Holding Company (D98-J14) (27.02.2014)

HOLDING COMPANIES
Section
The Companies Act, 2014
19(1)
Subsidiary company not to hold shares in its holding company.

No company shall, either by itself or through its nominees, hold any shares in its holding
company and no holding company shall allot or transfer its shares to any of its subsidiary
companies and any such allotment or transfer of shares of a company to its subsidiary
company shall be void:
Provided that nothing in this sub-section shall apply to a case
19(1)(a)
where the subsidiary company holds such shares as the legal representative of a deceased
member of the holding company; or
19(1)(b)
where the subsidiary company holds such shares as a trustee; or
19(1)(c)
where the subsidiary company is a shareholder even before it became a subsidiary

company of the holding company:
Provided further that the subsidiary company referred to in the preceding proviso shall
have a right to vote at a meeting of the holding company only in respect of the shares held
by it as a legal representative or as a trustee, as referred to in clause (a) or clause (b) of the
said proviso.
19(2)
The reference in this section to the shares of a holding company which is a company limited
by guarantee or an unlimited company, not having a share capital, shall be construed as a
reference to the interest of its members, whatever be the form of interest.
Consolidated Financial Statements of Group Companies

BASIC CONCEPTS
Question: Write a note on Holding Company and Subsidiary Company.
Answer:
Section
The Companies Act, 2014
2(46)
2(46) holding company, in relation to one or more other companies, means a company of
which such companies are subsidiary companies;
2(87)
(87) subsidiary company or subsidiary, in relation to any other company (that is to say
the holding company), means a company in which the holding company
2(87)(i)
(i) controls the composition of the Board of Directors; or
Financial Accounting
6.1
2(87)(ii)
(ii) exercises or controls more than one-half of the total share capital either at its own or
together with one or more of its subsidiary companies:
Provided that such class or classes of holding companies as may be prescribed shall not
have layers of subsidiaries beyond such numbers as may be prescribed.
Explanation.For the purposes of this clause,
(a) a company shall be deemed to be a subsidiary company of the holding company even if
the control referred to in sub-clause (i) or sub-clause (ii) is of another subsidiary company
of the holding company;
(b) the composition of a companys Board of Directors shall be deemed to be controlled by
another company if that other company by exercise of some power exercisable by it at its
discretion can appoint or remove all or a majority of the directors;
(c) the expression company includes any body-corporate;
(d) layer in relation to a holding company means its subsidiary or subsidiaries;
In a wholly owned subsidiary, there is no minority interest because all the shares with voting
rights are held by the holding company.
Consolidated financial statements are prepared and presented by a parent/holding enterprise to
provide financial information about a parent and its subsidiary(ies) as a single economic entity.
Distinction must be made from the point of view of the holding company, between revenue and
capital profit of the subsidiary. In the absence of information, profits of a year may be treated as
accruing from day to day
Consolidation procedures
In preparing the consolidated financial statements, the following steps are taken:
the carrying amount of the parents investment in each subsidiary and the parents portion of
equity of each subsidiary are eliminated.
In case cost of acquisition exceeds or is less than the acquirers interest, goodwill or capital
reserve is calculated retrospectively.
intragroup transactions, including sales, expenses and dividends, are eliminated, in full;
unrealised profits resulting from intragroup transactions that are included in the carrying
amount of assets, such as inventory and fixed assets, are eliminated in full;
unrealised losses resulting from intragroup transactions that are deducted in arriving at the
carrying amount of assets are also eliminated unless cost cannot be recovered;
minority interest in the net income of consolidated subsidiaries for the reporting period are
identified and adjusted against the income of the group in order to arrive at the net income
attributable to the owners of the parent; and
minority interests in the net assets of consolidated subsidiaries are identified and presented in
the consolidated balance sheet separately from liabilities and the parent shareholders equity.
If the controlling interest was acquired during the course of a year, profit for that year must be
apportioned into the pre-acquisition and post-acquisition portions, on the basis of time in the
absence of information on the point.
the financial statements of the parent and its subsidiaries are combined on a line by line basis by
adding together like items of assets, liabilities, equity, income and expenses.
Dividend received from a subsidiary company, must be distinguished between the part received
out of capital profits and that out of revenue profits - the former is credited to Investment Account,
it being a capital receipt, and the latter is adjusted as revenue income for being credited to the
Profit & Loss Account.
6.2
In respect of such goods not yet sold, the unrealised profits are to be eliminated in full. This may
be done by creating a reserve in respect of total unrealised profit which has not yet been realised.
Also, unrealised losses resulting from intragroup transactions should also be eliminated unless
cost cannot be recovered.
Preparation of Consolidated Profit and Loss Account
All the revenue items are to be added on line by line basis and from the consolidated revenue
items inter-company transactions should be eliminated.
If there remains any unrealised profit in the stock of good, of any of the Group Company, such
unrealised profit is to be eliminated from the value of stock to arrive at the consolidated profit.
Also it is necessary to eliminate the share of holding company in the proposed dividend of the
subsidiary.
Preparation of Consolidated Cash Flow Statement
All the items of Cash flow from operating activities, investing activities and financing activities
are to be added on line by line basis and from the consolidated items, intercompany transactions
should be eliminated.
Treatment of Investment in Associates in Consolidated Financial Statements
An enterprise that presents consolidated financial statements should account for investments in
associates in the consolidated financial statements in accordance with the Accounting Standard
(AS) 23.
Accounting for Associates (AS 23)
AS 23 suggests equity method of accounting for investments in associates.
Under equity method The following procedure should be followed:
Investment is initially recorded at cost. Subsequently, the carrying amount is increased on the
basis of share of profit or decreased on the basis of share of loss in the associate.
Step (1): Find out value of investments on the basis of proportionate value of net assets of the
investee;
Step (2): Find out goodwill or capital reserve arising out of the purchase consideration.
If the purchase price is above the value of investments determined in step (1) then there is
goodwill and
if the purchase price is less than the value of the investments determined in step (1) then there is
capital reserve.
Step (3): Goodwill or capital reserve as determined in step (2) should be included in the carrying
amount of the investments with a separate disclosure. On the contrary, investments are recognised
at purchase price as per AS 13 without disclosing goodwill/capital reserve.
DISCLOSURE-Goodwill/capital reserve can be disclosed within bracket below the
Investments in Associates in the following style and accumulated income which was not earlier
recognized should be added to value of investments for first time consolidation with
corresponding credit to consolidated reserve.
Equity method is not applicable
(1) when an investment is acquired for the purpose of disposal in the near future, i.e., as short term
investments; and
(2) there is severe long term restriction on fund transfer by the associate to the investor. In these
two cases AS 13 should be applied.
Treatment of Investment in Joint Ventures in Consolidated Financial Statements (AS 27)
AS 27 identifies three broad types of Joint Ventures- jointly controlled operations, jointly
controlled assets and jointly controlled entities.
Jointly Controlled Operations
6.3
In respect of its interests in jointly controlled operations, a venturer should recognise in its
separate financial statements and consequently in its consolidated financial statements:
(a) the assets that it controls and the liabilities that it incurs; and
(b) the expenses that it incurs and its share of the income that it earns from the joint venture.
Jointly Controlled Assets
In respect of its interest in jointly controlled assets, a venturer should recognise, in its separate
financial statements, and consequently in its consolidated financial statements:
(a) its share of the jointly controlled assets, classified according to the nature of the assets;
(b) any liabilities which it has incurred;
(c) its share of any liabilities incurred jointly with the other venturers in relation to the joint
venture;
(d) any income from the sale or use of its share of the output of the joint venture, together with its
share of any expenses incurred by the joint venture; and
(e) any expenses which it has incurred in respect of its interest in the joint venture.
Jointly Controlled Entities: A jointly controlled entity maintains its own accounting records and
prepares and presents financial statements in the same way as other enterprises in conformity with
the requirements of AS 27 applicable to that jointly controlled entity.
Separate Financial Statements of a Venturer
In a venturer's separate financial statements, interest in a jointly controlled entity should be
accounted for as an investment in accordance with Accounting Standard (AS) 13.
Consolidated Financial Statements of a Venturer
In its consolidated financial statements, a venturer should report its interest in a jointly controlled
entity using proportionate consolidation except
(a) an interest in a jointly controlled entity which is acquired and held exclusively with a view to
its subsequent disposal in the near future; and
(b) an interest in a jointly controlled entity which operates under severe long-term restrictions that
significantly impair its ability to transfer funds to the venturer.
Question: What are holding company and subsidiary company?
Answer: A holding company is one which holds 51% or more of the shares in another company
(subsidiary company). For example, A Ltd holds 75% of shares in B Ltd., and B Ltd., holds 80% of
shares in C Ltd. Here A Ltd., has two subsidiaries (subsidiary company of a subsidiary is also a
subsidiary of holding company). It is mandatory to consolidates the accounts of subsidiary company
with its holding company and reported to the shareholders
(1)
Calculation of ratio of shares held by holding company and outsiders

Share of Holding Company
Minority Interest
(2)
Total
General Reserve
Capital Reserve
Profit or Loss
Over (Under) Valuation of Assets
Capital
Revenue
Profit
Profit
%
%
H Co.
CP
RP
S Co.
CP
RP
6.4
Change in Depreciation
(3) Cost of Control
Cost of Acquisition
(4) MI
Book Value
Capital Profit
Bonus Shares
Pre-acquisition Dividend
Goodwill (Capital Reserve)

Revenue Profit
Minority Interest
[CMA FINAL J04& D05, 2 Marks]

Question: What entries would you make in holding companys accounts to record dividend received
from a subsidiarys pre-acquisition profits?
Answer:
Journal Entry In the books of Holding Company
Date
particular
Amount
Bank A/c
Dr.
Amount
xxxx
To Investment in Subsidiary A/c
xxxx
(Being Dividend received from subsidiarys pre-acquisition profit)

[CMA FINAL D04, 2 Marks]
Question: How is cost of control computed when an interest in subsidiary company is acquired in
blocks over a period of time?
Answer: When interest in a subsidiary company is acquired in blocks, the cost of control or goodwill
is computed as if all the blocks are purchased on the date when a control is achieved. However if
shares are required in major blocks, then for each block Analysis of profit will be computed after
considering the dates of acquisition.
PRACTICAL QUESTIONS
[Basic Sum]
Question: Consolidate the following Balance Sheet:
Particulars
Note
H Ltd
S Ltd
1,400
1,000
No.
I
EQUITY AND LIABILITIES
(1)
Shareholders funds
(a)
Equity Share of 1 each
(b)
Reserves and surplus
300
(2)
Current liabilities [Creditors]
500
1,400
1,800
Total
II
ASSETS
(1)
Non-current assets
6.5
Fixed Assets [Investments in 900 shares in S Ltd.,]
1,200
Sundry assets
(2)
Total
200
1,800
1,400
1,800
When H Ltd acquired shares in S Ltd the profit and loss in the later had a credit balance of 200
Answer:
(1) Calculation of ratio of shares held by holding company and outsiders
Minority Interest
(2)
Total
Profit or Loss
Capital
Revenue
Profit
Profit
300
200
100
RP
180
1,000
90%
10%
S Co.[10%]
CP
90
(3) Cost of Control

Cost of Acquisition
1,000
100
H Co.[90%]
CP
900
RP
20
10
(4) MI
1,200
Book Value
900
100
Capital Profit
180
20
Bonus Shares
Over (Under) Valuation of Assets
1,080

Revenue Profit
120
20
10
Minority Interest
Consolidated Balance Sheet of H Co. Ltd
(a)
Share capital
(b)
Reserves and surplus: Profit and Loss A/c
(c)
Minority Interest
(4)
130
H Co.
S Co.
1,400
90
ASSETS
(1)
Non-current assets
(a)
Fixed assets
(b)
Intangible assets [Goodwill]
(2)
Current assets
Total
90
130
Nil
500
Total
II
Cons.
500
2,120
200
1,800
2,000
120
2,120
Stock Reserve: When holding or subsidiary company purchased or sold goods at invoice price (with
profit) mutually, the profit Element on the unsold stock held on the balance sheet date should be
eliminated from profit and loss account in step 6and from stock in the balance sheet.
6.6
[Wholly owned subsidiary company | Unrealized profit on unsold stock]

Question: Following are the Balance sheet of R Ltd and S Ltd as at 31.12.1994:
Particulars
Note
R Ltd
S Ltd
4,00,000
1,50,000
80,000
65,000
No.
I
(1)
Shareholders funds
(a)
(b)
(2)
Non-current liabilities [12% Debenture]
2,00,000
(3)
Current liabilities
3,20,000
2,85,000
10,00,000
5,00,000
Fixed Assets
5,00,000
2,40,000
Investments in 15,000 shares in S Ltd., on 1.1.94
2,00,000
Current assets
3,00,000
2,60,000
10,00,000
5,00,000
Total
II
ASSETS
(1)
Non-current assets
(2)
[including 10,000 stock purchased from R Ltd]

Total
1
Reserves and Surplus
R Ltd
S Ltd
General Reserve
50,000
40,000
Profit and Loss A/c
30,000
25,000
80,000
65,000
Prepare a consolidated balance sheet as at 31.12.94 assuming that:

1.
2.
S Ltd general reserve and profit and loss account stood at 25000 and 10000 respectively on
1.1.1994
R Ltd. sells goods at profit of 25% on cost.
Answer:
(1)

Minority Interest
(2)
(3)
Total
Capital
Revenue
Profit
Profit
%
%
15,000
15,000
0
15,000
100%
0%
H Co.[100%]
S Co.[0%]
CP
RP
CP
RP
Profit or Loss
25,000
10,000
15,000
10,000
15,000
General Reserve
40,000
25,000
15,000
25,000
15,000
Total
65,000
35,000
30,000
35,000
30,000
Unrealised Profit on Unsold Stocks

Proportion of unsold stock Profit %
H Co.
25
10,000 125 %
2,000
Debit Profit and Loss A/c

Credit Stock in Trade A/c
6.7
(4) Cost of Control

Cost of Acquisition
1
Book Value
Capital Profit
2,00,000
1,50,000
35,000

1,85,000
15,000
Note
H Co.
S Co.
Cons.
(1)
Shareholders funds
(a)
Share capital
(b)
(3)
Non-current liabilities [12% Debentures]
2,00,000
2,00,000
(4)
3,20,000
2,85,000
6,05,000
4,00,000
1
1,08,000
Total
13,13,000
II
ASSETS
(1)
Non-current assets
(a)
Intangible assets [Goodwill]
(b)
Fixed assets
(2)
Current assets
15,000
15,000
5,00,000
2,40,000
7,40,000
3,00,000
2,60,000
5,58,000
Less: [Unrealised profit on unsold stock]
(2,000)
Total
13,13,000
1
R Ltd
S Ltd
Consol.
General Reserve
50,000
15,000
65,000
Profit and Loss A/c
30,000
15,000
45,000
80,000
1,10,000
Unrealised profit on unsold stock
2,000
Total
1,08,000
[Inter-company Owings | Unrealized Profit on Unsold Stock]

Question:
Particulars
Note
H Ltd
S Ltd
5,00,000
2,00,000
No.
I
(1)
Shareholders funds
(a)
(b)
3,50,000
1,00,000
(2)
Non-current liabilities [12% Debenture]
1,20,000
(3)
Current liabilities
1,50,000
80,000
10,00,000
5,00,000
Total
6.8
II
ASSETS
(1)
Non-current assets
(a)
Intangible Assets [Goodwill]
(b)
Tangible Assets
(c)
Investments
(2)
Current assets
4
5
Total
1,00,000
3,50,000
1,50,000
2,50,000
50,000
3,00,000
2,00,000
10,00,000
5,00,000
Note: Liability of bills discounted of H Ltd is 20000

1
2,00,000
60,000
Profit and Loss A/c
1,50,000
50,000
(10,000)
3,50,000
1,00,000
Secured Loan
80,000
Unsecured Loan
40,000
1,20,000
1,00,000
60,000
50,000
20,000
1,50,000
80,000
Plant and Machinery
2,00,000
1,20,000
Building
1,50,000
1,30,000
3,50,000
2,50,000
80,000
50,000
100,000
40,000
Non-current Liabilities
Current Liabilities
Creditors
Bills Payable
Non-current Assets
Current Liabilities
Stock
Debtors
1.
2.
3.
4.
S Ltd
General Reserve
Preliminary Expenses
2
H Ltd
Bills receivable
50,000
Bank
20,000
80,000
Cash
50,000
30,000
3,00,000
2,00,000
H Ltd acquired 16,000 shares of 10 each is S Ltd., on 1.4.2000 at a cost of 2,00,000.Balance sheet
of S ltd on 1.4.2000 showed balance in general reserve of 20,000 and profit and loss a/c 20,000
(credit)
Bills payable of S Ltd include 10,000 due to H Ltd., which has discounted bills worth of 6,000
Sundry creditors of H Ltd., include 20,000 due to S Ltd.
Closing stock of H Ltd., includes a stock worth of 60,000 supplied by S Ltd., which had invoiced
to H Ltd at cost plus 20%.
Prepare consolidated balance sheet.

