AS 21: Consolidated Financial Statements: Learning Outcomes

CA.
Ranjay Mishra (FCA) 1
AS 21 : Consolidated Financial Statements

Learning Outcomes
1. Introduction
2. Holding and Subsidiary under Companies Act
3. Consolidated Financial Statement - Basics, Presentation and Scope
4. Consolidation Procedures
5. Application of AS 21 on Sigle Subsidiary Single Acquisition
6. Impact of Step Acquisition (acquisition in lot) in CFS
7. Consolidation of Multiple Subsidiary Single Date of Acquisition
8. Consolidation of Multiple Subsidiary with Chain Holding and Different Dates of Acquisition
9. Treatment of Foreign Subsidiaries in CFS
10. Composite Problems (Holding, Subsidiary, Associates & Joint Venture)
11. Cross Holding
12. Consolidation After Balance Sheet Date
13. Consolidated Profit / Loss account
14. Consolidated Cash Flow Statement
15. Consolidated statement of changes in equity
16. Additional information to be presented alongwith consolidated account
1. Introduction
 In April 2001 ASB of ICAI issued AS 21 for consolidation of subsidiaries with parent. Subsequently, standard
is notified by MCA under Company AS Rule, 2006. In 2016 this AS has been amended and made applicable for
companies on financial statement to be prepared on or after 31st March, 2016. But as per ICAI announcement
this revised standard is applicable in examination on or after May, 2016.
 This Standard does not prescribed the requirement of consolidation but only prescribed procedure of
consolidation. It means that entity is required to follow this standard in the process of consolidation then entity
prepared consolidated financial statement either as per law or on voluntary basis.
 This standard is applicable in the consolidated financial statement of group of enterprise under control of a
parent. However, this standard does not prescribed treatment of
 Method of Accounting for amalgamation and there effect on consolidation including goodwill arising on
amalgamation.
 Accounting for investment in associates
 Accounting for investment in joint venture
2. Holding and Subsidiary under Companies Act

(i) Meaning of Subsidiary [Section 2 (87)
Subsidiary Company means a company in which holding company
 controls the composition of the Board of Directors; or
 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 company shall be deemed to be a subsidiary company of the holding compnay even if the control referred
to in sub-clause (i) or sub-clause (ii) is of another subsidiary company of the holding company;
 the composition of a company’s 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;
 the expression “company” includes any body corporate.
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2 AS 21 : Consolidated Financial Statements
Note : For determination of ½ of the share capital the term share capital includes
 Paid up equity share capital
 Convertible preference share capital
(ii) Meaning of Holding Company

“Holding company”, in relation to one or more other companies, means a company of which such companies
are subsidiary companies.
Analysis
Legally a holding company and its subsidiaries are distinct and separate entities. However, in substance holding
and subsidiary companies work as a group. Accordingly, users of holding company accounts need financial
information of subsidiaries to understand the performance and financial position of the holding company.
(iii) Wholly Owned and Partially Owned Subsidiary

 A wholly owned subsidiary company (Example A Ltd.) is one in which all the shares with voting rights of
100% are owned by the holding company (Example B Ltd.)
 In a partly owned subsidiary, all the shares of subsidiary company are not acquired by the holding company
i.e. only the majority of shares (i.e., more than 50%) are owned by the holding company.
 In a wholly owned subsidiary, there is no minority interest because all the shares with voting rights are
held by the holding company.
 On the other hand, in a partly owned subsidiary company, there is a minority interest because less than
50% shares with voting rights are held by outsiders other than the holding company.
3. Consolidated Financial Statement - Basics, Presentation and Scope

