POPPY paid 1,800,000 for 320,000 Shares in DOWNA on 1^st January 2017.
At the date of acquisition, the Property, Plant and Equipment (PPE) of DOWNA had a fair value which exceeded its carrying value by 250,000. At that date the PPE had a remaining useful life of 5 years. The fair value of the PPE at acquisition had not been adjusted for in the accounts of DOWNA
DOWNAs equity section of its financial statements (at the date of acquisition) was as follows:


Ordinary share capital	400,000
Retained earnings	1,240,000
Total	1,640,000

DOWNA sold goods to POPPY from the date of acquisition to the value of 600,000. DOWNA applies a mark up of 40% on selling price. At the year-end, POPPY still had inventory in stock to the value of 280,000 from DOWNA.
DOWNA had an intercompany amount of 160,000 owed by POPPY included in its trade receivables at year-end. POPPY has an amount included in its trade payables at year-end of 120,000. The difference was due to cash in transit at the year end.
POPPYs policy is to measure non-controlling interests at acquisition at their fair value. The Share price of DOWNA on 1^st January 2017 was 5 per share.

Requirement:

Set out consolidated statement of financial position of POPPY for the year-ended 31 December 2017.
IFRS 3 Goodwill allows 2 methods for the calculation of NCI at the date of acquisition. Explain these 2 methods and calculate the alternative to the method used in part (a)