Answer:
6.9
(1)

Minority Interest
(2)
Total
Capital
Revenue
Profit
Profit
16,000
20,000
4,000
20,000
80%
20%
H Co.[80%]
S Co.[20%]
CP
RP
CP
RP
General Reserve
60,000
20,000
40,000
16,000
32,000
4,000
8,000
Profit and Loss A/c
50,000
20,000
30,000
16,000
24,000
4,000
6,000
(10,000)
(10,000)
(8,000)
(2,000)
Total
1,00,000
30,000
70,000
24,000
56,000
6,000
14,000
(3)
Cost of Control
Cost of Acquisition
Book Value
Capital Profit
2,00,000
24,000
Minority Interest
Book Value
1,60,000
Goodwill
(5)
(4)
40,000
Capital Profit
1,84,000
16,000
6,000
Revenue Profit
14,000
Minority Interest
60,000
Unrealised Profit on Unsold Stocks [Downstream]

H Co.
20
10,000
60,000 120 %

(6)
Note
H Co.
S Co.
(1)
Shareholders funds
(a)
Share capital
(b)
(c)
Minority Interest
(3)
Non-current liabilities
1,20,000
(4)
2,06,000
5,00,000
Cons.
5,00,000
3,96,000
60,000
Total
12,82,000
II
ASSETS
(1)
Non-current assets
(a)
(b)
Tangible Assets
(c)
Investments
(2)
Current assets
1,00,000
16,000
1,16,000
3,50,000
2,50,000
6,00,000
50,000
50,000
1,00,000
4,66,000
Total
12,82,000
Note: Liability of bills discounted of H Ltd is 14,000 [20,000 less inter-company owings]
1

General Reserve
R Ltd
2,00,000
S Ltd
Consol
32,000
2,32,000
6.10
Profit and Loss A/c

Less
1,50,000
24,000
1,74,000
3,50,000
56,000
4,06,000
Unrealized Profit on unsold stocks
10,000
3,96,000
Non-current Liabilities
Secured Loan
80,000
80,000
Unsecured Loan
40,000
40,000
1,20,000
1,20,000
1,00,000
60,000
1,60,000
50,000
20,000
70,000
1,50,000
80,000
2,30,000
Current Liabilities
Creditors
Bills Payable
Inter-company Owings
Less
Creditors of S Ltd
Less
Bills Payable
20,000
4,000
2,06,000
Non-current Assets
Plant and Machinery
2,00,000
1,20,000
3,20,000
Building
1,50,000
1,30,000
2,80,000
3,50,000
2,50,000
6,00,000
80,000
50,000
1,30,000
Current Liabilities
Stock
Less
Unrealised profit on unsold stock

Debtors
Less
(10,000)
100,000
40,000
Bills receivable
Less
1,40,000
(20,000)
50,000
50,000
(4,000)
Bank
20,000
80,000
1,00,000
Cash
50,000
30,000
80,000
4,66,000
[CMA FINAL SY12, D13, 10 Marks]

Question: On 31.03.2011, A Ltd. acquired 1,05,000 shares of B Ltd. for 12,00,000. The Balance Sheet
of B Ltd. as on that date was as under:
The Balance Sheet of B Ltd. as on 31.03.2011
I
(1)
Shareholders funds
(a)
Share capital of 10 each, fully paid up
(b)

Securities Premium
Note
in 000
1,500
-
Pre-incorporation profits
30
Profit and Loss A/c
60
6.11
(2)
Current liabilities [Trade Payables]
75
Total
1,665
II
ASSETS
(1)
Non-current assets [Tangible Assets]
(2)
Current assets
1,050
615
Total
1,665
The B/Ss of A Ltd and B Ltd as on 31.03.2012
A Ltd
B Ltd
4,500
1,500
900
30
General Reserve
6,000
1,905
Profit and Loss A/c
1,575
420
555
210
13,530
4,065
(1)
Shareholders funds
(a)
Share capital of 10 each [before bonus shares]
(b)
Note
Securities Premium
Pre-incorporation Profits
(2)

Total
II
ASSETS
(1)
Non-current assets
(a)
Tangible Assets
7,920
2,310
(b)
Investments in B Ltd at cost
1,200
(2)
Current assets
4,410
1,755
13,530
4,065
Total
Directors of B Ltd. made a bonus issue on 31.03.2012 in the ratio of one equity share of 10 each fully
paid for every two equity shares held on that date.
Calculate as on 3.03.2012 the following:
Cost of Control / Capital Reserve
Minority Interest
Consolidated Profit and Loss Account in each of the following cases
o Before Issue of Bonus Shares
o Immediately after the Issue of Bonus Shares
It may be assumed that Bonus Shares were issued out of Post-Acquisition Profits by using General
Reserve.
Answer:
(1)

Minority Interest
(2)
Before Bonus Shares
Total
Capital
Revenue
Profit
Profit
%
%
1,05,000
1,50,000
45,000
1,50,000
70%
30%
A Ltd [70%]
B Ltd [30%]
CP
CP
RP
RP
6.12
Profit or Loss
General Reserve
Total
(3)
After Bonus Shares
Profit or Loss
General Reserve after Bonus
Total
Bonus Shares
420
60
360
1,905
1,905
30
30
21
2,355
90
2,265
63
Total
42
252.0
18
108.0
1,333.5
Capital
Revenue
Profit
Profit
571.5
9
1,585.5
27
679.5
A Ltd [70%]
B Ltd [30%]
CP
CP
RP
420
60
360
42
252.0
1,155
1,155
808.5
30
30
21
1,605
90
1,515
63
750
750
18
RP
108.0
346.5
9
1,060,.5
525
27
454.5
225
Before Bonus Shares

(4)
Cost of Control
(5)
Cost of Acquisition
1
Book Value
Capital Profit(2)
1,200
Minority Interest
Book Value
1,050
450.0
Capital Profit
63
1,113
Goodwill
27.0
(2)
Revenue Profit(2)
87
Minority Interest
679.5
1,156.5
Before Bonus Shares

(4)
Cost of Control
(5)
Cost of Acquisition
1
Book Value
Capital Profit
Bonus Shares
1,200
Book Value
1,050
(3)
Minority Interest
Capital Profit
63
525
1,638
Capital Reserve
27.0
Revenue Profit
454.5

Securities Premium
438
225.0
Minority Interest
A Ltd
B Ltd
900.0
Total
900.0
Pre-incorporation Profit
(3)
Bonus Shares
Before Bonus Shares

1
450.0
(3)
1,156.5
After Bonus Shares

A Ltd
B Ltd
900.0
Total
900.0
Capital Reserve
438.0
General Reserve
6,000.0
1,333.5
7,333.5
6,000.0
808.5
6,808.5
Profit and Loss A/c
1,575.0
252.0
1,827.0
1,575.0
252.0
1,827.0
[Bonus Shares Out of Post-acquisition Profit]

Question: H Ltd., acquired, 2000 equity shares of 100 each from S Ltd., on 31st March 2000.The
summarized Balance Sheet of the companies as on 31 March 2001 were as follows:
Particulars
I
(1)
Shareholders funds
Note
H Ltd
S Ltd
No.
6.13
(a)
(b)
(2)
8,00,000
2,50,000
Reserves
3,00,000
50,000
Profit and Loss A/c
1,00,000
1,00,000
Current liabilities
2,00,000
50,000
14,00,000
4,50,000
2,50,000
Total
II
ASSETS
(1)
Non-current assets
(a)
Tangible Assets [Fixed Assets]
7,00,000
(b)
Investments [2,000 shares in S Ltd at cost]
3,00,000
(2)
Current assets
4,00,000
2,00,000
14,00,000
4,50,000
Total
S Ltd., had a credit balance of 50,000 in the reserve and 20,000 in profit and loss account when H
Ltd acquired shares in S Ltd. S Ltd issued bonus shares in the ratio of one for every five shares held
out of the profits earned during 2000-2001. This is not shown in the above balance sheet of S Ltd.
Prepare a consolidated balance sheet of H Ltd., and its subsidiary on 31 March 2001 giving all
necessary working.
Answer:
(1)

Minority Interest
(2)
Total
Capital
Revenue
Profit
Profit
2,000
2,500
500
2,500
80%
20%
H Co.[80%]
S Co.[20%]
CP
RP
CP
RP
Profit or Loss(3)
50,000
20,000
30,000
16,000
24,000
4,000
6,000
General Reserve
50,000
50,000
40,000
10,000
1,00,000
70,000
30,000
56,000
24,000
14,000
6,000
Total
(3)
Less
(4)
Profit or Loss
1,00,000
Bonus Shares
50,000
Profit or Loss
50,000
Cost of Control
Cost of Acquisition
(6)
Book Value
Capital Profit
56,000
Bonus Shares
40,000
40,000
10,000
(5)
2,00,000
Minority Interest
Book Value
50,000
Capital Profit
14,000
Revenue Profit
296,000
4,000
S Co.[20%]
3,00,000
Goodwill
H Co.[80%]
Note
6,000
Bonus Shares
10,000
Minority Interest
80,000
H Ltd
S Ltd
Consol.
6.14
(1)
Shareholders funds
(a)
(b)
No.
8,00,000
8,00,000
Reserves
3,00,000
3,00,000
Profit and Loss A/c
1,00,000
24,000
1,24,000
(c)
Minority Interest
(2)
Current liabilities
80,000
2,00,000
50,000
Total
2,50,000
15,54,000
II
ASSETS
(1)
Non-current assets
(a)
(b)
(2)
4,000
Tangible Assets [Fixed Assets]
7,00,000
2,50,000
9,50,000
Current assets
4,00,000
2,00,000
6,00,000
Total
15,54,000
Revaluation of assets: Increase in value is capital profit therefore it has to be added with the capital
profit and to concerned assets. [vice versa for decrease in value ]
Adjustment for Depreciation: When an asset goes up, depreciation during the post-acquisition
period will also go up. Therefore it should be deducted from Revenue Profit.
[Intercompany Owings | Revaluation of Assets]
Question: The following are the summarized Balance Sheet of H Ltd. and S. Ltd. as at 31 December,
2001:
Particulars
Note
H Ltd
S Ltd
No.
I
(1)
Shareholders funds
(a)
Equity Shares
(b)
(2)
2,00,000
50,000
1,30,000
50,000
1,00,000
30,000
Total
4,30,000
1,30,000
Fixed Assets
1,80,000
1,20,000
Investments in S Ltd
2,30,000
20,000
10,000
4,30,000
1,30,000
II
ASSETS
(1)
Non-current assets
Current assets
(2)
Total
1

Reserves
H Ltd
30,000
S Ltd
10,000
6.15
Profit and Loss A/c as on 01.01.01
60,000
30,000
Profit and Loss for the year 2001
40,000
10,000
1,30,000
50,000
H Ltd. acquired 80% of the shares in S Ltd. on 1st July, 2001 included in the assets of H Ltd., there is
30,000 Loan to S Ltd. shown as creditors in S Ltd. Sundry Assets of S Ltd. include furniture & fittings
of 40,000 to be revalued at 50,000 being over depreciated as at 31st July 2001. Prepare Consolidated
Balance Sheet of H Ltd. as at 31st December, 2001.
Answer:
(1)

Minority Interest
(2)
Total
Capital
Revenue
Profit
Profit
80%
20%
H Co.[80%]
S Co.[20%]
CP
CP
RP
RP
Reserves
10,000
10,000
8,000
2,000
P/L as on 01.01.01
30,000
30,000
24,000
6,000
P/L for the year 2001
10,000
5,000
Revaluation of Assets
10,000
10,000
Total
60,000
55,000
(3)
5,000
5,000
Book Value of Shares
40,000
Capital Profit(2)
44,000
Goodwill
44,000
(4)
2,30,000
84,000
1,46,000
(5)
Consolidated Balance Sheet
(1)
Shareholders funds
(a)
Equity Shares
(b)
(c)
Minority Interest
(2)
4,000
8,000
Cost of Control
Cost of Acquisition
4,000
Note
ASSETS
(1)
Non-current assets
4,000
(2)
Current assets
Total
11,000
1,000
Minority Interest
10,000
Capital Profit(2)
11,000
Revenue Profit(2)
1,000
Minority Interest
22,000
H Ltd
S Ltd
Consol
2,00,000
2,00,000
1,30,000
4,000
1,34,000
22,000
1,00,000
4,56,000

Tangible Assets
1,000
2,000
Total
II
1,000
1,46,000
2,80,000
20,000
10,000
30,000
4,56,000
6.16
H Ltd
S Ltd
Consol
Reserves
30,000
60,000
Profit and Loss for the year 2001
40,000
4,000
1,30,000
4,000
1,34,000
1,00,000
30,000
1,30,000
Current Liabilities
Mutual Owings
30,000
1,00,000
Non-current Assets [Tangible]

Fixed Assets
1,80,000
Appreciation
1,20,000
3,00,000
10,000
10,000
Mutual Owings
(30,000)
2,80,000
[CMA INTER D05 & D07, 8+4+4=16 Marks]
Question: The Balance Sheet of Small Ltd. as on 31st March, 2005 was as under:
Particulars
I
(1)
Shareholders funds
(a)
Equity Shares of 100 each
(b)
6.00
General Reserve
3.00
Profit and Loss [Brought Forward]
1.20
Profit and Loss [Current Year]
0.60
(2)
in lacs
(0.50)
1.20
Total
II
ASSETS
(1)
Non-current assets
11.50
Land and Building
(2)
4.30
4.00
Machinery
3.50
Less: Depreciation for the year
0.50
3.00
Current assets
Stock at cost
2.00
Debtors
1.50
Cash and Bank Balance
1.00
Total
4.50
11.50
Big Ltd. purchased 4000 equity shares of 100 each on 1st October, 2004 on which date it was found
that Land and Building were undervalued by 1 lakh and machinery was worth only 2.75 lakh. In
6.17
preparing the consolidated Balance Sheet of holding company, it was decided to adopt proper values
of Assets, and write off preliminary expenses. On the above information given
Ascertain:
a) Capital Profits
b) Revenue profits and
c) Minority interest
Answer:
(1)

4,000

2
Share of Holding Company % 6,000 %
3
2,000

1
%
%
Minority Interest
6,000

3
(2)
Total
Capital
Revenue
Profit
Profit
H Co.[ ]
CP
S Co.[ ]
RP
CP
General Reserve
3,00,000
3,00,000
2,00,000
1,00,000
Profit or Loss B/F
1,20,000
1,20,000
80,000
40,000
Profit or Loss Cur. Year
60,000
30,000
30,000
20,000
(50,000)
(50,000)
(33,333)
(16,667)
50,000
50,000
33,333
16,667
3,571
3,571
4,50,000
33,571
(3)
(4)
Total
(3)
(a)
(b)
(c)
(4)
Less
20,000
RP
10,000
10,000
2,381
3,00,000
Date
1,190
22,381
1,50,000
Land and
11,190
Machinery
Building
Book Value
01.04.06
4,00,000
3,50,000
Depreciation [Balancing Figure]
2006-07
50,000
Book Value
31.03.07
4,00,000
3,00,000
( )
(d)
Rate of Depreciation
(e)
Depreciation (a)(d) up to
01.10.06
25,000
(f)
Book Value as on the date of acquisition
01.10.06
3,25,000
Value as on(3)
Less
Land and Building
01.10.06
Machinery
Book
Revised
Change
Book
Revised
Change
4,00,000
5,00,000
1,00,000
3,25,000
2,75,000
(50,000)
Depreciation
Value as on
(5)
Date
()
3,571
31.03.07
Revaluation of Assets(4)
Change in value
Change in depreciation
1,00,000
Type
Land and
Building
(46,429)
Machinery
Total
Capital Profit (Loss)
1,00,000
(50,000)
50,000
Revenue Profit (Loss)
3,571
3,571
6.18
(6)
Minority Interest
Book Value
Capital Profit
2,00,000
(2)
Revenue Profit(2)
Minority Interest
1,50,000
11,190
3,61,190
[Abnormal Loss | Mutual Owings | Tax Treatment | Different Date of B/S for H Ltd and S Ltd]
Question: The Balance Sheet of H Ltd. and S Ltd. as on the date of last closing of accounts are as
under:
Particulars
I
(1)
Shareholders funds
(a)
(b)
Reserves and surplus [Accumulated]
(2)
Note
In
H Ltd as at
S Ltd as at
31.03.2011
31.03.2010
11,00,000
5,00,000
4,50,000
2,05,000
3,00,000
[15% Non convertible Debentures]

(3)
Current liabilities
(a)
Accounts Payable
4,80,000
2,80,000
(b)
Other Liabilities
1,00,000
40,000
(c)
Tax Provision
1,50,000
2,50,000
22,80,000
15,75,000
8,45,000
5,26,500
(1,95,000)
(1,21,500)
Total
II
ASSETS
(1)
Non-current assets
Tangible Assets
Investments
(a)
40,000 Shares in S Ltd.
8,00,000
(b)
1,000 Debentures in S Ltd.
1,50,000
(2)
Current assets
Inventories
2,00,000
3,50,000
Accounts Receivable
2,50,000
4,65,000
2,30,000
3,55,000
22,80,000
15,75,000
Total
The following information is also available:
a) On 8th February, 2011 there was a fire at the factory of S Ltd., resulting in inventory worth
20,000 being destroyed. S Ltd. received 75 per cent of the loss as insurance.
b) The same fire resulted in destruction of a machine having a written down value of 1,00,000. The
Insurance company admitted the Companys claim to the extent of 80 per cent. The machine was
insured at its fair value of 1,50,000.
6.19
On 13th March, 2011, H Ltd. sold goods costing 1,50,000 to S Ltd. at a mark-up of 20 per cent.
Half of these goods were resold to H Ltd. who in turn was able to liquidate the entire stock of
such goods before closure of accounts on 31st March, 2011. As on 31st March, 2011, S Ltd.s
accounts payable show 60,000 due to H Ltd. on the two transactions.
d) H Ltd. acquired the holdings in S Ltd. on 1st January, 2009 when the reserves and accumulated
profits of S Ltd. stood at 75,000.
e) Both companies have not provided for tax on current year profits. The current year taxable profits
are 33,000 and 66,000 for H Ltd. and S Ltd. respectively. The tax rate is 33%.
f) The incremental profits earned by S Ltd. for the period January, 2011 to March, 2011 over that
earned in the corresponding period in 2010 was 56,000. Except for the profits that resulted from
the transactions with H Ltd. in the aforesaid period, the entire profits have been realised in cash
before 31st March, 2011.
c)
Required: Prepare a Consolidated Balance Sheet of H Ltd. and its Subsidiary as at 31st March, 2011
Answer:
(1)
I
Particulars
In
Note
S Ltd as at
Change
S Ltd as at
31.03.2010
31.03.2011
(1)
Shareholders funds
(a)
5,00,000
5,00,000
(b)
2,05,000
49,220
2,54,220
(2)
3,00,000
3,00,000
2,80,000
60,000
3,40,000
40,000
40,000
2,50,000
21,780
2,71,780