(i) Consolidated financial statement are financial statement of group presented as those of single enterprise.
Consolidated financial statement includes
 Consolidated Balance Sheet
 Consolidated Profit and Loss Account
 Consolidated notes to account
 Consolidated Cash Flow Statement (if parent present own cash flow statement)
Note :
(1) As per companies act parent entity are also required to present a consolidated statement of changes in
equity and additional information which will be discuss in miscellaneous chapter.
(2) Consolidated notes to account does not meaning all notes of separate financial statement of parent and
subsidiaries. But, only relevant notes taking into account concept of materiality and usefulness of
information from prospective of group.
(ii) Presentation of consolidated financial statement shall be in the same format as followed by parent entity for
separate financial statement. It means format given in Schedule III Division 1 of the Companies Act, 2013 shall
be followed.
(iii) Following subsidaries are excluded from consolidation
 control is intended to be temporary because the subsidiary is acquired and held exclusively with a view to
its subsequent disposal in the near future, or
 it operates under severe long-term restriction which significantly impair its ability to transfer funds to the
parent.
Note :
(1) Accounting of such subsidiaries are made as per AS 13.
(2) Near future means period not exceeding 12 months from the date of acquisition unless a longer period is
justified.
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CA. Ranjay Mishra (FCA) 3
(iv) Parent must consolidate all subsidiaries (whether domestic or foreign). If parent does not have a subsidiary but
have an associate and/or joint venture such enterprise should present consolidated financial statement as per
AS 23 and AS 27.
(v) Control exist by two reason either from voting power or by control of composition of board. It may be possible
that a company is controlled from voting power by one entity and by composition of board by other entity. In
such a rare case the company is deemed to be subsidiary of both controlling enterprise and both enterprise are
required present consolidated financial statement under this standard.
(vi) When control is made through composition of board in that situation only those enterprise are consolidated on
which objective of control is to obtain economic benefit. An enterprise may obtain control on board of gratuity
trust, provident fund trust not from the angle of economic benefit in such a situation consolidation is not required.
(vii) Situation of control on board
(a) the board of directors of a company, if it has the power, without the consent or concurrent of any other
person, to appoint or remove all or a majority of directors of that company. An enterprise is deemed to
have the power to appoint a director, if any of the following conditions is satisfied :
 a person cannot be appointed as director without the exercise in his favour by that enterprise of such
a power as aforesaid, or
 a person’s appointment as director follows necessarily from his appointment to a position held by
him in that enterprise, or
 the director is nominated by that enterprise or a subsidiary thereof.
(b) The governing body of an enterprise that is not a company, if it has the power, without the consent or the
concurrent of any other person, to appoint or remove all or a majority of members of the governing body
of that other enterprise. An enterprise is deemed to have the power to appoint a member, if any of the
following conditions is satisfied :
 a person cannot be appointed as member of the governing body without the exervse in his favour by
that other enterprise of such a power as aforesaid, or
 a person’s appointment as member of the governing body follows necessarily from his appointment
to a position held by him in that other enterprise, or
 the member of the governing body is nominated by that other enterprise.
4. Consolidation Procedures
(i) Cost of Control
 Background
 Whenever investment in shares is made by one entity in another entity at that time price of shares may be
less than intrinsic value or more than intrinsic value or sometimes equal to intrinsic value. Intrinsic value
is net assets available for equity shareholder divided by number of equity share outstanding. Further net
assets can be calculated either by [All assets minus All liabilities] or [Equity share capital plus reserve &
surplus minus Fictitious assets].
 Whenever, shares are purchased at less than or more than intrinsic value of shares at the time of purchase
in that case investor either gain or loose on investment made. But, under AS 13 investor record shares at
cost in separate financial statement hence such gain or loss doesnot reflect.
 In case of consolidated financial statement investor (parent) club the balance sheet of all subsidiaries and
cancel its investment in subsidiary. In such a case for presentation of consolidated balance sheet difference
between cost of investment in individual financial statement and share of net assets (intrinsic value) on
the date of purchase in subsidiary individual financial statement shall be presented as either goodwill or
capital reserve. The process of calculation of goodwill/capital reserve is called cost of control.
 Provision of AS 21 on Cost of Control
The cost to the parent of its investment in each subsidiary and the parent’s portion of equity (ESC + Reserve &
Surplus - Fictifious] of each subsidiary, at the date on which investment in each subsidiary is made, should be
eliminated
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 any excess of the cost to the parent of its investment in a subsidiary over the parent’s portion of equity of
the subsidiary, at the date on which investment in the subsidiary is made, should be described as goodwill
to be recognised as an asset in the consolidated financial statements,
 when the cost to the parent of its investment in a subsidiary is less than the parent’s portion of equity of
the subsidiary, at the date on which investment in the subsidiary is made, the difference should be treated
as a capital reserve in the consolidated financial statements.
 Question Specific Problem

