Charm Plc (Charm) is keen to expand its global operations and purchased 75% of the ordinary share
Question:
Charm Plc (Charm) is keen to expand its global operations and purchased 75% of the ordinary share capital of Exos Inc. (Exos) on 1 June 2020 for $57.6 million. Exos is an overseas company incorporated in the United States and is the first subsidiary acquired by Charm. The group must now prepare its first set of consolidated financial statements for the year ended 31 May 2021. The finance team have not undertaken this task as they have had no experience in preparing consolidated statements and have little understanding of how to do complete this task, nor why it is necessary under IFRS Standards. Exos’s financial statements are stated in their functional currency, the American Dollar ($). The balance on retained earnings of Exos on 1 June 2020 was $15.875 million. Both Charm and Exos prepare financial statements to 31 May 2021 and adopt IFRS Standards. The financial statements for Charm and Exos are included below (the financial statements for Charm include the adjustments in respect of the additional information from Task 1 and no further adjustments are required to the separate financial statements of Charm in respect of those).