(3)
Current liabilities
(a)
Accounts Payable
(b)
Other Liabilities
(c)
Tax Provision
Total
II
ASSETS
(1)
Non-current assets
15,75,000
Tangible Assets
5,26,500

(2)
(1,21,500)
Add
Less
Less
(1,30,000)
3,96,500
**
30,000
(91,500)
70,000
4,20,000
Current assets
Inventories
17,06,000
Incremental profit
Incremental Profit
Profit on insurance claim [machine]
Loss on insurance claim [stocks]
Tax Provision
Total
3,50,000
56,000
20,000
(5,000)
(21,780)
49,220
Payables to H Ltd for the purchases 60,000

Tax on current year taxable profit = 60,00033% = 21,780
Insurance claim = 80% of fair value

**
Impact on depreciation = Insurance Claim
= 1,30,000
1,21,500
5,26,500
=30,000
Purchase of goods from H Ltd with profit % of Sales Abnormal Loss = (1,50,000 + 20%) 50% 20,000
6.20
Accounts Receivable
4,65,000
4,65,000
3,55,000
41,000*
3,96,000
1,30,000
1,30,000
Insurance Claim Receivable

Total
(2)
15,75,000

Minority Interest
(3)
Total
Profit or Loss(3)
(4)
2,54,220
50,000
10,000
50,000
80%
20%
Profit
Profit
CP
RP
CP
RP
75,000
1,79,220
60,000
1,43,376
15,000
35,844
Cost of Control
H Co.[80%]
Revenue
(5)
S Co.[20%]
Minority Interest
Book Value
1,00,000
Equity Shares
8,00,000
Capital Profit
15,000
Debenture
1,50,000
Revenue Profit
35,844
Book Value Equity
4,00,000
Book Value Debenture
1,00,000
Capital Profit
60,000
Goodwill
I
40,000
Capital
Cost of Acquisition
17,06,000
Minority Interest
5,60,000
3,90,000
In
Note
(1)
Shareholders funds
(a)
(b)
(c)
Minority Interest
(2)
1,50,844
H Ltd as at
S Ltd as at
Consol.
31.03.2011
31.03.2011
31.03.2011
11,00,000
11,00,000
1
5,67,486
1,50,844
-
2,00,000
2,00,000
(3)
Current liabilities
(a)
Accounts Payable
(b)
Other Liabilities
(c)
Tax Provision
Incremental Cash
Insurance claim for stocks received
Total incremental profit
Profit Earned on transaction with H Ltd [not in cash]
Total incremental cash
7,60,000
1,00,000
40,000
1,40,000
4,32,670
56,000
30,000
15,000
26,000
41,000
6.21
Total
33,51,000
II
ASSETS
(1)
Non-current assets
Intangible Assets [Goodwill(4)]
3,90,000
Tangible Assets
(2)
3,90,000
9,55,000
Inventories
6,05,000
Accounts Receivable
6,55,000
Current assets
Insurance Claim Receivable

1,20,000
1,20,000
2,30,000
3,96,000
6,26,000
Total
1
33,51,000

33
4,50,000
1,43,376
Tax Provision for H Ltd [33,000100 ]
(10,890)
(10,890)
Unrealised Profit [downstream]
(15,000)
(15,000)
Total
2
5,67,486
Accounts Payable
4,80,000
Mutual Owings
(60,000)
3,40,000
7,60,000
Tax Provision
1,50,000
33
Tax Provision for H Ltd [33,000100 ]
2,71,780
10,890
4,32,670
Tangible Assets
8,45,000
3,96,500
12,41,500
(1,95,000)
(91,500)
(2,86,500)
Total
5
9,55,000
Inventories
2,00,000
Unrealised Profit
4,20,000
6,20,000
(15,000)
(15,000)
Total
6
3,21,780
10,890
Total
4
8,20,000
(60,000)
Total
3
5,93,376
6,05,000
Accounts Receivable
2,50,000
Mutual Owings
(60,000)
4,65,000
Total
7,15,000
(60,000)
6,55,000
[Preliminary Expenses | Bonus Shares out of Pre-acquisition Profit | Inter-company Owings

|Unrealsied Profit on Unsold Stock | Revaluation of Assets]
Question:
Balance Sheet as on 31.3.2008
Note
H Co.
S Co.
5,00,000
7,00,000
(1)
Shareholders funds
(a)
Share capital of 100 each
(b)
7,00,000
2,80,000
(2)
Current liabilities
3,00,000
2,00,000
6.22
Total
II
ASSETS
(1)
Non-current assets
(a)
(b)
Tangible Assets
(c)
Investments
(2)
Current assets
1,00,000
5,00,000
4,20,000
4,00,000
2,00,000
5,00,000
4,60,000
15,00,000
11,80,000
S Co.
General Reserve
3,00,000
1,00,000
Profit and Loss A/c
4,00,000
2,00,000
(20,000)
7,00,000
2,80,000
2,00,000
1,00,000
Bills Payable
50,000
40,000
Other Liabilities
50,000
60,000
3,00,000
2,00,000
Plant and Machinery
2,00,000
2,40,000
Land and Building
3,00,000
1,80,000
5,00,000
4,20,000
1,00,000
3,00,000
Debtors
80,000
90,000
Bills receivable
20,000
30,000
Sundry Assets
3,00,000
40,000
5,00,000
4,60,000
Current Liabilities
Creditors
1,00,000
H Co.
2
11,80,000
Total
1
15,00,000
Non-current Assets
Current Liabilities
Stock
Adjustment:
1 H Ltd acquired 3,000 shares in S Ltd for 350,000 on 1.10.2007.
2 The profit and loss a/c and general reserve stood at 1,00,000 and 3,00,000 respectively on 1.4.2007
3 A bonus issue of 2 shares for every 5 shares held was made on 1.11.2007 out of pre acquisition
reserve.
4 Debtors of S Ltd includes 40,000 due from H Ltd for goods supplied at a profit 25% on cost (half of
the goods remained unsold on 31.3.2008)
5 All receivables of H Ltd are from S Ltd
6 Land and Building and Plant and Machinery which stood at 200,000 and 300,000 on 1.4.2007,
where revalued at 400,000 & 200,000 respectively on the date of purchase of shares.
Answer:
6.23
(1)

Minority Interest
(2)
Total
Profit or Loss
General Reserve
Capital
Revenue
Profit
Profit
%
%
4,200
7,000
2,800
7,000
60%
40%
H Co.[60%]
S Co.[40%]
CP
CP
RP
1,50,000
50,000
90,000
1,00,000
1,00,000
60,000
40,000
(20,000)
(20,000)
(12,000)
(8,000)
1,40,000
1,40,000
84,000
56,000
Change in Depreciation(8)
(3,500)
(3,500)
Total
4,16,500
3,70,000
46,500
(4)
Less
2,22,000
General Reserve (Opening Balance)
3,00,000
Bonus Shares
2,00,000
General Reserve (Closing Balance)
1,00,000
Duration
Profit and Loss A/c
As on 31.03.08
2,00,000
Profit
Up to 01.04.07
2007-08
(4)
Less
Current Year
27,900
(1,400)
1,48,000
18,600
S Co.[40%]
1,20,000
80,000
Upto 01.10.07
After 01.10.07
1,00,000
1,00,000
1,00,000
50,000
50,000
1,50,000
50,000

1
20,000
H Co.[60%]
Total
(5)
60,000
(2,100)
(3)
30,000
RP
2,00,000
(3)
25
H Co.
40,000 2 125 %
4,000

(6)
(a)
(b)
(c)
(7)
Less
Date
Land and
Plant and
Building
Machinery
Book Value
01.04.07
2,00,000
3,00,000
Depreciation [Balancing Figure]
2007-08
20,000
60,000
Book Value
31.03.08
1,80,000
2,40,000
10%
20%
( )
(d)
Rate of Depreciation
(e)
Depreciation (a)(d) up to
01.10.07
10,000
30,000
(f)
Book Value as on the date of acquisition
01.10.07
1,90,000
2,70,000
Value as on(6)
Less
Depreciation
Date
01.10.07
()
Land and Building
Plant and Machinery
Book
Revised
Change
Book
Revised
Change
1,90,000
4,00,000
2,10,000
2,70,000
2,00,000
(70,000)
10,500
(7,000)
6.24
Value as on
(8)
31.10.07
Plant and
Building
Machinery
2,10,000
(70,000)
1,40,000
(10,500)
7,000
(3,500)
Type
Change in value
Cost of Control
Cost of Acquisition
1
Book
Bonus
Capital Profit
Value
Including
(63,000)
Land and
(9)
1,99,500
(10)
Total
Minority Interest
3,50,000
Book
Bonus
4,20,000
Value
Including
2,80,000
Capital Profit(2)
1,48,000
(2)
2,22,000
Goodwill
6,42,000
Revenue Profit
2,92,000
Minority Interest
(11)
(1)
Shareholders funds
(a)
(b)
(c)
Minority Interest
(2)
Current liabilities
Note
H Co.
18,600
(2)
4,46,600
S Co.
Consol.
5,00,000
5,00,000
7,00,000
1,15,900
8,15,900
4,46,600
4,40,000
Total
22,02,500
II
ASSETS
(1)
Non-current assets
(a)
Tangible Assets
(b)
Investments [for H: 4,00,000-3,50,000]
(2)
Current assets
5,00,000
5,56,500
10,56,500
50,000
2,00,000
2,50,000
8,96,000
Total
1
22,02,500
H Co.
S Co.
Capital Reserve(9)
2,92,000
Goodwill
(2,00,000)
Consol.
General Reserve
3,00,000
Profit and Loss A/c (2)
4,00,000
30,000
Change in Depreciation(2)
(2,100)
Unrealised Profit on Unsold Stock
(4,000)
7,00,000
1,15,900
8,15,900
2,00,000
1,00,000
3,00,000
Current Liabilities
Creditors
Mutual Owings
Bills Payable
(40,000)
50,000
40,000
90,000
6.25
Mutual Owings
(20,000)
Other Liabilities
3
50,000
60,000
3,00,000
2,00,000
2,00,000
2,40,000
Non-current Assets
Plant and Machinery
Change in value
Land and Building
(63,000)
3,00,000
Change in value
4,40,000
1,80,000
1,99,500
5,00,000
5,56,500
10,56,500
1,00,000
3,00,000
4,00,000
Current Assets
Stock
(4,000)
Debtors
80,000
90,000
Mutual Owings
(40,000)
Bills receivable
20,000
30,000
Mutual Owings
Sundry Assets
1,70,000
50,000
(20,000)
3,00,000
40,000
3,40,000
5,00,000
4,60,000
8,96,000
Adjustments for Dividends:

I
Dividend declared and paid by subsidiary company:
Out of revenue profit No adjustment is required
Out of Capital Profit Holding company share of dividend
(a)
If the dividend credited to profit and loss a/c
Credit Cost of Acquisition

Debit Profit and Loss A/c of H Co.
(b)
If the dividend credited to cost of acquisition
No adjustments
II
Proposed Dividend
Minoritys share can be shown in B/S
[CMA FINAL J10, 7 Marks]

Question: On 31.12.09 the balance sheets of H Ltd. and S Ltd. disclose the following figures:
H. Ltd.
S. Ltd.
Share premium
10,000
6,000
General reserve
20,000
12,000
Capital reserve
--
8,000
30,000
20,000
Profit And Loss Account
On the date when H. Ltd. acquired control of S Ltd., S Ltd. had 10,000 in Profit and Loss A/c and
10,000 in General Reserve, apart from Share Premium and Capital Reserve Account which were
6.26
same as on 31.12.09. H Ltd. holds th of the shares. H. Ltd. received 6,000 dividend out of preacquisition profit. Show how the above figures will appear in Consolidated Balance Sheet.
Answer:
(1)

Minority Interest
(2)
Total
Profit or Loss
Capital
Revenue
Profit
Profit
75%
25%
H Co.[75%]
S Co.[25%]
CP
RP
CP
RP
20,000
2,000
18,000
1,500
13,500
500
4,500
General Reserve
12,000
10,000
2,000
7,500
1,500
2,500
500
Share Premium
6,000
6,000
4,500
1,500
Capital Reserve
8,000
8,000
6,000
2,000
Total
46,000
26,000
(3)
(3)
20,000
Pre-acquisition P/L
Profit or Loss (Opening Balance)
Less
19,500
8,000
Profit or Loss (Closing Balance)
2,000
Cost of Control
6,500
H Co.[75%]
S Co.[25%]
6,000
2,000
(5)
Minority Interest
Cost of Acquisition
Book Value
Book Value
Capital Profit(2)
6,500
Capital Profit(2)
Revenue Profit(2)
5,000
26,000
Capital Reserve
1
5,000
10,000
Dividend Declared
(4)
15,000
Minority Interest
H Co.
S Co.
Consol.
Profit or Loss
30,000
13,500
43,500
General Reserve
20,000
1,500
21,500
Share Premium
10,000
10,000
[Mutual Owings | Pre-acquisition Dividend correctly credited in investment]

H Ltd. acquired 80% shares of S Ltd. on April 1, 2008. The Balance Sheet of H Ltd. and S Ltd. as on
March 31. 2009 are as follows:
Particulars
Note
H Co.
S Co.
9,00,000
3,00,000
(1)
Shareholders funds
(a)
(b)
5,80,000
2,80,000
(2)
Current liabilities
1,60,000
1,10,000
16,40,000
6,90,000
Total
6.27
II
ASSETS
(1)
Non-current assets
(a)
Tangible Assets
(b)
Investments
(2)
Current assets
3
4
Total
1
3,20,000
20,000
3,20,000
2,10,000
16,40,000
6,90,000
H Co.
S Co.
General Reserve
3,90,000
1,50,000
Profit and Loss A/c
1,90,000
1,30,000
5,80,000
2,80,000
1,00,000
60,000
60,000
50,000
1,60,000
1,10,000
Land and Building
4,20,000
2,40,000
Plant and Machinery
3,90,000
1,30,000
Furniture and Fixtures
1,90,000
90,000
10,00,000
4,60,000
90,000
50,000
1,20,000
1,00,000
Bills receivable
70,000
40,000
Cash and Bank
40,000
20,000
3,20,000
2,10,000
Current Liabilities
Bills Payable
4,60,000
Sundry Creditors
10,00,000
Non-current Assets
Current Liabilities
Stock
Debtors
Other Information:
(i) As on the date of acquisition, the following balances were revealed in the books of S. Ltd.
a. General Reserve: 1, 00,000
b. Profit & Loss Account: 60,000 (Cr.)
(ii) H. Ltd. received a dividend of 24,000 from S. Ltd. on the date of acquisition and credited the
amount.
(iii) Sundry debtors of H. Ltd. include 10,000 due from S. Ltd.
(iv) Total bills payable of S. Ltd. consisted of bills drawn by H. Ltd. and the same were discounted
with the bank by H. Ltd.
You are required to prepare the consolidated Balance Sheet of H. Ltd. and S. Ltd. as on March
31.2009.
Answer:
(1)

Minority Interest
80%
20%
6.28
(2)
Total
Profit or Loss
Capital
Revenue
Profit
Profit
H Co.[80%]
CP
S Co.[20%]
RP
CP
RP
1,30,000
30,000
1,00,000
24,000
80,000
6,000
20,000
General Reserve
1,50,000
1,00,000
50,000
80,000
40,000
20,000
10,000
Total
2,80,000
1,30,000
1,50,000
1,04,000
1,20,000
26,000
30,000
(3)
(3)
Pre-acquisition P/L
Less
60,000
Dividend Declared
30,000
30,000
(4)
Cost of Control
Cost of Acquisition
Book Value
Capital Profit
3,20,000
1,04,000
Capital Reserve
(1)
Shareholders funds
(a)
(b)
(c)
Minority Interest
(3)
Current liabilities
24,000*
6,000
Minority Interest
Book Value
60,000
Capital Profit
3,44,000
24,000
Consolidated Balance Sheet of H Ltd

I
S Co.[20%]
(5)
2,40,000
(2)
H Co.[80%]
(2)
26,000
Revenue Profit
30,000
(2)
Minority Interest
Note
H Co.
S Co.
9,00,000
1,16,000
Consol.
9,00,000
7,24,000
1,16,000
2,60,00
Total
20,00,000
II
ASSETS
(1)
Non-current assets
(a)
Tangible Assets
(b)
Investments
(2)
Current assets
10,00,000
4,60,000
14,60,000
20,000
20,000
5,20,000
Total
20,00,000
1
H Co.
S Co.
Consol.
Capital Reserve
24,000
24,000
General Reserve
3,90,000
40,000
4,30,000
Profit and Loss A/c
1,90,000
80,000
2,70,000
7,24,000
Current Liabilities
Sundry Creditors
Mutual Owings
1,00,000
60,000
1,60,000
(10,000)
Requires no adjustments as pre-acquisition dividend correctly credited in investment a/c
6.29
Bills Payable
60,000
50,000
1,10,000
2,60,000
Non-current Assets
Land and Building
4,20,000
2,40,000
6,60,000
Plant and Machinery
3,90,000
1,30,000
5,20,000
1,90,000
90,000
2,80,000
10,00,000
4,60,000
14,60,000
90,000
50,000
1,40,000
1,20,000
1,00,000
2,20,000
Current Assets
Stock
Debtors
Mutual Owings
(10,000)
Bills receivable
70,000
40,000
1,10,000
Cash and Bank
40,000
20,000
60,000
5,20,000
[Bonus shares | Dividend out of pre-acquisition profit |Mutual Owings | Unrealised profit on
unsold stock and assets transferred]
Question: Following are the Balance Sheet of H Ltd and S Ltd., as at 31.03.2001
Note
H Co.
S Co.
10,00,000
7,00,000
General Reserve
2,00,000
3,00,000
Profit and Loss A/c
3,00,000
3,00,000
Current liabilities
5,00,000
9,00,000
20,00,000
22,00,000
(1)
Shareholders funds
(a)
(b)
(2)
Total
II
ASSETS
(1)
Non-current assets
(a)
Tangible Assets
8,00,000
9,00,000
(b)
5,00,000
(2)
Current assets
7,00,000
13,00,000
20,00,000
22,00,000
Total
The following further information is furnished:
1 H Ltd acquired 30,000 shares in S Ltd as on 01.04.2000, when reserves and profit and loss a/c
position was as follows:
General reserve
5,00,000
Profit and Loss a/c
2,00,000
2 On 01.10.2000, S Ltd issued 2 shares for every 5 shares held, as bonus shares at a face value of 10
per share. [No entry is made in the books of H Ltd for receipt of these bonus shares.]
3 On 30.06.2000, S Ltd declares dividend out of pre-acquisition profit at 20% and H Ltd credited the
6.30
receipt of dividend on its profit and loss account.