In examination question sometimes balance sheet of subsidiary is available on the date of investment and
sometimes after the date of investment. Whenever balance sheet is available on the date of investment the
determination of net assets is very simple.
But whenever balance sheet is available after date of investment then for determination of net assets on the
date of investment determination of profit upto date of investment and after date of investment is required.
The process of determination of pre (profit upto date of investment) and post (profit after date of investment) is
called analysis of profit. While preparing analysis of profit all types of profit, reserves and fictitious are divided
between pre and post. By this process net assets on the date of acquisition is calculated as follows [Share capital
plus Pre-profit]. As far as share capital is considered it is always of capital nature and no division between pre
and post is needed. By such an analysis actual net assets is determined because one way to determine net assets
is share capital plus reserve and surplus.
 Format of Cost of Control

Particulars `
(a) Cost of Investment :
Amount invested xxx
Less : Pre-acquisition dividend received xxx
Net Cost as per AS 13 xxx
(b) Share of Net Assets
Share in equity share capital xxx
Share in pre-acquisition profit and reserve xxx
Total xxx
(c) Goodwill (a > b) or Capital Reserve (b > a) xxx
Note : In above format investment in equity shares and pref. shares both are considered.
Q.1. (Study Material) Exe Ltd. acquires 70% of equity shares of Zed Ltd. as on 31st March, 2012 at a cost of ` 70
lakhs. The following information is available from the balance sheet of Zed Ltd. as on 31st March, 2012 :
` in lakhs
Fixed Assets 120
Investments 55
Current Assets 70
Loans & Advances 15
15% Debentures 90
Current Liabilities 50
The following revaluations have been agreed upon (not included in the above figures) :
Fixed Assets Up by 20%
Investments Down by 10%
Zed Ltd. declared and paid dividend @20% on its equity shares as on 31st March, 2012. Exe Ltd. purchased the
shares of Zed Ltd. @ ` 20 share.
Calculate the amount of goodwill/capital reserve on acquisition of shares of Zed Ltd.

Ans. :-
(i) Observations
 Detail of assets and liabilities is available on the date of investment hence, it is easy to find out net assets
on the date of acquisition.
 Detail of profit and share capital of subsidiary is not available hence, net assets on the date of acquisition
(31st March, 2012) is calculated by Assets minus Liabilities.
(ii) Calculation of Net Assets on 31st March, 2012
Particulars ` in lakhs
Fixed Assets (120 + 20%) 144
Investments (55 - 10%) 49.5
Current Assets 70
Loans and Advances 15
Less : 15% debentures 90
Less : Current Liabilities 50
Net Assets 138.5
(iii) Calculation of dividend paid by subsidiary

(a) No. of equity share purchased by X Ltd. (70 / 20) 3.5 lakhs shares
(b) % of Holding X in Z 70%
(c) Total No. of Share of Z (3.5 x 100 / 70) 5 lakhs shares
(d) Paid up value of 5 lakhs shares (5 x 10) 50 lakhs
(e) Dividend paid @ 20% (50 x 20%) 10 lakhs
(iv) Cost of Control
Particulars ` in lakhs
Amount invested 70
Less : Pre-acquisition dividend received (10 x 70%) 7
Net Cost as per AS 13 63
(b) Share of Net Assets (138.5 x 70%) 96.95
(c) Capital Reserve (b - a) 33.95
Q.2. (Study Material) A Ltd. purchased 40% stake of B Ltd. for Rs. 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 Rs. 10 each as fully paid up shares.
The purchase deal was finalised on the following terms :
 Purchase price per share to be calculated on the basis of average profit of last three years capitalised at
7.5%. Profits for last three years are Rs. 35 lakhs, Rs. 65 lakhs and Rs. 89 lakhs.
 Total assets of B Ltd. of Rs. 11,50,00,000. Assets to be appreciated by Rs. 40,00,000.
 Of the External Trade payables for Rs. 2,50,00,000 one trade payable to whom Rs. 10,00,000 was due has
expired and nothing is to be paid to settle this liability.
 B Ltd. will declare dividend @ 15%.
Calculate the Goodwill or Capital Reserve for A Ltd. in Consolidated Financial Statement.
Ans. :-
(i) Observations
 Detail of assets and liabilities is available on the date of investment hence, it is easy to find out net assets
on the date of acquisition.
 Detail of profit and share capital of subsidiary is not available hence, net assets on the date of acquisition
(31st March, 2012) is calculated by Assets minus Liabilities.
 In this question cost of investment (purchase consideration) is not available hence, purchase consideration
is required to be calculated.
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(ii) Calculation of Net Assets on 31st March, 2012

