Question 18: Group Structures

Suggested Time: You should spend about 35 minutes on this section.

Part A

Crazy Office Supplies and Suva Office Supplies own 80% and 20% respectively of the ordinary shares that carry voting rights at a general meeting of shareholders of Nadi Office Supplies. Crazy Office Supplies sells half of its interest to Labasa Office Supplies and buys call options from Labasa Office Supplies that are exercisable at any time at a premium to the market price when issued and, if exercised, would give Crazy Office Supplies its original 80% ownership interest and voting rights. At 30 June 2018, the options are out of the money.

Required:

Discuss whether Crazy Office Supplies is the parent of Nadi Office Supplies.