4 S Ltd., owed H Ltd 1,20,000 for purchase of stock from H Ltd., the entire stock held by S Ltd on
31.3.2001. H Ltd made a profit of 20% on cost.
5 H Ltd transferred machinery to S Ltd., for 1,00,000. The book value of the machine of H Ltd was
75,000.
Prepare a consolidated balance sheet as at 01.03,2001.
Answer: Shares held by H Ltd. [including bonus shares of 2 for 5 shares held] = 4,200
(1)

Minority Interest
(2)
Total
Capital
Revenue
Profit
Profit
4,200
7,000
2,800
7,000
H Co.[60%]
CP
60%
40%
S Co.[40%]
RP
CP
RP
Profit or Loss(3)
3,00,000
1,00,000
2,00,000
60,000
1,20,000
40,000
General Reserve(4)
3,00,000
3,00,000
1,80,000
1,20,000
Total
6,00,000
4,00,000
2,00,000
2,40,000
1,20,000
1,60,000
(3)
Less
(4)
2,00,000
Dividend Declared
1,00,000
1,00,000
Pre-acquisition GR
Less
(5)
Pre-acquisition P/L
5,00,000
Bonus Shares
2,00,000
3,00,000
1,20,000 120
80,000
H Co.[60%]
S Co.[40%]
60,000
40,000
H Co.[60%]
S Co.[40%]
1,20,000
80,000
(a) Unrealised Profit on Unsold Stocks [Downstream]

20
80,000
H Co.
20,000

(b) Profit on assets transferred [Downstream]

Transfer Price Cost Price
1,00,000 75,000
25,000

Credit Machinery A/c
(6)
Cost of Control
(7)
Cost of Acquisition
5,00,000
Minority Interest
Book Value Including Bonus
2,80,000
(2)
1,60,000
80,000
Book Value Including Bonus
4,20,000
Capital Profit
Capital Profit
2,40,000
Revenue Profit
Dividend from Pre-acq Profit
(2)
60,000
(2)
7,20,000
6.31
Capital Reserve
2,20,000
Minority Interest
(8)
(1)
Shareholders funds
(a)
(b)
(c)
Minority Interest
(2)
Current liabilities
Note
H Co.
5,20,000
S Co.
Consol.
10,00,000
10,00,000
1
7,35,000
5,20,000
12,80,000
Total
35,35,000
II
ASSETS
(1)
Non-current assets
16,75,000
(2)
Current assets
18,60,000
Total
1
35,35,000
S Co.
Consol.
2,20,000
2,20,000
General Reserve
2,00,000
2,00,000
Profit and Loss A/c (2)
3,00,000
1,20,000
4,20,000
Capital Reserve
H Co.
(6)
Profit on Assets Transferred
(25,000)
(20,000)
(60,000)
7,35,000
Current Liabilities
5,00,000
9,00,000
Mutual Owings
14,00,000
(1,20,000)
12,80,000
Non-current Assets
8,00,000
9,00,000
17,00,000
Profit on Assets Transferred
(25,000)
16,75,000
Current Assets
7,00,000
13,00,000
20,00,000
(20,000)
Mutual Owings
(1,20,000)
18,60,000
[Proposed Dividend | Unrealised Profit | Mutual Owings]

Question: The Balance Sheets of H Ltd, and its subsidiary S Ltd, as on 31st March, 1999 are as
follows:
Note
I
(1)
Shareholders funds
(a)
(b)
H Co.
S Co.
30,00,000
15,00,000
16,00,000
9,50,000
6.32
(2)
Non-current Liabilities [15% Debentures]
(3)
Current liabilities
Total
10,00,000
4,60,000
3,00,000
60,60,000
27,50,000
II
ASSETS
(1)
Non-current assets
43,00,000
16,00,000
(2)
Current assets
17,60,000
11,50,000
Total
60,60,000
27,50,000
H Ltd
S Ltd
General Reserve as on 01.04.98
8,00,000
4,00,000
2,00,000
2,50,000
Net Profit for 1998-99
6,00,000
4,00,000
(1,00,000)
16,00,000
9,50,000
4,00,000
2,70,000
60,000
30,000
4,60,000
3,00,000
Premises
14,00,000
9,00,000
Machinery
12,00,000
7,00,000
Investment in Shares of S Ltd
17,00,000
43,00,000
16,00,000
Inventories
7,00,000
4,50,000
Debtors
5,00,000
4,20,000
Cash and Bank
3,80,000
2,00,000
Bills Receivable
1,80,000
80,000
17,60,000
11,50,000
Miscellaneous Expenses
2
Current liabilities
Creditors
Bills Payable
Non-current Assets
Current Assets
The following is the additional information:

1 H Ltd acquired 12,000 equity shares in S Ltd on 1st April 1998.
2 Bills receivable of H Ltd includes 30,000 accepted by S Ltd
3 Accounts receivable of H Ltd include 1,00,000 due from S Ltd
4 S Ltd purchased goods from H Ltd for 2,50,000 which invoiced by H Ltd at a profit of 20% on
Sales. Half of the goods remains unsold
5 Both H Ltd and S Ltd have proposed 10% dividend for the year 1998-99, but no effect has been
given in the balance sheets.
Prepare a consolidated balance sheet of H Ltd and its subsidiary S Ltd as on 31 stMarch, 1999 giving
proper working notes. Ignore corporate dividend tax.
Answer:
6.33
(1)

Minority Interest
(2)
Capital
Revenue
Profit
Profit
15,000
3,000
Total
12,000
15,000
80%
20%
H Co.[80%]
CP
S Co.[20%]
RP
CP
RP
P/L as on 01.04.98
2,50,000
2,50,000
2,00,000
50,000
GR as on 01.04.98
4,00,000
4,00,000
3,20,000
80,000
P/L for 1998-99
4,00,000
4,00,000
3,20,000
80,000
Miscel. Expenses
(1,00,000)
(1,00,000)
(80,000)
(20,000)
9,50,000
5,50,000
4,00,000
4,40,000
3,20,000
1,10,000
80,000
Total
(3)

H Co.
20
2,00,000 2 100
20,000

(4)
Cost of Control
Cost of Acquisition
Capital Profit
(5)
17,00,000
12,00,000
(2)
4,40,000
16,40,000
Goodwill
60,000
(6)
Consolidated Financial Statement of H Co.
(1)
Shareholders funds
(a)
(b)
(c)
Minority Interest
(2)
(3)
Current liabilities
Minority Interest
3,00,000
Capital Profit
(2)
1,10,000
Revenue Profit
80,000
(2)
Minority Interest
Note
H Co.
4,90,000
S Co.
30,00,000
Consol.
16,00,000
4,90,000
10,00,000
9,30,000
Total
70,20,000
II
ASSETS
(1)
Non-current assets
(a)
(b)
Tangible Assets
(2)
Current assets
60,000
26,00,000
16,00,000
42,00,000
27,60,000
Total
1
30,00,000
70,20,000
H Ltd
General Reserve as on 01.04.98
8,00,000
2,00,000
S Ltd
Consol
6.34
Net Profit for 1998-99

Proposed Dividend of H Ltd.,
6,00,000
3,20,000
16,00,000
3,20,000
19,20,000
(3,00,000)
(3,00,000)
Unrealised Profit
(20,000)
16,00,000
Current liabilities
Creditors
Mutual Owings
Bills Payable
Mutual Owings
Proposed Dividend of H Ltd.,
4,00,000
2,70,000
6,70,000
(1,00,000)
60,000
30,000
90,000
(30,000)
3,00,000
3,00,000
9,30,000
Non-current Assets [Tangible Assets]

Premises
14,00,000
9,00,000
23,00,000
Machinery
12,00,000
7,00,000
19,00,000
26,00,000
16,00,000
42,00,000
7,00,000
4,50,000
11,50,000
Current Assets
Inventories
Unrealised Profit
Debtors
(20,000)
5,00,000
4,20,000
Mutual Owings
9,20,000
(1,00,000)
Cash and Bank
3,80,000
2,00,000
5,80,000
Bills Receivable
1,80,000
80,000
2,60,000
Mutual Owings
(30,000)
27,60,000
[Preference Shares | Dividend | Bonus Shares]

Question: The following are the summarized balance sheets of P Ltd. and S Ltd. as at 31 st March,
2003:
Note
P Co.
S Co.
(1)
Shareholders funds
(a)
Share capital
80,00,000
60,00,000
(b)
70,00,000
34,00,000
(2)
20,00,000
5,00,000
(3)
Current liabilities
30,00,000
24,00,000
2,00,00,000
1,23,00,000
Total
II
ASSETS
(1)
Non-current assets
(a)
Tangible Assets
90,00,000
70,00,000
(b)
Investments
70,00,000
20,00,000
6.35
(2)
Current assets
Total
1
Share Capital
40,00,000
33,00,000
2,00,00,000
1,23,00,000
P Ltd
12% Preference Shares of 10 each
20,00,000
80,00,000
40,00,000
80,00,000
60,00,000
Securities Premium
10,00,000
General Reserve
36,00,000
20,00,000
Profit and Loss A/c
24,00,000
14,00,000
70,00,000
34,00,000
12,00,000
6,00,000
2,40,000
50,000
18,00,000
15,10,000
30,00,000
24,00,000
Land and Building
50,00,000
40,00,000
Other Fixed Assets
40,00,000
30,00,000
90,00,000
70,00,000
(1) 3,00,000 Equity Shares
45,00,000
(2) 1,00,000 Preference Shares
12,00,000
2,50,000
10,50,000
20,00,000
70,00,000
20,00,000
Stocks
15,00,000
12,00,000
Debtors and Bank
25,00,000
21,00,000
40,00,000
33,00,000

2
S Ltd
Current liabilities
Proposed Dividend
(1) Equity
(2) Preference
Accrued Debenture Interest
Creditors
Non-current Assets
Tangible Assets
Investment at cost in S Ltd
(3) 10% Debentures at face vale

Investments in Govt. Securities
6
Current Assets
Additional information:
a) P Ltd. acquired its interest in S Ltd. on 1st April, 2002, when the latter company had 18,00,000 in
its general reserve account.
b) S Ltd. arrives at its profit and Loss account balance as follows:
Balance 1st April, 2002
4,00,000
6.36
Profit in the current year
20,40,000
24,40,000
Transfer to Reserves
2,00,000
Proposed Dividend
8,40,000
10,40,000
Balance on 31 March, 2003
14,00,000
st
c)
The profit and loss account balance of S Ltd. as on 1 st April, 2002 was arrived at after providing
for preference and 10% equity dividends for the year ended 31st March, 2002. These dividends
were paid in August, 2002. P Ltd. credited dividends received from S Ltd. to its profit and loss
account.
d) P Ltd. has made no provisions in respect of debenture interest and dividends receivable from S
Ltd. for the year ended 31st March, 2003.
e) In January, 2003 S. Ltd. issued fully paid bonus shares in the ratio of one share for every four held
by utilizing general reserve. The transaction is yet to be recorded in the books of both P Ltd. and S
Ltd.
Draft a consolidated balance sheet as at 31st March, 2003. Show details of computation of cost of
control, minority interest and consolidated profit.
Answer:
(1)

Minority Interest
(2)
Total
4,00,000
1,00,000
4,00,000
P Co.[75%]
75%
25%
Capital
Revenue
S Co.[25%]
Profit
Profit
CP
RP
CP
RP
Profit or Loss
14,00,000
4,00,000
10,00,000
3,00,000
7,50,000
1,00,000
2,50,000
Gen. Reserve
10,00,000
8,00,000
2,00,000
6,00,000
1,50,000
2,00,000
50,000
Proposed Divid.
(a)
Equity
6,00,000
6,00,000
4,50,000
1,50,000
(b)
Preference [1:1]
2,40,000
2,40,000
1,20,000
1,20,000
Total
32,40,000
(3)
(4)
12,00,000
20,40,000
9,00,000
(4)
3,00,000
S Co.[25%]
Equity Shares
4,00,000
3,00,000
2,00,000
Preference Shares [1:1 Ratio]
2,40,000
1,20,000
1,20,000
5,70,000
4,20,000
Pre-acquisition GR
Less
14,70,000
P Co.[75%]
Total
18,00,000
Bonus Shares
10,00,000
3,00,000
P Co.[75%]
S Co.[25%]
7,50,000
2,50,000
8,00,000
General Reserve after Bonus Issue = (20,00,000 10,00,000)
6.37
(5)
Cost of Control
(6)
Cost of Acquisition
Book Value
Equity Shares
45,00,000
Equity Shares
10,00,000
Preference Shares
12,00,000
Preference Shares
10,00,000
Debentures
2,50,000
Capital Profit
59,50,000
1
Minority Interest
Book Value
Equity Shares
30,00,000
Preference Shares
10,00,000
Debentures
3,00,000
Bonus Shares
2,50,000
Minority Interest
(7)
Proposed Dividend
1,50,000
9,00,000
Preference
1,20,000
Bonus Shares
7,50,000
4,20,000
Capital Reserve
63,20,000
3,70,000
Consolidated Balance Sheet of P Ltd
Note
(1)
Shareholders funds
(a)
Share capital
(b)
(c)
Minority Interest
(2)
(3)
Current liabilities
P Co.
80,00,000
S Co.
Consol.
80,00,000
84,45,000
28,50,000
20,00,000
2,50,000
22,50,000
48,05,000
Total
2,63,50,000
II
ASSETS
(1)
Non-current assets
(a)
Tangible Assets
(b)
Investments in Govt. Securities
(2)
Current assets
3
4
90,00,000
70,00,000
1,60,00,000
10,50,000
20,00,000
30,50,000
40,00,000
33,00,000
73,00,000
Total
1
28,50,000
Equity
Capital Profit
(8)
Revenue Profit(2)
2,50,000
(2)
3,00,000
(2)
2,63,50,000
P Ltd
Securities Premium
S Ltd
Consol.
10,00,000
10,00,000
Capital Reserve
3,70,000
3,70,000
General Reserve
36,00,000
36,00,000
Profit and Loss A/c
24,00,000
(4,20,000)
(3)
14,70,000(2)
38,70,000
(4,20,000)
25,000
25,000
84,45,000
Cancellation of Mutual Owings
6.38
Current liabilities
Proposed Dividend(7)
(3) Equity
12,00,000
1,50,000
13,50,000
1,20,000
1,20,000
25,000
25,000
18,00,000
15,10,000
33,10,000
(4) Preference
Creditors
48,05,000
Non-current Assets
3
Tangible Assets
Land and Building
50,00,000
40,00,000
90,00,000
Other Fixed Assets
40,00,000
30,00,000
70,00,000
90,00,000
70,00,000
1,60,00,000
Stocks
15,00,000
12,00,000
27,00,000
Debtors and Bank
25,00,000
21,00,000
46,00,000
40,00,000
33,00,000
73,00,000
Current Assets
[CMA FINAL, SY08, J12, 15 Marks]

Question: the following are the Balance Sheets of H Ltd and S Ltd., as at 31.03.2012
Note
H Co.
S Co.
10,00,000
7,00,000
1,00,000
50,000
General Reserve
2,00,000
4,48,000
Profit and Loss A/c
3,60,000
1,77,000
(2)
2,00,000
2,00,000
(3)
Current liabilities
Sundry Creditors
3,00,000
5,35,000
Bills Payable
1,40,000
1,40,000
23,00,000
22,50,000
Land and Building
6,00,000
2,70,000
Plant and Machinery
2,00,000
2,70,000
(1)
Shareholders funds
(a)
(b)
12% Preference Shares of 10 each
(c)
Total
II
ASSETS
(1)
Non-current assets
(a)
Tangible Assets
(b)
Shares in S Ltd
900, 12% Debentures in S Ltd
(2)
7,10,000
80,000
Current assets
Stock
1,00,000
3,00,000
6.39
Debtors
4,00,000
10,10,000
60,000
2,75,000
1,00,000
1,00,000
50,000
25,000
Cash at Bank
Bills Receivable
Total
Note: Contingent liability in respect of Bills discounted by H Ltd. 50,000.