Particulars Rs.
Total Assets (11,50,00,000 + 40,00,000) 11,90,00,000
Less : Trade Payable (2,50,00,000 - 10,00,000) 2,40,00,000
Net Assets 9,50,00,000
(iii) Calculation of Purchase Consideration

Particulars `
Profit for Last 3 years : First 89,00,000
Second 65,00,000
Third 35,00,000
Total profits for last 3 years 1,89,00,000
Average Profits (1,89,00,000 / 3) 63,00,000
Total Value of B Ltd. (63,00,000 / 7.5%) 8,40,00,000
Number of Shares in B Ltd. 1,00,00,000
Value per Share 8.40
Purchase Consideration (1,00,00,000 x 40%) x 8.4 3,36,00,000
(iv) Cost of Control

Particulars `
Amount invested - Current Investment 3,36,00,000
Existing investment (1,00,00,000 x 40% x 12) 4,80,000
Less : Pre Dividend (10,00,00,000 x 15% x 40%) 60,00,000
Net Costs 7,56,00,000
(b) Share of Net Assets (9,50,00,000 x 80%) 7,60,00,000
(c) Capital Reserve (b - a) 4,00,000
Note : Dividend received from subsidiary is post for existing 40% because this investment was made before two
year and for payment of dividend current year profit is to be used. But, for current purchase of 40%
dividend is pre because current year profit is earned before investment is made.
Q.3. (Study Material) A Ltd. acquired 60% shares of B Ltd. @ ` 20 per share. Following are the extract of Balance
Sheet of B Ltd.
`
10,00,000 Equity Shares of ` 10 each 1,00,00,000
10% Debentures 10,00,000
Creditors 55,00,000
Fixed Assets 70,00,000
Investments 45,00,000
Current Assets 68,00,000
Loans & Advances 22,00,000
On the same day B Ltd. declared dividend at 20% and as agreed between both the companies fixed assets were
to be depreciated @ 10% and investment to be taken at market value of ` 60,00,000. Calculate the Goodwill or
Capital Reserve to be recorded in Consolidated Financial Statement.
Ans. :- Goodwill - ` 19,20,000.

Q.4. Balance Sheet as on 31.3.2012

Liabilities H Ltd. S Ltd. Assets H Ltd. S Ltd.
ESC @ 10 15,00,000 5,00,000 Fixed Assets 10,00,000 6,00,000
Reserve and Surplus 10,00,000 4,00,000 Invest @ 70% in S Ltd. 6,00,000 ---
Current Liabilities 5,00,000 1,00,000 Stock 4,00,000 2,00,000
Debtor 5,00,000 1,00,000
Cash 5,00,000 1,00,000
30,00,000 10,00,000 30,00,000 10,00,000
Calculate cost of control if reserve and surplus on 1.4.2011 in the books of S Ltd. is Rs. 3,00,000 in each
of following cases :
Case 1 : If date of acquisition is 31st March, 2012
Case 2 : If date of acquisition is 1st April, 2011
Case 3 : If date of acquisition is 30st Sept. 2011
(ii) Minority Interest

 Background
 Whenever investment in shares exceeds 50% then control is established and consolidation is required.
Under AS 21 whenever investment exceeds 50% then all assets and liabilities of subsidiary companies are
required to be consolidated on line by line basis. Accordingly, eventhough holding company does not
hold 100% of assets and liabilities but consolidation of all assets and liabilities are required. Therefore,
excess of assets and liabilities consolidated on consolidation date is treated as minority interest and required
to be disclosed in balance sheet under separate head.
 If holding company holds 100% of equity shares of subsidiary company in that case all assets and liabilities
of subsidiaries belongs to holding and hence calculation and disclosure of minority interest is not needed.
 Provision of AS 21 on Minority Interest
 Minority interest is that part of the net results of operations and of net assets of a subsidiary attributable
to interests which are not owned, directly or indirectly through subsidiaries, by the holding (parent)
company.
 In short, minority interest represents the claims of the outside shareholders of a subsidiary. 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 shareholders of the
holding company.
 Minority interest in the income of the group should be separately presented.
 As per Schedule III Minority Interest shall be presented within equity separately from owner equity but
as per AS 21 Minority Interest shall be presented separately from equity and liability and hence, Minority
Interest is presented by creating additional head.
 Question Specific Problem

 In question sometimes preference share capital are also available and hence Minority Interest in pref.
share capital shall be added in Minority Interest to the extent not transferred to cost of control.
 Also Share in unrealised profit on upstream transactions and minority interest in equity proposed dividend
shall be presented as deduction from total minority.
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 Format of Minority Interest

