Question
Task 01 The statements of financial position of Parifar Co. and Sarifar Co. as at 30 June 2022 are given below: Parifar Co. Sarifar Co.
Task 01 The statements of financial position of Parifar Co. and Sarifar Co. as at 30 June 2022 are given below: Parifar Co. Sarifar Co. OMR OMR Non-current assets Property, plant & equipment 16,000 9500 Investments 5000 -- 21000 9500 Current assets Inventory 2500 3000 Receivables 3000 2000 Cash 2,000 7500 5000 28500 14500 Share capital 6000 5000 Share Premium 6000 Retained earnings 10500 7500 22500 12500 Non-current liabilities: 8% Loan notes 2000 500 Current liabilities 4000 1500 28500 14500 Parifar Co. acquired 70% shares of Sarifar Co. on 1st July 2021 when the retained earnings of Sarifar Co. was OMR 4,800. Parifar Co. paid OMR4,900 in cash. Parifar Co. also issued 2, OMR1 share for every 5 shares acquired in Sarifar Co. and agreed to pay a further OMR 2,100 in 4 years' time. The market value of Parifar Co.s shares on 1 July 2021 was OMR1.70. Parifar Co. has only recorded the cash paid in respect of the investment in Sarifar Co. Current interest rates are 5%. The Parifar Co. group uses the fair value method to value Page 5 of 9 the non-controlling interest. At the date of acquisition, the fair value of the non-controlling interest was OMR 5500. Requirement: (b) What are the circumstances under which Parifer Co. would feel the necessity to consolidate financial information into a single set of statements. Justify. (with 300 words)
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