Contingent liability in respect of Bills discounted by S Ltd. 25,000 of which Bills of 5,000 were
accepted by H Ltd.
Additional Information:
a) H Ltd. acquired 40,000 Equity Shares of S Ltd. and 2,000. 12% Pref. Shares in S Ltd. on 1.7.2011 at
a cost of 6,80,000 and 30,000 respectively. The credit balance of Profit and Loss Account of S
Ltd. as on 1.4.2011 was 2,25,000 and that of General Reserve on that date was 6,00,000.
b) On 30.9.2011, S Ltd. declared dividend @ 20% on equity shares for the year 2010-2011. H Ltd.
credited the receipt of dividend to its Profit and Loss Account.
c) On 1.1.2012, S Ltd. issued 2 shares for every 5 shares held, as bonus shares. No entry has been
made in the books of H Ltd. for the receipt of these bonus shares.
d) H Ltd. purchased goods for 3 lakhs from S Ltd. which made at a profit of 20% on cost. 80% of
these goods were sold by H Ltd. at a profit of 20% on cost till 31.03.2012.
e) On 1.1.2012, H Ltd. sold to S Ltd. a Machine costing 2,40,000 at a profit of 25% on selling price.
f) Depreciation at 10% p.a. was provided by S Ltd. on this Machine.
g) H Ltd. owed S Ltd. 2,90,000 but S Ltd. is owed 3,00,000 by H Ltd.
h) The Land and Building of S Ltd. which stood at 3,00,000 on 1.4.2011, was considered as worth of
6,92,500 on 1.7.2011, for which necessary adjustments are yet to be made.
i) All the Bills Payables of S Ltd. were drawn upon by H Ltd.
j) The management of H Ltd. and S Ltd. wish to recommend a dividend of 15% p.a. and 10% p.a.
respectively on equity shares for the year 2011-2012.
Required: Calculate Minority Interest, Cost of Control and the Balance of Consolidated Profit and
Loss Account to be shown in the Consolidated Balance Sheet of H Ltd. and its subsidiary, as at 31 st
March, 2012.
Answer: Shares held by H Ltd. [including bonus shares of 2 for 5 shares held] = 56,000
(1)

Minority Interest
(2)
Total
Profit or Loss
General Reserve
Miscel. Expenses
(3)
(4)
Capital
Revenue
Profit
Profit
%
%
56,000
70,000
14,000
70,000
Prop. Pref. Divid.

Total
80%
20%
H Co. [80%]
S Co. [20%]
CP
RP
CP
RP
1,71,000
1,34,200
36,800
1,07,360
29,440
26,840
7,360
4,48,000
4,12,000
36,000
3,29,600
28,800
82,400
7,200
(25,000)
(25,000)
(20,000)
(5,000)
H Co. [40%]
4
S Co. [60%]
6,000
1,500
4,500
600
1,800
900
2,700
6,00,000
5,22,700
77,300
4,17,560
60,040
1,05,140
17,260
6.40
(3)
Date
01.04.2011
2,25,000
Pre-acquisition P/L
Profit and Loss
Less
Dividend Declared [5,00,000 20%]
H Co. [80%]
S Co. [20%]
80,000
20,000
1,00,000
Capital
Profit and Loss after Dividend
01.04.2011
1,25,000
Profit and Loss after Pref Dividend
31.03.2012
1,71,000
2011-12
Profit for the year after dividend

Total
(4)
General Reserve
Less
1,25,000
46,000
9,200
36,800
1,71,000
1,34,200
36,800
Date
01.04.2011
6,00,000
Pre-acquisition GR
Bonus Shares
Revenue
H Co. [80%]
S Co. [20%]
1,60,000
40,000
2,00,000
Capital
4,00,000
General Reserve after Bonus

General Reserve
4,00,000
31.03.2012
4,48,000
2011-12
48,000
12,000
36,000
4,48,000
4,12,000
36,000
Transfer from P/L

Total
(5)
(a) Unrealised Profit on Unsold Stocks [Uptream]

Revenue
H Co.
20
20
3,00,000 100 120
10,000

(b) Profit on assets transferred [Downstream]

25
Transfer Price Cost Price
2,40,000 75
Depreciation
10% for 3 months
(6)
78,000
Date
Credit Machinery A/c
Land and Building

Book
Less
3,00,000
Value as on
01.07.2011
2,92,500
6,92,500
4,00,000
22,500
52,500
30,000
2,70,000
6,40,000
3,70,000
Depreciation
Change in value
31.03.2012
Land and
Type
S Co. [20%]
4,00,000
3,20,000
80,000
(30,000)
(24,000)
(6,000)
(9)
Cost of Acquisition
Equity & Preference Shares
H Co. [80%]
Building
Cost of Control
Debentures
Change
01.04.2011
(8)
Revised
Value as on
Value as on
(7)
Minority Interest
Book Value Plus Bonus
7,10,000
1.
Equity Shares
80,000
2.
Preference Shares
1,40,000
30,000
6.41
Book Value Plus Bonus
Capital Profit(2)
Equity Shares
5,60,000
1,05,140
Revenue Profit(2)
17,260
Preference Shares
20,000
80,000
Debentures
90,000
Revaluation of Depreciation
(6,000)
Capital Profit
Divid. from Pre-acq Profit
3,20,000
Revaluation of Depreciation
(24,000)
Minority Interest
4,17,560
(2)
3,66,400
80,000
Capital Reserve
14,63,560
6,73,560
[Dividend | Bonus Shares | Intercompany Owings | Unrealized Profit on unsold stock]

[CMA FINAL D08, 5+3+2+1+2+2=15 Marks]
The Balance sheet of Paragon Ltd. and its subsidiary, Axis Ltd., as at March 31, 2008 are as under:
Note
P Co.
A Co.
6,000
2,400
(1)
Shareholders funds
(a)
(b)
2,749
1,500
(2)
Current liabilities
1,944
704
10,693
4,604
4,733
2,743
Total
II
ASSETS
(1)
Non-current assets
(a)
Tangible Assets
(b)
Investments in shares in Axis Ltd
(2)
Current assets
1,500
4
Total
1
4,460
1,861
10,693
4,604
P Ltd
A Ltd
General Reserve
1,392
690
Profit and Loss A/c
1,357
810
2,749
1,500
Bills Payable
186
80
Sundry Creditors
730
427
Provision for Taxation
428
197
Proposed Dividend
600
1,944
704
Land and Building
1,359
Plant and Machinery
2,452
2,450
922
293
Current liabilities
Non-current Assets
3
Tangible Assets
Furniture and Fittings
6.42
4,733
2,743
Stocks
1,975
978
Sundry Debtors
1,300
681
Bills Receivable
180
100
Sundry Advances
260
Cash and Bank Balances
745
102
4,460
1,861
Current Assets
Following additional information is available:

a) Paragon Ltd. purchased 90 lacs shares in Axis Ltd. on April 1, 2007 when the balances in General
Reserve and Profit and Loss Account of Axis Ltd. stood at 1,500 lacs and 600 lacs respectively.
b) On July 4, 2007 Axis Ltd. declared a dividend @ 20% for the year ended March, 31.2007. Paragon
Ltd. credited the dividend so received to its Profit and Loss Account.
c) Out of the balance in its General Reserve Accounts on January 1, 2008 Axis Ltd. issued 3 fully
paid- up bonus shares for every 5 movement in its General Reserve Account in 2007-08.
d) On March 31, 2008 Axis Ltds stock included goods which it had purchased for 50 lacs form
Paragon Ltd. on which the latter made a profit of 25% on cost.
e) On March 31, 2008 all the bills payable in Axis Ltds Balance Sheet were acceptances in favour of
Paragon Ltd. But on that date, Paragon Ltd. held only 23 lacs of these acceptances in hand, the
rest having been endorsed in favour of its creditors.
Required:
(i) Prepare Consolidated Balance sheet of Paragon Ltd. and its Subsidiary Axis Ltd. as at March 31,
2008.
(ii) Analysis of pre-acquisition and Post- acquisition profits.
(iii) Goodwill/Capital Reserve arising out of consolidation.
(iv) Consolidated General Reserve.
(v) Consolidated Profit and Loss Account.
(vi) Minority Interest.
Answer: Shares held by H Ltd. [including bonus shares of 3 for 5 shares held] = 144 lacs
(1)

Minority Interest
(2)
Total
Capital
Revenue
Profit
Profit
%
%
P Co.[60%]
144
240
96
240
60%
40%
A Co.[40%]
CP
RP
CP
RP
Profit or Loss
810
300
510
180
306
120
204
Gen. Reserve(4)
690
600
90
360
54
240
36
1,500
900
600
540
360
360
240
Total
(3)
Pre-acquisition P/L
Less
600
300
300
P Co.[60%]
A Co.[40%]
180
120
6.43
(4)
Pre-acquisition GR
Less
900
600
Cost of Control
(6)
Cost of Acquisition
1
Capital Profit
1,500
1,440
540
(2)
(3)
180
A Co.[40%]
540
360
1,500
Bonus Shares
(5)
P Co.[60%]
Minority Interest
960
Capital Profit
(2)
360
Revenue Profit
240
2,160
Capital Reserve
(7)
(1)
Shareholders funds
(a)
(b)
(c)
Minority Interest
(2)
Current liabilities
660
Minority Interest
Note
P Co.
A Co.
Consol
6,000
6,000
1,560
2
2,625
13,764
II
ASSETS
(1)
Non-current assets
(a)
Tangible Assets
(2)
Current assets
4,733
2,743
7,476
6,288
Total
13,764
P Ltd
A Ltd
Consol.
General Reserve
1,392
54
1,446
Profit and Loss A/c
1,357
306
1,663
(180)
(180)
(10)
(10)
Unrealised Profit on Unsold Stock(8)
1,560
3,579
Total
(2)
Capital Reserve
660
3,579
Current liabilities
Bills Payable
186
80
Mutual Owings
266
(23)
Sundry Creditors
730
427
1,157
Provision for Taxation
428
197
625
Proposed Dividend
600
600
2,625
6.44
Non-current Assets
3
Tangible Assets
7,476
Land and Building
1,359
1,359
Plant and Machinery
2,452
2,450
4,902
922
293
1,215
4,733
2,743
7,476
1,975
978
2,953
Furniture and Fittings

4
Current Assets
Stocks
Unrealised Profit on Unsold Stock(8)
(10)
(10)
Sundry Debtors
1,300
681
1,981
Bills Receivable
180
100
280
Mutual Owings
(23)
Sundry Advances
260
260
Cash and Bank Balances
745
102
847
6,288
(8)

25
50 125
H Co.
10

[Preference Shares | Dividend | Bonus Shares | Unrealised Loss on Unsold Stock upstream |
Revaluation of Assets with Depreciation]
[CMA FINAL SY12 D13, 15 Marks]
Question: The balance sheets of A Ltd. and B Ltd. as at 31.03.2012
Note
A Ltd
B Ltd
40,00,000
8,00,000
5,00,000
General Reserve
18,00,000
50,000
Profit and Loss A/c
17,00,000
6,50,000
5,00,000
3,00,000
80,00,000
23,00,000
Plant and machinery
26,50,000
8,00,000
Furniture and fixtures
8,00,000
5,40,000
(1)
Shareholders funds
(a)
Share capital
Equity shares of 10 each, fully paid up
14% Preference shares of 100 each, fully paid up
(b)
(2)

Total
II
ASSETS
(1)
Non-current assets
(a)
Tangible assets
(b)
Non-current investments
Equity shares in B Ltd
19,80,000
6.45
Preference shares in B Ltd

(2)
4,00,000
Current assets
Inventories
8,70,000
4,60,000
Trade receivables
7,50,000
3,70,000
Cash and Cash Equivalents
5,50,000
1,30,000
80,00,000
23,00,000
Total
A Ltd. acquired 80% of both classes of shares in B Ltd on 01.04.2011. Additional information:
i.
ii.
iii.
iv.
v.
vi.
vii.
The balance in Profit and Loss A/c of B Ltd. on 01.04.2011 was 2,50,000, out of which dividend of
15% p.a. on the Equity Capital of 8,00,000 was paid for the year 2010-2011
General reserve balances of B Ltd. was the same as on 01.04.2011
The dividend in respect of preference shares of B Ltd. for the year 2011-12 was still payable as on
31.032012
A Ltd. credited its Profit and Loss A/c for the dividend received by it from B Ltd. for the year
2010-11.
At the time of acquisition by A Ltd., while determining the price to be paid for the shares in B
Ltd. it was decided that the value of plant and machinery was to be increased by 20% and that of
furniture and fixtures to be reduced by 30%. There was no transaction of purchase or sale of these
assets during the year. The effects to these revaluations are to be given in the consolidated
balance sheet.
Sundry creditors of A Ltd. included an amount of 2,20,000 for purchases from B ltd. on which B
Ltd. made a loss of 20,000
60% of the above goods were still with the closing stock of A Ltd. as at 31.032012
Prepare the Consolidated Balance Sheet as at 31 st March, 2012, assuming the rate of depreciation
charged as 20% p.a. on plant and machinery and 10% p.a. on furniture and fixtures.
Workings should be part of the answer.
Answer:
(1)

Given

Minority Interest
(2)
Total
Capital
Revenue
Profit
Profit
60,000
(3)
5,20,000
50,000
50,000
20,000
20,000
P/L after Prop. P.Divd.
Gen. Reserve(4)
Change
Assets
(22,000)
Total
6,28,000
1,30,000
4,98,000
70,000
70,000
in
Value
Prop. Pref. Dividend

(3)
**
5,80,000
of
A Ltd [80%]
CP
80%
20%
B Ltd [20%]
RP
CP
RP
48,000
4,16,000
12,000
1,04,000
40,000
10,000
16,000
(22,000)
4,000
(17,600)
1,04,000
3,98,400
56,000
A Ltd [80%]
(4,400)
26,000
99,600
14,000
B Ltd [20%]
Dividend receivable of A Ltd and payable by B Ltd are mutually cancelled
6.46
Pre-acquisition profit before dividend

Less
Equity Shares
Less
Preference Shares
Pre-acquisition profit after dividend
(4)
Revaluation of
Assets
Date
01.04.11
(5)
Unrealised
Stocks
Loss
on
24,000
70,000
56,000
14,000
60,000
1,52,000
01.04.2011
Change
Book
Revised
Change
10,00,000
12,00,000
2,00,000
6,00,000
4,20,000
(1,80,000)
2,00,000
2,40,000
40,000
60,000
42,000
18,000
8,00,000
9,60,000
1,60,000
5,40,000
3,78,000
1,62,000
Plant and
Furniture and
Machinery
Fixtures
2,00,000
(1,80,000)
(40,000)
18,000
Type
Change in value
(6)
96,000
Revised
31.03.12
1,20,000
Book
Depreciation
20%|10%
Value given on
2,50,000
Plant and Machinery
Value
Value on
01.04.2011
Unsold
Loss Proportion of unsold stock
[Upstream]
20,00060%
12,000
H
Co.
S Co
H Co. [80%]
9,600
2,400
Cr P/ L A/c
Dr
A/c
(7)
Cost of Control
(8)
Cost of Acquisition
19,80,000
Preference Shares
4,00,000
Book Value
S Co. [20%]
Cr MI A/c
Dr Stock
A/c
Minority Interest
Equity Shares
1,60,000
Preference Shares
1,00,000
Capital Profit
(2)
26,000
99,600
6,40,000
Revenue Profit
Preference Shares
4,00,000
Unrealised Loss
Capital Profit(2)
1,04,000
Minority Interest

Equity
96,000
Preference
56,000
Goodwill
(7)
12,96,000
(2)
2,400
3,88,000
Proposed Dividend
Preference
14,000
10,84,000
Consolidated Balance Sheet of P Ltd
(1)
Shareholders funds
(a)
Share capital
(b)
(22,000)
Stock
Equity Shares
(8)
20,000
Book Value
Equity Shares
1
Total
Note
Consol.
40,00,000
1
38,12,000
6.47
(c)
Minority Interest
(2)
Current liabilities
3,88,000
Trade Payables less Mutual Owings [8 lacs 2.2 lacs]

Preference Dividend Payable
5,80,000
14,000
Total
87,94,000
II
ASSETS
(1)
Non-current assets
(a)
10,84,000
(b)
Tangible Assets
47,88,000
(2)
Current assets
29,22,000
Total
87,94,000
A Ltd
General Reserve
18,00,000
Profit and Loss A/c
17,00,000
B Ltd
18,00,000
3,98,400
Proposed Dividend
Consol.
20,98,400
56,000
(1,52,000)
(3)
Unrealised Loss on Unsold Stock
9,600
38,12,000
Non-current Assets
2
Tangible Assets
Plant and Machinery
26,50,000
9,60,000(4)
36,10,000
8,00,000
3,78,000(4)
11,78,000
47,88,000
Current Assets
Inventories
8,70,000
4,60,000
Unrealised Loss
Trade Receivable
12,000
7,50,000
3,70,000
Mutual Owings
Cash and Cash Equivalent
13,30,000
11,20,000
(2,20,000)
5,50,000
1,30,000
6,80,000
29,22,000
[CMA INTER SY12, D13, 10 Marks]

Question: In preparing the Consolidated Balance Sheet of A Ltd. as on 31.12.2012. You are required to
show clearly what amount, if any, you would include in respect of B Ltd. with regard to:
a. Cost of Control;
b. Profit or Loss, and
c. Minority Interest
Under each of the following assumptions:
1.
2.
48,000 of the shares then in issue of B Ltd. were acquired at a cost of 75,000 on 1st March, 2010. A
Ltd. participated in the proposed dividend of 8,000.
48,000 of the shares then in issue of B Ltd., were acquired at a cost of 60,000 on 31st Dec. 2010: A
Ltd. participated in the bonus issue but not in the proposed dividend of 9,000.
6.48
60,000 of the shares then in issue of B Ltd. were acquired at a cost of 80,000 on 1st July, 2012. A
Ltd. did not participate in the proposed dividend of 6,000.
3.
The Balance Sheet of B Ltd. as on 31st: December, 2012 showed:

Particulars
Amount
(a)
Share Capital, authorized and issued of 1 each
80,000
(b)
Undistributed Profits
24,000
(c)
7% Debentures
40,000
The profit and loss appropriations, for the four years ending 31.12.2012 were as followings:
Particulars
(a)
Balance at the beginning of the year
2009
2010
2011
2012
16,000
22,000
43,000
28,000
Nil
Nil
(16,000)
Nil
14,000
30,000
7,000
(4,000)
30,000
52,000
34,000
24,000
(b) Bonus Issue of 1 share for every 4 shares: 1st Jan. 2011
Profit for the year / (loss)
(c)
(d) Profits available for appropriation