Particulars Rs.
Share in equity share capital xxx
Share in pref. share capital xxx
Share in pre-acquisition profit xxx
Share in post-acquisition and reserve xxx
Share in unrealised profit (xxx)
Share in equity proposed dividend (xxx)
xxx
Q.5. (MTP S1 - Nov., 2018) Ram Ltd. holds 80% share in Shyam Ltd., its subsidiary. Share Capital of Shyam Ltd.
is ` 25,00,000 Lakhs and Reserves being ` 5,00,000 on the date of acquisition 31.3.2012.
Following is the results of Shyam Ltd. :
Year Ended Profit / (Loss) ` in lakhs)
Net Worth (`
31.3.2013 (15,00,000) +15.00
31.3.2014 (20,00,000) (5.00)
31.3.2015 4,00,000 (1.00)
31.3.2016 5,00,000 +4.00
Calculate Minority Interest for the period from 2012 to 2016 as per AS - 21.
(May, 2016 - 5 Marks)
Ans. :-
(I) Calculation of Minority Interest
31.3.2012 31.3.2013 31.3.2014 31.3.2015 31.3.2016
Opening Balance --- 6,00,000 3,00,000 Nil Nil
Share in ESC 5,00,000 --- --- --- ---
Share in Capital Profit 1,00,000 --- --- --- ---
Share in revenue profit --- (3,00,000) (3,00,000) --- 80,000
Note 1 Note 2 Note 3
Closing Balance 6,00,000 3,00,000 Nil Nil 80,000
(II) Analysis of Profit

Capital Revenue
31.3.2012 31.3.2013 31.3.2014 31.3.2015 31.3.2016
Reserve & Profit 5,00,000 (15,00,000) (20,00,000) 4,00,000 5,00,000
Minority Interest @ 20% 1,00,000 (3,00,000) (4,00,000) 80,000 1,00,000
Ram Ltd. @ 80% 4,00,000 (12,00,000) (16,00,000) 3,20,000 4,00,000
Note 1 : Although share in loss is 4,00,000, but we have adjusted only 3,00,000, because minority interest
cannot be negative.
Note 2 : Share in post profit is 80,000 but this is still less than unabsorbed minority loss of ` 1,00,000 of
previous year, hence no amount is presented.
Note 3 : Although, share in post profit is 1,00,000, but earlier year unabsorbed minority loss is 20,000, hence
balance 80,000 is added.

5. Application of AS 21 on Sigle Subsidiary Single Acquisition

Q.6. From the following balance sheets of Hanish Ltd. and is subsidiary Sunil Ltd. drawn up at 31st March,
2010, prepare a consolidated balance sheet as a that date, having regards to the following :
1. Reserve and Profit and Loss Account of Sunil Ltd. stood at ` 25,000 and ` 15,000 respectively on the date
of acquisition of its 80% shares by Hanish Ltd. on 1st April, 2009.
2. Machinery (Book-value ` 1,00,000) and Furniture (Book value ` 20,000) of Sunil Ltd. were revalued at `
1,50,000 and ` 15,000 respectively on 1.4.2009 for the purpose of fixing the price of its shares. (Rates of
depreciation : Machinery 10% Furniture 15%).
Balance Sheet of Hanish Ltd. as on 31st March, 2010
Liabilities Hanish Ltd. Sunil Ltd. Assets Hanish Ltd. Sunil Ltd.
Share capital Machinery 3,00,000 90,000
Share of ` 100 each 6,00,000 1,00,000 Furniture 1,50,000 17,000
Reserve 2,00,000 75,000 Other Assets 4,40,000 1,50,000
Profit & Loss A/c 1,00,000 25,000 Shares in Sunil Ltd. :
Creditors 1,50,000 57,000 800 shares at ` 200 each 1,60,000
10,50,000 2,57,000 10,50,000 2,57,000
Ans. :-
Consolidated Balance Sheet of H Ltd. and its Subsidiary S Ltd.
as at 31st March, 2012
Particulars Note No. `)
(`
I. Equity and Liabilities
(1) Shareholder’s Funds
(a) Share Capital 6,00,000
(b) Reserves and Surplus 3,44,600
(2) Minority Interest 48,150
(3) Current Liabilities
(a) Trade Payables 2,07,000
11,99,750
II. Assets
(1) Non-current Assets
(a) Fixed Assets
(i) Tangible Assets 5,97,750
(ii) Intangible Assets 12,000
(b) Other non-current assets 5,90,000
11,99,750
WN 1 : Analysis of Profit of Sunil Ltd. (Subsidiary)

