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Which of the statements is true in respect of the year march

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Hermione Limited is a for-profit New Zealand company owned by five New Zealand resident individuals, each holding 20% of the shares. In Hermione's financial statements from the years ended 31 March 2018 and 31 March 2019, Hermione has reported assets of $50 million and revenue of $22 million.

Harry Limited is a for-profit New Zealand company 100% owned by Hogwarts Corp, a company incorporated in the UK. In Harry's financial statements from the years ended 31 March 2018 and 31 March 2019, Harry has reported assets of $25 million and revenue of $5 million.

Neither Hermione nor Harry is classified as an FMC reporting entity.

Question 1: In respect of the year ended 31 March 2020 which of the following statements is true?

A. Hermione does not need to prepare general purpose financial statements but must opt in if shareholders who hold not less than 5% of the voting shares require it. Hermione is not required to be audited, but can opt in. Harry does need to prepare general purpose financial statements, within 5 months of balance date.

B. Hermione does not need to prepare general purpose financial statements but must opt in if shareholders who hold not less than 95% of the voting shares require it. If Hermione does opt in to preparing general purpose financial statements, those financial statements are required to be audited. Harry needs to prepare general purpose financial statements.

C. Hermione and Harry will not have to prepare general purpose financial statements. Both companies can choose to prepare special purpose financial statements for tax purposes and for any other stakeholders that may require financial information.

D. Hermione and Harry are both required to prepare general purpose financial statements. Hermione can opt out of the requirement to have these financial statements audited.

Reference no: EM132554921

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