(e)
Proposed Dividends
(8,000)
(9,000)
(6,000)
Nil
(f)
Balance c/f
22,000
43,000
28,000
24,000
Answer:
Case 1: Shares held by H Ltd. [including bonus shares of 1 for 4 shares held] = 60,000
(1)

Minority Interest
(2)
Total
Undistributed Profit
2
3
Capital
Revenue
Profit
Profit
60,000
80,000
20,000
80,000
75%%
25%
A Ltd [75%]
B Ltd [25%]
CP
RP
CP
RP
24,000
9,500(3)
14,500
7,125
10,875
2,375
3,625
Pre-acquisition Dividend 2009
8,000
8,000
6,000
2,000
Pre-acquisition Dividend 2010
9,000
1,500
7,500
1,125
Total
(3)
14,250
Pre-acquisition Profit upto
Add
Pre-acquisition Profit after Dividend for
Less
Bonus issue
Pre-acquisition Profit after Bonus Shares
(4)
Date
31.12.09
22,000
2010
3,500*
01.01.11
16,000
01.04.2011
9,500
Cost of Control
Cost of Acquisition
(5)
75,000
375
10,875
2,375
3,625
A Ltd [75%]
B Ltd [25%]
12,000
4,000
Minority Interest
16,000
[30,000 9,000]12
6.49
Book Value of Shares(2)
48,000
Capital Profit(2)
2,375
Capital Profit & Pre-acq. Divid(2)
14,250
Revenue Profit(2)
3,625
Bonus Shares
12,000
Bonus Shares
4,000
(3)
74,250
Goodwill
750
(3)
Minority Interest
26,000
Case 2: Shares held by H Ltd. [including bonus shares of 1 for 4 shares held] = 60,000
(1)

Minority Interest
(2)
Total
24,000
Capital
Revenue
Profit
Profit
27,000(3)
(3,000)
Less
(2,250)
6,750
(750)
01.01.11
16,000
01.04.2011
27,000
Cost of Acquisition
60,000
B Ltd [25%]
20,250
Bonus issue
(5)
25%
RP
43,000
Cost of Control
CP
31.12.10
(4)
80,000
75%%
RP

CP
80,000
20,000
A Ltd [75%]
Date
(3)
60,000
A Ltd [75%]
B Ltd [25%]
12,000
4,000
Minority Interest
16,000
48,000
Capital Profit
Capital Profit(2)
20,250
Revenue Profit(2)
(750)
Bonus Shares(3)
12,000
80,250
Bonus Shares(3)
4,000
20,250
Minority Interest
Capital Reserve
6,750
(2)
26,000
Case 3:
(1)

Minority Interest
(2)
1
Total
(3)
24,000
Capital
Revenue
Profit
Profit
26,000
(3)
(2,000)
Add
Pre-acquisition Profit during

(4)
Cost of Control
(5)
60,000
80,000
20,000
80,000
A Ltd [75%]
75%%
25%
B Ltd [25%]
CP
RP
CP
RP
19,500
(1,500)
6,500
(500)
Date
31.12.11
28,000
01.01.12 01.07.12
(2,000)
01.04.201
26,000
Minority Interest
6.50
Cost of Acquisition
80,000
60,000
Capital Profit
19,500
(2)
Goodwill
79,500
500
20,000
Capital Profit(2)
6,500
Revenue Profit
(500)
(2)
Minority Interest
26,000
Chain Holding
[CMA INTER D04, 6+25=16 Marks]
Question: The summarized Balance sheets of X Ltd, Y Ltd. and Z Ltd. as at 31 st March, 2004 were as
follows:
Note
X Ltd
Y Ltd
Z Ltd
(1)
Shareholders funds
(a)
8,00,000
6,00,000
4,00,000
(b)
9,60,000
4,80,000
3,20,000
(2)
10,00,000
5,00,000
(3)
Current liabilities
4,40,000
2,20,000
1,80,000
32,00,000
13,00,000
14,00,000
17,00,000
6,00,000
10,00,000
(1) 48,000 shares in Y Ltd
7,60,000
(2) 24,000 shares in Z Ltd
3,84,000
7,40,000
3,16,000
4,00,000
32,00,000
13,00,000
14,00,000
Total
II
ASSETS
(1)
Non-current assets
(a)
Tangible Assets
(b)
Investments
(2)
Current assets
Total
The shares in subsidiary companies were acquired on 1st April, 2000.

Balance in revenue reserve accounts as on 1st April, 2000 were as
X Ltd.
Y Ltd.
Z Ltd.
4,70,000
80,000
36,000
You are required to prepare the consolidated Balance Sheet of X Ltd. and its subsidiaries as on 31 st
March, 2004. All relevant working must be shown.
Answer: Indirect Method
(1)

Share of Holding Company [X Ltd]
Minority Interest [X Ltd]
Share of Holding Company [Y Ltd]
Minority Interest [Y Ltd]
%
%
%
%
48,000
60,000
96
240
24,000
40,000
16,000
40,000
80%
20%
60%
40%
6.51
(2)
1
Z Ltd
Total
Gen. Reserve
Capital
Revenue
Profit
Profit
CP
RP
CP
RP
2,84,000
21,600
1,70,400
14,400
1,13,600
3,20,000
36,000
Y Co.[60%]
Y Ltd
Z Co.[80%]
Gen. Reserve
4,80,000
80,000
4,00,000
21,600
1,70,400
1,01,600
5,70,400
From Z Ltd
8,00,000
(3)
Cost of Control
14,400
1,13,600
4,56,320
20,320
1,14,080
81,280
4,56,320
34,720
2,27,680
Minority Interest
Shares in Y Ltd.
7,60,000
Y Ltd
1,20,000
Shares in Z Ltd.
3,84,000
Z Ltd
1,60,000

Y Ltd
Z Ltd
Y Co. MI [20%]
81,280
(4)
Cost of Acquisition
Z Co. MI [40%]
Capital Profit
Capital Profit(2)
4,80,000
Revenue Profit(2)
2,27,680
2,40,000
Minority Interest
5,42,400
(2)
81,280
Goodwill
(5)
34,720
8,01,280
3,42,720
Note
X Ltd
Y Ltd
Z Ltd
Consol.
(1)
Shareholders funds
(a)
8,00,000
8,00,000
(b)
9,60,000
4,56,320
14,16,320
(c)
Minority Interest
(2)
(3)
Current liabilities
5,42,400
10,00,000
5,00,000
15,00,000
4,40,000
2,20,000
1,80,000
8,40,000
Total
50,98,720
II
ASSETS
(1)
Non-current assets
(a)
Intangible Assets
(b)
Tangible Assets
(2)
Current assets
3,42,720
17,00,000
6,00,000
10,00,000
33,00,000
7,40,000
3,16,000
4,00,000
14,56,000
Total
50,98,720
Alternative Solution Direct Method:

(1)

Share of Holding Company [X Ltd]
Minority Interest [X Ltd]
Share of Holding Company [Y Ltd]
%
%
%
48,000
60,000
96
240
24,000
40,000
80%
20%
60%
6.52
Minority Interest [Y Ltd]

(2)
1
Z Ltd
Total
Gen. Reserve
3,20,000
Profit
Profit
CP
RP
CP
RP
2,84,000
21,600
1,70,400
14,400
1,13,600
36,000
Y Co.[60%]
4,80,000
80,000
4,00,000
21,600
From Z Ltd
Y Cos Revenue Profit
1,16,000
6,84,000
Cost of Control
85,600
(4)
Shares in Z Ltd.
3,84,000
Z Ltd
Capital Profit
16,000
80,000
14,400
1,13,600
4,56,320
34,080
30,400
2,27,680

Y Ltd
Z Ltd
3,20,000
Minority Interest
7,60,000
Y Ltd
Y Co. MI [20%]
1,36,320
Shares in Y Ltd.
1,20,000
1,60,000
(2)
Capital Profit
30,400
4,80,000
Revenue Profit
2,27,680
2,40,000
Minority Interest
(2)
85,600
Goodwill
(5)
Z Co. MI [40%]
21,600
Cost of Acquisition
64,000
1,70,400
8,00,000
40%
Revenue
Z Co.[80%]
Gen. Reserve
40,000
Capital
Y Ltd
(3)
16,000
(2)
5,38,080
8,05,600
3,38,400
Note
X Ltd
Y Ltd
Z Ltd
Consol.
(1)
Shareholders funds
(a)
8,00,000
8,00,000
(b)
9,60,000
4,56,320
14,16,320
(c)
Minority Interest
(2)
(3)
Current liabilities
5,38,080
10,00,000
5,00,000
15,00,000
4,40,000
2,20,000
1,80,000
8,40,000
Total
II
ASSETS
(1)
Non-current assets
(a)
Intangible Assets
(b)
Tangible Assets
(2)
Current assets
Total
50,94,400
3,38,400
17,00,000
6,00,000
10,00,000
33,00,000
7,40,000
3,16,000
4,00,000
14,56,000
50,94,400
Chain Holding
[CMA FINAL J09, 15 Marks]
Question: Given below are the balance sheets of A Ltd., B Ltd. and C Ltd as on 31 st March, 2008. You
are required to prepare the Consolidated Balance Sheet of the holding company and its subsidiaries as
6.53
on 31st March, 2008, bear in mind that the acquisition of shares by the company was made on the
same date.
Note
I
(1)
Shareholders funds
(a)
A Ltd
Reserves and surplus [Profit or Loss A/c]
1,80,000
(2)
Non-current liabilities [Loan from B Ltd]
1,00,000
(3)
Current liabilities
Total
(1)
Non-current assets
(a)
Tangible Assets
(b)
Investments at cost
1,00,000
5,00,000
(b)
ASSETS
C Ltd
7,00,000
II
B Ltd
(1) 40,000 shares in B Ltd
50,000
75,000
5,00,000
1,50,000
1,75,000
14,80,000
7,00,000
3,50,000
5,00,000
3,00,000
1,50,000
5,00,000
(2) 1,00,000 shares in C Ltd
80,000
(3) 5,000 shares in B Ltd

(2)
60,000
Current assets
Total
4,00,000
4,00,000
1,40,000
14,80,000
7,00,000
3,50,000
Note: B Ltd and C Ltd had 10,000 (Cr) and 15,000 (Dr) in Profit or Loss A/c on the date of
acquisition
Answer: Direct Method
(1)
C

Share held by A Ltd
Minority Interest
Share held by A Ltd
Shares held by C Ltd

Minority Interest
(2)
1
B Ltd
Total
P/L
50,000
Capital
Revenue
Profit
Profit
10,000
40,000
C Ltd
P/L
%
%
%
%
%
A Co.[80%]
CP
8,000
RP
32,000
A Co.[100%]
75,000
(15,000)
90,000
(15,000)
1,00,000
1,00,000
0
1,00,000
40,000
50,000
5,000
40,000
5,000
40,000
100%
0%
80%
10%
10%
C Co.[10%]
MI [10%]
CP
RP
CP
RP
1,000
4,000
1,000
4,000
MI [0%]
90,000
From B Ltd
1,000
4,000
(1) A Ltd
8,000
32,000
8,000
32,000
(2) C Ltd
1,000
4,000
1,000
3,200
800
6.54
Total
1,25,000
(3)
(6,000)
1,26,000
(6,000)
Cost of Control
(4)
Cost of Acquisition
1,25,200
1,000
4,800
Minority Interest
Shares in B Ltd. by A Ltd
5,00,000
B Ltd
Shares in C Ltd. by A Ltd
80,000
Capital Profit(2)
1,000
Shares in B Lid. by C Ltd
60,000
Revenue Profit(2)
4,800
Minority Interest
55,800
Book Value of Shares of

B Ltd held by A Ltd
4,00,000
C Ltd. held by A Ltd
1,00,000
B Ltd held by C Ltd
50,000
Capital Profit
(6,000)
Goodwill
50,000
5,44,000
96,000
Note
A Ltd
B Ltd
(1)
Shareholders funds
(a)
7,00,000
(b)
1,80,000
(c)
Minority Interest
(2)
Current liabilities
C Ltd
Consol.
7,00,000
1,25,200
3,05,200
55,800
5,00,000
1,50,000
1,75,000
Total
8,25,000
18,86,000
II
ASSETS
(1)
Non-current assets
(a)
(b)
Tangible Assets
5,00,000
3,00,000
1,50,000
9,50,000
(2)
Current Assets after Mutual Owings
4,00,000
4,00,000
1,40,000
8,40,000
96,000
Total
18,86,000
CMA FINAL SY08, D13, 10 Marks]

Question: The following is an abstract of the Balance Sheet of Richa Ltd., Puru Ltd. and Sura Ltd as
on March 31, 2013
Note
I
(1)
Shareholders funds
(a)
(b)
(2)
Current liabilities
Sundry Creditors
Bills Payable
Total
II
Richa
Puru
Sura
10,00,000
8,00,000
5,00,000
5,00,000
2,00,000
60,000
92,000
1,34,000
1,60,000
8,000
16,000
40,000
16,00,000
11,50,000
7,60,000
ASSETS
6.55
(1)
Non-current assets
(a)
Tangible Assets
(b)
Investments at cost
4,00,000
(1) 6,400 shares in Puru Ltd
7,00,000
(2) 3,000 shares in Sura Ltd
4,00,000
5,00,000
4,00,000
(3) 800 shares in Puru Ltd

(2)
90,000
Current assets
Debtors
40,000
1,80,000
80,000
Stock
40,000
1,40,000
1,00,000
20,000
3,30,000
90,000
16,00,000
11,50,000
7,60,000
Total
Profit and Loss Account of Puru Ltd. includes 50,000 as pre-acquisition profits, the balance
representing post-acquisition profits.
ii. The balance in the Profit and Loss Account of Sura Ltd. is arrived at after setting off 15,000 being
pre-acquisition loss against the post acquisition profit of 75,000
iii. Richa Ltd. and Sura Ltd. acquired the shares of Puru Ltd. on the same date.
i.
Required: Prepare a consolidated Balance Sheet of Richa Ltd. and its subsidiaries Puru Ltd. and Sura
Ltd. as on March 31, 2013
(1)
Sura

Share held by Richa Ltd
Minority Interest
Share held by Richa Ltd
Puru
Shares held by Sura Ltd

Minority Interest
(2)
1
Puru Ltd
P/L
Total
Capital
Revenue
Profit
50,000
2,00,000
%
%
%
%
3,000
5,000
2,000
60%
40%
80%
10%
10%
5,000
6,,400
8,000
800
8,000
800
8,000
Richa [80%]
Sura [10%]
Profit
CP
RP
CP
RP
1,50,000
40,000
1,20,000
5,000
15,000
Sura Ltd
P/L
MI [10%]
CP
5,000
Richa [60%]
60,000
(15,000)
75,000
(9,000)
45,000
(1) Richa
40,000
1,20,000
40,000
1,20,000
(2) Sura
5,000
15,000
5,000
9,000
(3) MI
5,000
15,000
35,000
2,25,000
RP
15,000
MI [40%]
(6,000)
30,000
6,000
5,000
15,000
(1,000)
51,000
From Puru
Total
2,60,000
(3)
36,000
Cost of Control
(4)
Cost of Acquisition
Shares in Puru by Richa
1,74,000
Minority Interest
7,00,000
Puru
80,000
6.56
Shares in Sura by Richa
4,00,000
Shares in Puru by Sura
90,000

Shares in Puru by Richa
6,40,000
Shares in Sura by Richa
3,00,000
Shares in Puru by Sura
80,000
Capital Profit
36,000
2,00,000
Capital Profit(2)
(1,000)
Revenue Profit
51,000
(2)
Minority Interest
3,30,000
10,56,000
Goodwill
(5)
Sura
1,34,000
(1)
Shareholders funds
(a)
(b)
(c)
Minority Interest
(2)
Current liabilities
Note
Richa
Puru
Sura
10,00,000
5,00,000
10,00,000
1,74,000(2)
6,74,000
3,30,000
Sundry Creditors
Bills Payable
92,000
1,34,000
1,60,000
3,86,000
8,000
16,000
40,000
64,000
Total
24,54,000
II
ASSETS
(1)
Non-current assets
(a)
Intangible Assets (Goodwill)
(b)
Tangible Assets
(2)
Current assets
1,34,000
4,00,000
5,00,000
4,00,000
13,00,000
Debtors
40,000
1,80,000
80,000
3,00,000
Stock
40,000
1,40,000
1,00,000
2,80,000
20,000
3,30,000
90,000
4,40,000
Total
24,54,000
[CMA FINAL SY08 J14, 15 Marks]

Question: The summarized Balance Sheet of Apple Ltd., Orange Ltd., and Banana Ltd. as on 31st
March, 2014 are given below
in 000
Note
Apple
Banana
Orange
300
200
120
Reserves
100
80
60
Profit or Loss A/c
120
100
80
60
70
50
(1)
Shareholders funds
(a)
(b)
(2)
Current liabilities
Sundry Creditors
6.57
Apple Ltd
Total
II
ASSETS
(1)
Non-current assets
(a)
Tangible Assets
(b)
Investment at cost
(2)
20
16
580
470
326
140
240
206
Shares in Orange Ltd.
180
Shares in Banana Ltd.
80
100
Stock in-trade
80
60
40
Debtors
40
50
60
Current assets
Due from:
Orange
24
Banana
16
Cash in Hand
20
20
20
580
470
326
(1)
(2)
(3)
(4)
Apple Ltd. held 16,000 shares of Orange Ltd., and 3,600 shares of Banana Ltd.,
Orange Ltd. held 7,200 shares of Banana Ltd.
All investments were made on 1st July, 2013
The following were the balances on 1st July, 2013:
Orange Ltd
Banana Ltd
Reserves
50,000
30,000
Profit & Loss A/c
40,000
50,000
(5) Orange Ltd. invoiced goods to Apple Ltd. for 8,000 at a cost plus 25% in December, 2013. The
closing stock of Apple Ltd. includes such goods valued at 10,000
(6) Apple Ltd. proposed dividend at 15%.
Prepare the consolidated Balance Sheet as per Revised Schedule VI of the group as on 31st March,
2014. Working notes should form part of the answer.
(1)
O