Particulars Pre-acquisition Post Acquisition Total
Capital Rev. PL Rev. GR
General Reserve 25,000 --- 50,000 75,000
P&L 15,000 10,000 --- 25,000
Total 40,000 10,000 50,000 1,00,000
Time Adjustment --- --- ---
Total 40,000 10,000 50,000
Add : Revaluation Projection 45,000
Less : Depreciation (4,250) ---
Total 85,000 5,750 50,000
Minority Interest (20%) 17,000 1,150 10,000 28,150
H Ltd. (80%) 68,000 4600 40,000
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WN 2 : Revaluation Adjustment
Particulars Machinery Furniture
Market Value 1,50,000 15,000
Book value 1,00,000 20,000
Revaluation / Profit / Loss 50,000 (5,000)
Additional / Saving (5000) 750
WN 3 : Calculation of Cost of Control

Particulars `
(A) Cost of Investment
Amount Invested 1,60,000
Less : Pre-acquisition dividend ---
Total 1,60,000
(B) Share of Net Assets represented by
Share Capital 80,000
Capital Profit 68,000
Total 1,48,000
(C) Goodwill (A - B) 12,000
WN 4 : Calculation of Minority Interest

Particulars `
Share Profit 17,000
Revenue Profit & Loss 1,150
Revenue General Reserve 10,000
Total 48,150
WN 5 : Calculation of Consolidated P&L / GR

P&L Reserve
Own 1,00,000 2,00,000
Share in Subsidiary 4,600 40,000
1,04,600 2,40,000
Combined 3,44,600
Q.7. (Dec., 2013 - 15 Marks) On 31st March, 1996, P Ltd. acquired 1,05,000 shares of Q Ltd. for ` 12,00,000. The
Balance Sheet of Q Ltd. on that date was as under :
Liabilities ` Assets `
1,50,000 equity shares of ` 10 each fully paid 15,00,000 Fixed Assets 10,50,000
Pre-incorporation profits 30,000 Current Assets 6,45,000
Profit and Loss Account 60,000
Creditors 1,05,000
16,95,000 16,95,000

On 31st March, 2002 the Balance Shet of two companies were as follows :
Liabilities P Ltd. Q Ltd. Assets P Ltd. Q Ltd.
` ` ` `
Equity shares of ` 10 Fixed Assets 79,20,000 23,10,000
each fully paid 45,00,000 15,00,000 1,05,000 equity shares 3
Securities premium 9,00,000 --- in Q Ltd. at cost 12,00,000 ---
Pre-incorporation profit --- 30,000 Current assets 44,10,000 17,55,000
Genereal Reserve 60,00,000 19,05,000
P & L Account 15,75,000 4,20,000
Creditors 5,55,000 2,10,000
1,35,30,000 40,65,000 1,35,30,000 40,65,000
Directors of Q Ltd. made a bonus issue in the ratio of one equity share of ` 10 each fully paid for every two equity
shares held on 31.03.2002.
Calculate as on 31st March, 2002 (i) Cost of control / Capital Reserve; (ii) Minority Interest, (iii) Consolidated Profit
and Loss Account in each of the following cases :
(1) Before issue of bonus shares.
(2) Immediately after issue of bonus shares.
It may be assumed that bonus shares were issued out of post-acquisition profits by using General Reserve.
Prepare a Consolidated Balance Sheet after the bonus issue as per Schedule III of The Companies Act, 2013.
[May 2003 - 10 Marks]
Ans. :-
Consolidated Balance Sheet of P Ltd. and its Subsidiary Q Ltd.
(`
(b) Reserves and Surplus [4,38,000 + 9,00,000 + 68,08,500 + 18,27,000] 99,73,500
(2) Minority Interest 11,56,500
Total 1,63,95,000
II. Assets
Fixed Assets 1,02,30,000
(2) Current Assets 61,65,000
Total 1,63,95,000
WN 1 : Analysis of Profit of Q Ltd. (Subsidiary)