Share held by A Ltd
Minority Interest
Share held by A Ltd
Shares held by O Ltd

Minority Interest
(2)
1
B Ltd
P/L
Total
80
Profit
Profit
50
30
20,000
3,600
12,000
7,200
Revenue
20,000
4,000
Capital
16,000
12,000
1,200
12,000
A [30%]
CP
15
RP
9
80%
20%
30%
60%
10%
O [60%]
MI [10%]
CP
RP
CP
RP
30
18
6.58
Reserves
60
30
30
18
18
140
80
60
24
18
48
36
O Ltd
1
P/L
Reserves
A [80%]
100
40
60
32.0
48.0
8.0
12.0
80
50
30
40.0
24.0
10.0
6.0
8.0
6.0
(1) A Ltd
24
18
24.0
18.0
(2) O Ltd
48
36
48.0
28.8
7.2
170
150
144.0
118.8
26.0
31.2
H
Co.
S
Co
1,600
400
From B Ltd
Total
(3)
Unrealised
Stocks
Profit
320
on
Unsold
Proportion of unsold stock Profit

%
(4)
[Upstream]
10,000
25
%
2,000
H Co. [80%]
Dr P/ L A/c
Cr Stock
A/c
125
Cost of Control
(5)
Cost of Acquisition
Less
MI [20%]
S Co. [20%]
Dr MI A/c
Cr Stock
A/c
Minority Interest
Shares in O Ltd. by A Ltd
180.0
O Ltd
80.0
B Ltd
Shares in B Lid. by O Ltd
100.0
40.0
12.0
Capital Profit
(2)
26.0
Revenue Profit(2)
31.2
Shares in O Ltd. by A Ltd
160.0
Unrealised Profit(3)
(0.4)
36.0
Minority Interest
108.8
Shares in B Lid. by O Ltd
72.0
Capital Profit
144.0
412.0
Capital Reserve
52.0

I
(1)
Shareholders funds
(a)
(b)
(c)
Minority Interest
(2)
Current liabilities
Note
300.0
1
180.0
Proposed Dividend
45.0
Total
ASSETS
(1)
Non-current assets
(2)
Current assets
344.2
108.8
Sundry Creditors
II
in 000
978.0
586.0
2
392.0
978.0
6.59
Total
Capital Reserve
52.0
Reserves
Profit or Loss A/c
100.0
120
118.8
(2)
Unrealised Profit
238.8
(1.6)
Proposed Dividend
(45.0)
344.2
Current Assets
Stock in-trade
180
(2)(3)
Debtors
178.0
150.0
Cash in hand
60
4*
64.0
392.0

Question: M Ltd. is a holding company and N Ltd. and O Ltd. are subsidiaries of M Ltd. Their
Balance Sheet as on 31st March, 2013 are given below
In
Note
M Ltd
N Ltd
O Ltd
6,00,000
6,00,000
3,60,000
2,88,000
60,000
54,000
96,000
72,000
54,000
Sundry Creditors
42,000
30,000
O Ltd. Balance
18,000
M Ltd. Balance
42,000
10,44,000
8,04,000
4,68,000
1,20,000
3,60,000
2,58,000
Shares in N Ltd.
5,70,000
Shares in O Ltd.
78,000
3,18,000
1,56,000
1,26,000
1,92,000
48,000
(1)
Shareholders funds
(a)
Share capital
(b)

Reserves
Profit or Loss A/c
(2)
Current liabilities
Total
II
ASSETS
(1)
Non-current assets
(a)
Tangible Assets
(b)
Investment at cost
(2)
Current assets
Stock in-trade
Debtors
N Ltd Balance
72,000
Cash in transit arrived by cancelling mutual Owings
6.60
M Ltd Balance
18,000
10,44,000
8,04,000
4,68,000
The following particulars are given:

(1)
(2)
(3)
(4)
(5)
The share capital of all companies is divided into shares of 10

M Ltd. held 48,000 shares of N Ltd., and 6,000 shares of O Ltd.,
N Ltd. held 24,000 shares of O Ltd.
All these investments were made on 30.06.2013
On 31.12.2012, the position was as shown below:
N Ltd
O Ltd
Reserves
48,000
45,000
Profit & Loss A/c
24,000
18,000
Sundry Creditors
30,000
6,000
3,60,000
2,58,000
24,000
2,13,000
2,88,000
1,98,000
Fixed Assets
Stock in Trade
Sundry Debtors
(6) The whole of stock in trade of N Ltd as on 30.06.2013 (24,000) was later sold to M Ltd. for 26,400
and remained unsold by M Ltd. as on 31.12.2013
(7) Cash in transit from N Ltd. to M Ltd. was 6,000 as at the close of the year.
You are required to prepare a consolidated Balance Sheet of M Ltd and its subsidiaries N Ltd. and O
Ltd as at 31.12.2013.
(1)
N

Share held by M Ltd
Minority Interest
Share held by M Ltd
Shares held by N Ltd

Minority Interest
(2)
O Ltd
Total
Profit(3)
Profit(3)
60,000
12,000
60,000
6,000
36,000
24,000
Revenue
Capital
48,000
80%
20%
1
6
4
%
36,000
%
6,000
36,000
6
1
M []
O []
MI []
CP
RP
CP
RP
CP
RP
P/L
54,000
36,000
18,000
6,000
3,000
24,000
12,000
6,000
3,000
Reserves
54,000
49,500
4,500
8,250
750
33,000
3,000
8,250
750
N Ltd
1
P/L
A [80%]
72,000
48,000
24,000
38,400
19,200
(1) M Ltd
6,000
3,000
6,000
3,000
(2) O Ltd
24,000
12,000
24,000
9,600
6,000
3,000
54,000
6,000
MI [20%]
9,600
4,800
From O
(3) MI
2
Reserves
60,000
43,200
4,800
2,400
6,000
3,000
10,800
1,200
6.61
From O
(1) M Ltd
8,250
750
8,250
750
(2) O Ltd
33,000
3,000
33,000
2,400
8,250
750
(3) MI
Total
2,40,000
1,52,850
39,750
72,000
Profit
Up to 31.12.12
24,000
24,000
2012-13
48,000
24,000
24,000
48,000
24,000
As on 31.12.13
60,000
Reserve
Up to 31.12.12
48,000
48,000
2012-13
12,000
6,000
6,000
54,000
6,000
Profit and Loss A/c
As on 31.12.13
54,000
Profit
Up to 31.12.12
18,000
18,000
2012-13
36,000
18,000
18,000
36,000
18,000
Current Year
Total
Less
Reserve
As on 31.12.13
54,000
Reserve
Up to 31.12.12
45,000
45,000
2012-13
9,000
4,500
4,500
49,500
4,500
Current Year
Total
(4)
Unrealised
[Upstream]
Profit
Transfer Price Cost
on
Unsold
Stocks
H
Co.
S
Co
2,400
1,920
480
26,400 24,000
H Co. [80%]
Dr P/ L A/c
Cr
A/c
(5)
Cost of Control
(6)
Cost of Acquisition
Less
After 01.07.13
Reserve
Total
O Ltd
12,750
As on 31.12.13
Current Year
Less
34,650
Profit and Loss A/c
Upto 30.06.13
Total
Less
750
Current Year
N Ltd
8,250
Duration
(3)
Less
600
Stock
Cr Stock
A/c

5,70,000
N Ltd
Shares in O Ltd. by M Ltd
78,000
O Ltd
Shares in O Lid. by N Ltd
3,18,000
Capital Profit
1,20,000
60,000
34,650
(2)
Revenue Profit
12,750
(2)
Shares in N Ltd. by M Ltd
4,80,000
Unrealised Profit
Shares in O Ltd. by M Ltd
60,000
Minority Interest
Shares in O Lid. by N Ltd
2,40,000
Capital Profit
1,52,850
Dr MI A/c
Minority Interest
Shares in N Ltd. by M Ltd
Goodwill
S Co. [20%]
(3)
(480)
2,26,920
9,32,850
33,150
6.62
In
Note
(1)
Shareholders funds
(a)
(b)
(c)
Minority Interest
(2)
6,00,000
1
4,21,830
2,26,920
72,000
Total
II
ASSETS
(1)
Non-current assets
13,20,750
Intangible assets (Goodwill)
33,150
Tangible assets
(2)
7,38,000
Current assets
5,49,600
13,20,750

Reserves
Profit or Loss A/c
Total
2,88,000
96,000
2,88,000
39,750
1,35,750
Unrealised Profit
(1,920)
4,21,830
Current Assets
Inventories
Debtors
72,000
2,400
4,74,000
69,600
4,74,000
Cash in transit
6,000
5,49,600

Question: The Balance Sheet of Big Ltd., Small Ltd., and Little Ltd., as at 31 st March, 2013 are given
below
Note
Big
Small
2,00,000
1,00,000
60,000
General Reserves
60,000
50,000
40,000
Profit or Loss A/c
50,000
40,000
30,000
35,000
30,000
40,000
15,000
5,000
3,45,000
2,35,000
1,75,000
(1)
Shareholders funds
(a)
(b)
(2)
Little
Current liabilities
Trade payables
Big Ltd
Total
II
ASSETS
(1)
Non-current assets
6.63
(a)
Tangible Assets [Plant and Machinery]
(b)
Investment at cost
(2)
80,000
1,10,000
1,15,000
Equity Shares in Small Ltd.
90,000
Equity Shares in Little Ltd.
40,000
60,000
Inventories
60,000
35,000
35,000
Trade Receivables
35,000
20,000
15,000
15,000
10,000
10,000
3,45,000
2,35,000
1,75,000
Current assets
Due from:
Small Ltd.
18,000
Little Ltd
7,000
Cash and Cash Equivalent
(1)
(2)
(3)
(4)
Big Ltd. held 8,000 shares of Small Ltd., and 1,800 shares of Little Ltd.,
Small Ltd. held 3,600 shares of Little Ltd.
All investments were made on 1st July, 2012
The following were the balances on 1st July, 2012:
Small Ltd
Little Ltd
Reserves
25,000
15,000
Profit & Loss A/c
30,000
25,000
(5) Small Ltd. invoiced goods to Big Ltd. at a cost plus 25% in December, 2012. The closing stock of
Big Ltd. includes goods with invoice value at 6,000
(6) Little Ltd., sold to Small Ltd., an equipment costing 24,000 at a profit of 25% on selling price on
1st January 2013. Depreciation at 10% p.a. was provided by Small Ltd. on this equipment.
(7) Big Ltd. proposed dividend at 10%.
Prepare the consolidated Balance Sheet of the group as at 31st March 2013 by the direct approach.
Working should form part of the answer. Present the Balance Sheet as per revised format.
(1)
Small

Share held by Big Ltd
Minority Interest
Share held by Big Ltd

Little
Shares held by Small Ltd
Minority Interest
(2)
Little Ltd
Total
Capital
Profit
(3)
Revenue
Profit
(3)
Big 30%
8,000
10,000
2,000
10,000
1,800
6,000
3,600
6,000
600
6,000
80%
20%
30%
60%
10%
Small 60%
MI 10%
CP
RP
CP
RP
CP
RP
P/L
30,000
25,000
5,000
7,500
1,500
15,000
3,000
2,500
500
Reserves
40,000
15,000
25,000
4,500
7,500
9,000
15,000
1,500
2,500
Small Ltd
Big [80%]
MI [20%]
6.64
P/L
40,000
30,000
10,000
24,000
8,000
7,500
1,500
7,500
1,500
15,000
3,000
15,000
2,400
2,500
500
25,000
25,000
20,000
20,000
(1) Big
4,500
7,500
4,500
7,500
(2) Small
9,000
15,000
9,000
12,000
(3) MI
1,500
2,500
6,000
2,000
From Little
(1) Big
(2) Small
(3) MI
2
Reserves
50,000
600
2,500
500
5,000
5,000
From Little
Total
(3)
1,60,000
80,000
Unrealised Profit
Stock
[Upstream]
Unsold stock Profit

%
6,000
25
125
3,000
41,400
H Co.
MI
H Co.
960
240
Dr P/ L A/c
1,200
Cr
A/c
[ratio: 80:20]
Assets
Profit Depreciation %
8,000 2.5%
7,800
7,020
780
(5)
Cost of Acquisition
Less
15,000
13,600
MI
Dr MI A/c
Stock
Cr
A/c
Cost of Control
2,500
Dr P/ L A/c
[ratio: 90:10]
(4)
1,500
Cr Stock
A/c
Dr MI A/c
Stock
Cr Stock
A/c
Minority Interest
Shares in Small by Big
90,000
Small
Shares in Little by Big
40,000
Little
Shares in Little by Small
60,000
Capital Profit
20,000
6,000
(2)
Revenue Profit(2)
15,000
13,600
Shares in Small by Big
80,000
Unrealised Profit(3)
Shares in Little by Big
18,000
(1) Stock
(240)
Shares in Little by Small
36,000
(2) Asset
(780)
Capital Profit(2)
80,000
Minority Interest
53,580
Capital Reserve
(6)
2,14,000
24,000
(1)
Shareholders funds
(a)
Share capital
(b)
(c)
Minority Interest
(2)
Current liabilities
(5)
Proposed Dividend
In
2,00,000
Trade Payables
Total
Note
1,57,420
53,580
1,05,000
20,000
5,36,000
6.65
II
ASSETS
(1)
Non-current assets [Tangible assets]
2,97,200
(2)
Current assets
2,38,800
5,36,000
(a)
Capital Reserve(4)
(b)
Reserves
(c)
Profit or Loss A/c

Proposed Dividend
Big
Small
Little
Total
24,000
60,000
50,000
32,000
7,500
99,500
10,400
1,500
61,900
(20,000)
(20,000)
Unrealised Profit Equipment
(7,020)
Unrealised Profit Stock
(960)
1,57,420
Non-current Assets [Equipment]
80,000
1,10,000
1,15,000
Unrealised Profit Equipment
3,05,000
(7,800)
2,97,200
Current Assets
Inventories
60,000
35,000
35,000
Unrealised Profit Stock
1,30,000
(1,200)
Debtors
35,000
20,000
15,000
70,000
Cash and Cash Equivalents
15,000
10,000
10,000
35,000
Cash in transit [mutual owings]
5,000
2,38,800

Question: The following is an abstract of the Balance Sheets of H Ltd., S Ltd. and D Ltd. as on 31
March 31, 2012:
Note
H Ltd
S Ltd
D Ltd
20,00,000
10,00,000
6,00,000
General Reserves
1,80,000
2,00,000
1,44,000
Profit or Loss A/c
2,00,000
40,000
1,02,000
60,000
60,000
20,000
24,40,000
13,00,000
8,66,000
11,00,000
6,00,000
8,00,000
(1)
Shareholders funds
(a)
Share capital of 10 each fully paid
(b)
(2)
Current liabilities (Creditors)

Total
II
ASSETS
(1)
Non-current assets
(a)
Tangible Assets
(b)
Investment at cost
75,000 Shares in S Ltd.
10,00,000
6.66
15,000 Shares in D Ltd.
2,00,000
40,000 Shares in D Ltd.

(2)
5,60,000
Current assets
Stock
1,20,000
1,00,000
56,000
20,000
40,000
10,000
24,40,000
13,00,000
8,66,000
Cash at Bank
H Ltd. purchased the shares in S Ltd. and in D Ltd on September 30, 2011, and S Ltd. also purchased
the shares in D Ltd. on the same day.
The following are the balances at the beginning of the year (01.04.2011):
Reserves
Profit & Loss A/c
S Ltd
D Ltd
1,80,000
1,20,000
20,000
16,800
You are to assume that profits accrue uniformly every month.

Required: Prepare the consolidated Balance Sheet of H ltd. and its Subsidiaries as at March 31, 2012.
(1)
S Ltd
Share held by H Ltd

Minority Interest
Share held by H Ltd
D Ltd
Shares held by S Ltd

Minority Interest
(2)
S Ltd
Total
Capital
Revenue
Profit(3)
Profit(3)
H Ltd
CP
75,000
1,00,000
25,000
1,00,000
15,000
60,000
40,000
60,000
5,000
RP
60,000
75%
25%
%
%
%
S Ltd []
CP
3
12
8
12
1
12
MI []
RP
CP
RP
P/L
1,02,000
59,400
42,600
14,850
10,650
39,600
28,400
4,950
3,550
Reserves
1,44,000
1,32,000
12,000
33,000
3,000
88,000
8,000
11,000
1,000
2,46,000
1,91,400
54,600
47,850
13,650
1,27,600
36,400
15,950
4,550
D Ltd
1
P/L
H Ltd [75%]
40,000
30,000
10,000
22,500
7,500
(1) H
14,850
10,650
14,850
10,650
(2) S
39,600
28,400
39,600
21,300
(3) MI
4,950
3,550
1,90,000
10,000
1,42,500
7,500
(1) H
33,000
3,000
33,000
3,000
(2) S
88,000
8,000
88,000
6,000
(3) MI
11,000
1,000
4,11,400
74,600
MI [25%]
7,500
2,500
7,100
4,950
3,550
47,500
2,500
2,000
11,000
1,000
70,950
18,650
From S
Reserves
2,00,000
From S
Total
4,86,000
3,40,450
55,950
6.67
(3)
Cost of Control
(4)
Cost of Acquisition
Less
Minority Interest
Shares in S by H
10,00,000
Shares in D by H
2,00,000
Shares in D by S
5,60,000
Capital Profit

7,50,000
Shares in D by H
1,50,000
Shares in D by S
4,00,000
Capital Profit
3,40,450
Goodwill
(5)
50,000
70,950
(2)
Revenue Profit(2)
Shares in S by H
(2)
2,50,000
Consolidated Balance Sheets
(1)
Shareholders funds
(a)
(b)
Minority Interest
1,19,550
Note
H Ltd
Profit or Loss A/c
2,00,000
(2)
S Ltd
20,00,000
1,80,000
Minority Interest
3,89,600
16,40,450
General Reserves
(c)
18,650
D Ltd
Consol
1,80,000
55,950(2)
2,55,950
3,89,600
60,000
60,000
20,000
Total
II
ASSETS
(1)
Non-current assets
(a)
(b)
Tangible Assets
(2)
Current assets
Stock
20,00,000
1,40,000
29,65,550
1,19,550
11,00,000
6,00,000
8,00,000
25,00,000
1,20,000
1,00,000
56,000
2,76,000
20,000
40,000
10,000
70,000
Cash at Bank
29,65,550
Question: The following is an abstract of the Balance Sheets of H Ltd. and its two subsidiaries (B
Ltd. and C Ltd.) as on 31 March 31, 2013:
Note
I
(1)
Shareholders funds
(a)
(b)

Capital Reserve
Revenue Reserve
H Ltd
B Ltd
D Ltd
50,00,000
25,00,000
10,00,000
5,00,000
1,50,000
1,00,000
10,00,000
7,50,000
6,00,000
6.68
(2)

Creditors
20,00,000
10,00,000
3,00,000
5,00,000
3,50,000
3,00,000
90,00,000
47,50,000
23,00,000
32,00,000
16,00,000
3,00,000
Income Tax
Total
II
ASSETS
(1)
Non-current assets
(a)
Tangible Assets
(b)
Investment at cost
(2)
Shares in B Ltd.
45,00,000
Shares in C Ltd.
5,00,000
10,00,000
Stock
2,00,000
9,00,000
7,00,000
Debtors
4,00,000
10,50,000
11,50,000
Cash at Bank
2,00,000
2,00,000
1,50,000
90,00,000
47,50,000
23,00,000
Current assets
a.
B Ltd. acquired 6,000 shares in C Ltd on 01.04.2011 when the balance on capital reserve had been
1,00,000 and revenue reserve 1,50,000.
b. H Ltd. purchased 20,000 shares in B Ltd. on 01.04.2011 when the latters balance on consolidated
revenue reserve had been 5,50,000. The Balance of Capital Reserve in B Ltd. at that time was
1,50,000
c. H Ltd. also acquired 3,000 shares in C Ltd. on 01.04.2011 when the balance on capital reserve had
been 1,00,000 and revenue reserve 3,50,000
Required: Prepare a consolidated balance sheet of H Ltd and its subsidiaries as on March 31, 2013
together with consolidated schedules.
(1)
B Ltd
Share held by H Ltd

Minority Interest
Share held by H Ltd
C Ltd
Shares held by B Ltd

Minority Interest
20,000
25,000
5,000
25,000
3,000
10,000
6,000
10,000
1,000
10,000
80%
20%
30%
60%
10%
in 000
(2)
C Ltd
Total
Capital
Profit
1
2
CR
RR
100
100
100
600
350
700
150
H Ltd [30%]
B Ltd [60%]
MI [10%]
Total
CP
RP
Total
CP
RP
Total
30
30
60
60
10
180
105
75
360
90
270
60
135
75
150
270
70
6.69
in 000
(3)
B Ltd
Total
Cap. Reserve
Capital
Revenue
Profit
Profit
150
H Ltd [80%]
CP
150
MI [20%]
RP
Total
120
30
From C
(1) H
30
30
(2) B
60
60
(3) MI
2
10
Rev. Reserve
750
550
200
440
160
(1) H
105
75
105
75
(2) B
90
270
90
216
150
From C
54
(3) MI
60
Total
1,600
845
451
304
in 000
(4)
Cost of Control
(5)
Cost of Acquisition
Less
Shares in B by H
4,500
500
Shares in C by H
500
100
Shares in C by B
1,000
Profit(3)
304
Minority Interest
904

Shares in B by H
2000
Shares in C by H
300
Shares in C by B
600
Capital Profit
845
(3)
Goodwill
I
(1)
Shareholders funds
(a)
(b)

Capital Reserve
Revenue Reserve
(c)
Minority Interest
(2)

Creditors
Income Tax
Total
II
Minority Interest
3,745
2,255
Note
H Ltd
B Ltd
D Ltd
Consol
50,00,000
5,00,000
5,00,000
5,00,000
10,00,000
4,51,000(3)
14,51,000
9,04,000
20,00,000
10,00,000
3,00,000
33,00,000
5,00,000
3,50,000
3,00,000
11,50,000
1,23,05,000
ASSETS
6.70
(1)
Non-current assets
(a)
(b)
Tangible Assets
(2)
Current assets
22,50,000
32,00,000
16,00,000
3,00,000
51,00,000
Stock
2,00,000
9,00,000
7,00,000
18,00,000
Debtors
4,00,000
10,50,000
11,50,000
26,00,000
Cash at Bank
2,00,000
2,00,000
1,50,000
5,50,000
1,23,05,000

Question: The following summarized Balance Sheet of X Ltd. and its subsidiaries, Y Ltd. and Z
Ltd., have been prepared at 31st March, 2009
Note
X Ltd
Y Ltd
Z Ltd
(1)
Shareholders funds
(a)
30,00,000
20,00,000
2,00,000
(b)
28,00,000
16,00,000
1,20,000
(2)
(a)
Secured loan
15,00,000
8,00,000
2,00,000
(b)
Unsecured loan
5,00,000
2,00,000
--
(3)
Current liabilities
12,00,000
14,00,000
2,80,000
Total
90,00,000
60,00,000
8,00,000
Land and building at cost less depreciation
10,00,000
8,00,000
2,00,000
Plant and equipment at cost less depreciation
14,00,000
22,00,000
1,00,000
(b)
Investment
34,00,000
2,20,000
50,000
(2)
Current assets
Stock
12,00,000
14,00,000
2,50,000
Debtors
16,00,000
12,00,000
1,75,000
4,00,000
1,80,000
25,000
90,00,000
60,00,000
8,00,000
II
ASSETS
(1)
Non-current assets
(a)
Tangible Assets
Cash and Bank
(1)
Particular of investments are as follows

Investment in 1,60,000 Shares in Y Ltd.
X Ltd.
Investment in 5,000 Shares in Z Ltd.
33,60,000
40,000
34,00,000
Y Ltd.
Investment in 12,000 shares in Z Ltd.
Z Ltd.
Investment in Growth Sectors Bonds (F.V. 50,000)
2,20,000
50,000
6.71
(2) The acquisition of investments took place in the manner indicated below:
Balance in P/L A/c
X Ltd.
Y Ltd.
Date
Y Ltd.
Z Ltd.
1,60,000 share in Y Ltd.
1 April 2008
14,00,000
1,00,000
5,000 share in Z Ltd
1 April 2006
20,000
12,000 shares in Z Ltd.
1 April 2007
72,000
(3) X Ltd. has proposed 15% dividend for the accounting year ended on 31 March, 2009. This amount
is included in sundry creditors
(4) Sundry debtors of Y Ltd. include 30,000 representing sum due from X Ltd. Sundry creditors of X
Ltd. include 20,000, which represents the amount due to Y Ltd. it is discovered that X Ltd. sent a
cheque for 10,000 to Y Ltd. on 30 March, 2009 which was not received until 3 April, 2009.
Prepare a consolidated Balance Sheet of X Ltd. and its subsidiaries as at 31 st March, 2009
(1)

Share held by X Ltd
Minority Interest
Shares held by Y Ltd
(2)
1
Z Ltd
P/L
(3)
1
Total
1,20,000
20,000
12,000
20,000
3,000
Capital
1,00,000
5,000
Minority Interest
2,00,000
40,000
Share held by X Ltd

Z
1,60,000
X Ltd [25%]
20,000
80%
20%
25%
60%
15%
Y Ltd [60%]
Profit
Total
CP
RP
Total
CP
RP
20,000
30,000
5,000
25,000
72,000
43,200
28,800
72,000
B Ltd
Capital
Revenue
Profit
Profit
CP
RP
16,00,000
14,00,000
2,00,000
11,20,000
1,60,000
(1) X
30,000
5,000
25,000
5,000
25,000
(2) Y
72,000
43,200
28,800
43,200
23,040
(3) MI
18,000
P/L
MI [15%]
Total
X Ltd [80%]
Total
18,000
MI [20%]
Total
3,20,000
From Z
Total
(4)
18,000
17,20,000
11,68,200
Cost of Control
2,08,040
(5)
Cost of Acquisition
Less
5,760
3,43,760
Minority Interest
Shares in Y by X
33,60,000
Shares in Z by X
40,000
Shares in Z by Y
2,20,000
Profit
4,00,000
30,000
(3)
3,43,760
6.72
Shares in Y by X
16,00,000
Shares in Z by X
50,000
Shares in Z by Y
1,20,000
Capital Profit
(3)
11,68,200
Goodwill
(6)
Minority Interest
29,38,200
6,81,800
Note
X Ltd
Y Ltd
(1)
Shareholders funds
(a)
30,00,000
(b)
Reserves and surplus [Profit or Loss

A/c]
23,50,000
(c)
Minority Interest
(2)
(a)
Secured loan
(b)
Unsecured loan
(3)
Current liabilities
Sundry Creditors
Proposed Dividend
7,73,760
Z Ltd
Consol
2,08,040(3)
7,73,760
15,00,000
8,00,000
2,00,000
25,00,000
5,00,000
2,00,000
--
7,00,000
12,00,000
14,00,000
2,80,000
28,60,000
4,50,000
4,50,000
Total
II
ASSETS
(1)
Non-current assets
(a)
Intangible Assets
(b)
Tangible Assets
30,00,000
25,58,040
1,28,41,800
6,81,800
Land and building
10,00,000
8,00,000
2,00,000
20,00,000
Plant and equipment
14,00,000
22,00,000
1,00,000
37,00,000
50,000
50,000
Stock
12,00,000
14,00,000
2,50,000
28,50,000
Debtors
16,00,000
12,00,000
1,75,000
29,55,000
4,00,000
1,80,000
25,000
6,05,000
(c)
Investment
(2)
Current assets
Cash and Bank
1,28,41,800
Question: AIR LTD, SEA LTD and RAIL LTD are members of a group. AIR LTD bought 70% of the
shares of SEA LTD on October, 1.2008 and 30% of shares of RAIL LTD on 1st January, 2010. SEA LTD
bought 60% of the shares of RAIL LTD on October 1, 2009.
Profit and Loss Account
After proposed dividend of X Ltd

After Mutual Owings of 20,000
After Mutual Owings of 20,000
6.73
Balance as on
Profit / (Loss)
Balance as on
Company
1.4.2009
for 2009-10
31.3.2010
Formed
AIR LTD
55,000
25,000
80,000
April 1,2007
SEA LTD
20,000 (Dr.)
47,500
27,500
April 1,2008
24,000 (Loss)
24,000 (Dr)
April 1,2009
RAIL LTD.
State how the profit/ (loss) will be reflected in the consolidated Balance sheet.
(1)

Share held by AIR Ltd
SEA
Minority Interest
Share held by AIR Ltd
RAIL
Shares held by SEA Ltd

Minority Interest
(2)
RAIL
Total
Date
01.10.08
70%
30%
01.01.10
30%
01.10.09
60%
10%
Capital
AIR [30%]
SEA [60%]
MI
[10%]
Loss
1
Loss
24,000
(3)
1
AIR
01.01.10
18,000
SEA
01.10.09
12,000
SEA
Total
P/(L)
Total
CP
RP
Total
CP
RP
Total
7,200
5,400
1,800
14,400
7,200
7,200
2,400
Capital
Revenue
Profit
Profit
AIR Ltd [70%]

CP
RP
27,500
(10,000)*
37,500
(7,000)
26,250
(1) AIR
(7,200)
(5,400)
(1,800)
(5,400)
(1,800)
(2) SEA
(14,400)
(7,200)
(7,200)
(7,200)
(5,040)
MI [30%]
Total
8,250
From RAIL
(3) MI
(2,400)
Total
(2,160)
(2,400)
3,500
(19,360)
22,860
(2,400)
(19,600)
19,410
3,690
[CMA FINAL J11]

a) Calculate the Minority Interest and Cost of Control form the following Balance Sheets of A
Ltd. and B Ltd. as at 31st March 2011:
Liabilities
Share
each)
Capital
(100
Profit:
A Ltd.
B Ltd.
Assets
5,00,000
2,00,000
Investment: 1,600 share in B

Ltd.
1,00,000
80,000
1,000 Shares in A Ltd.
A Ltd.
B Ltd.
2,20,000
1,50,000
Capital Loss upto the period 01.10.08 = 6 months loss out of one years loss as on 01.04.2009 is 20,000
6.74
Capital Profit
1,00,000
80,000
Revenue Profit
3,00,000
50,000
Creditors
1,50,000
60,000
10,50,000
3,90,000
Sundry Assets
8,30,000
2,40,000
10,50,000
3,90,000
(b) A Ltd. purchased 40% stake of B Ltd. for 12 per share. After two years A Ltd. decided to
purchase another 40% share in B Ltd. B Ltd. has 1, 00, 00,000 equity shares of 10 each as fully paid
up shares. The purchase deal was finalized on the following terms:
Purchase price per share to be calculated on the basis of average profit of last three years
capitalized at 7.5%. profit for last three years are 35 lacs. lacs and 89 lacs.
Total assets of B Ltd. of 11,50,00,000. Assets to be appreciated by 40,00,000.
Of the External Creditors for 2,50,00,000 one creditor to whom 10,00,000 was due has expired
and nothing is to be paid to settle this liability
B Ltd. will declare dividend @ 15%.
Calculation the Goodwill or Capital Reserve for A Ltd. in Consolidated Financial Statement.
Green Limited
Balance Sheet as at 31st March 2000
(Rupees in)
Particulars Figures as at the
Note
CY
PY
No.
1
I
(1)
Shareholders funds
(a)
Share capital
Authorized: 1,50,000 Equity shares of 50 each
75,00,000
Subscribed and paid up Capital:

50,000 Equity shares of 50 each
25,00,000
1,00,000 Equity shares of 50 each, 40 per share paid up
40,00,000
(b)
(c)
Money received against share warrants
(2)
Share application money pending allotment
(3)
(a)
Long-term borrowings
12% First Debentures
12% Second Debentures
(b)
Deferred tax liabilities (Net)
(c)
Other Long term liabilities
(d)
Long-term provisions
(4)
Current liabilities
(a)
Short-term borrowings
(b)
Trade payables
65,00,000
(20,00,000)
5,00,000
10,00,000
15,00,000
6.75
(c)
Other current liabilities
(d)
Short-term provisions
5,00,000
Total
II
ASSETS
(1)
Non-current assets
(a)
Fixed assets
(i)
Tangible assets
65,00,000
Building
10,00,000
Plant
10,00,000
Computers
25,00,000
(ii)
Intangible assets Goodwill
(iii)
Capital work-in-progress
(iv)
Intangible assets under development
(b)
Non-current investments
(c)
Deferred tax assets (net)
(d)
Long-term loans and advances
(e)
Other non-current assets [AAA]
(2)
Current assets
(a)
Current investments
(b)
Inventories
(c)
Trade receivables
(d)
Cash and cash equivalents
(e)
Short-term loans and advances
(f)
Other current assets

Total
5,00,000
45,00,000
20,00,000
65,00,000
6.76

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HOLDING COMPANIES

The Companies Act, 2014

Subsidiary company not to hold shares in its holding company.

where the subsidiary company holds such shares as a trustee; or

where the subsidiary company is a shareholder even before it became a subsidiary

Consolidated Financial Statements of Group Companies

The Companies Act, 2014

(i) controls the composition of the Board of Directors; or

Calculation of ratio of shares held by holding company and outsiders

Over (Under) Valuation of Assets

Goodwill (Capital Reserve)

[CMA FINAL J04& D05, 2 Marks]

To Investment in Subsidiary A/c

(Being Dividend received from subsidiarys pre-acquisition profit)

EQUITY AND LIABILITIES

Equity Share of 1 each

Reserves and surplus

Current liabilities [Creditors]

Fixed Assets [Investments in 900 shares in S Ltd.,]

(3) Cost of Control

Over (Under) Valuation of Assets

Goodwill (Capital Reserve)

Reserves and surplus: Profit and Loss A/c

Current liabilities [Creditors]

Intangible assets [Goodwill]

[Wholly owned subsidiary company | Unrealized profit on unsold stock]

EQUITY AND LIABILITIES

Equity Share of 10 each

Reserves and surplus

Non-current liabilities [12% Debenture]

Investments in 15,000 shares in S Ltd., on 1.1.94

[including 10,000 stock purchased from R Ltd]

Reserves and Surplus

Profit and Loss A/c

Prepare a consolidated balance sheet as at 31.12.94 assuming that:

Calculation of ratio of shares held by holding company and outsiders

Unrealised Profit on Unsold Stocks

Debit Profit and Loss A/c

(4) Cost of Control

Goodwill (Capital Reserve)

EQUITY AND LIABILITIES

Reserves and surplus: Profit and Loss A/c

Non-current liabilities [12% Debentures]

Current liabilities [Creditors]

Intangible assets [Goodwill]

Less: [Unrealised profit on unsold stock]

Reserves and Surplus

Profit and Loss A/c

Unrealised profit on unsold stock

[Inter-company Owings | Unrealized Profit on Unsold Stock]

EQUITY AND LIABILITIES

Equity Share of 10 each

Reserves and surplus

Non-current liabilities [12% Debenture]

Intangible Assets [Goodwill]

Note: Liability of bills discounted of H Ltd is 20000

Reserves and Surplus

Profit and Loss A/c

Plant and Machinery

Prepare consolidated balance sheet.

Calculation of ratio of shares held by holding company and outsiders

Share of Holding Company

Profit and Loss A/c