Capital Rev. GR Rev. PL
General Reserve --- 19,05,000 --- 19,05,000
P&L 60,000 --- 3,60,000 4,20,000
Pre-incorporation 30,000 --- --- 30,000
Total 90,000 19,05,000 3,60,000 23,55,000
Minority Interest (30%) 27,000 5,71,500 1,08,000 7,06,500
P Ltd. (70%) 63,000 13,33,500 2,52,000
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Particulars `
Total 12,00,000
Share Capital 10,50,000
Total 11,13,000

Particulars `
Revenue Profit & Loss 1,08,000
Revenue General Reserve 5,71,500
Total 11,56,500
WN 4 : Calculation of Consolidated P&L

Particulars `
Own Balance 15,75,000
Add : Share in Subsidiary 2,52,000
18,27,000
Case II : After issue of Bonus Shares

WN 1 : Analysis of Profit of Q Ltd. (Subsidiary)
General Reserve --- 19,05,000 --- 19,05,000
P&L 60,000 --- 3,60,000 4,20,000
Pre-incorporation 30,000 --- --- 30,000
Total 90,000 19,05,000 3,60,000
Less : Bonus Issue --- (7,50,000) ---
Total 90,000 11,55,000 3,60,000
Minority (30%) 27,000 3,46,500 1,08,000
P Ltd. (70%) 63,000 8,08,500 2,52,000

Particulars `
Total 12,00,000
Bonus Share 5,25,000
Total 16,38,000
(C) Capital Reserve (A - B) 4,38,000


Particulars `
Revenue Profit & Loss 1,08,000
Revenue General Reserve 3,46,500
Bonus Shares 2,25,000
Total 11,56,500
WN 4 : Calculation of Consolidated P&L

Particulars GR P&L
Own Balance 60,00,000 15,75,000
Add : Share in Subsidiary 8,08,500 2,52,000
68,08,500 18,27,000
Q.8. (Study Material) X Ltd. acquired 1,600 ordinary shares of ` 100 each of Y Ltd. on 1st July 2010. On
December 31, 2010 the Balance Sheet of the two companies were as given below :
Liabilities X Ltd. Y Ltd. Assets X Ltd. Y Ltd.

` ` ` `
Capital (Share of ` 100 Land & Building 1,50,000 1,80,000
each fully paid) 5,00,000 2,00,000 Plant & Machinery 2,40,000 1,35,000
Reserves 2,40,000 1,00,000 Investment in Y Ltd. at cost 3,40,000 ---
P & L A/c 57,200 82,000 Stock 1,20,000 36,400
Bank overdraft 80,000 --- Sundry Debtors 44,000 40,000
Bills payable --- 8,400 Bills Receivable 15,800 ---
Creditors 47,100 9,000 Cash 14,500 8,000
9,24,300 3,99,400 9,24,300 3,99,400
The Profit and Loss Account of Y Ltd. showed a credit balance of ` 30,000 on 1st January, 2010 out of which a
dividend of 10% was paid on 1st August; X Ltd. has credited the dividend received to its Profit & Loss Account. The
Plant & Machinery which stood at ` 1,50,000 on 1st January, 2010 was considered as worth ` 1,80,000 on 1st
July, 2010; this figure is to be considered while consolidating the Balance Sheets.
Prepare consolidated Balance Sheet as on December 31, 2010.
Ans. :- Goodwill 17,200.
Q.9. In preparing the consolidated balance sheet of Hanish Ltd.as on 31st december, 1999 you are required to show
clearly what amount, if any, you would include in respect of Wind Ltd. with regard to :
(a) Cost of control / reserve;
(b) Profit and Loss; and
(c) Minority interest.
Under each of the following assumptions :
(i) 48,000 of the shares then in issue of Wind Ltd. were acquired at a cost of ` 75,000 on 1st March, 1997
Hanish Ltd. participated in the proposed dividend of ` 8,000.
(ii) 40,000 of the shares then in issue of Wind Ltd. were acquired at a cost of ` 60,000 on 31st December,
1997, Hanish Ltd. participated in the bonus issue but not in the proposed dividend of ` 9,000.
(iii) 60,000 of the shares then in issue of Wind Ltd. were acquired at a cost of ` 80,000 on 1st July, 1999; Hanish
Ltd. did not participate in the proposed dividend of ` 6,000.
Following balances appeared in the books of Wind Limited on 31st December, 1999.
`
Shares Capital, Authorised & Issued of Re. 1 each 80,000
Undistributed Profits 24,000
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The profit and loss appropriation accounts, for four years ended 31st December, 1999
1996 1997 1998 1999
` ` ` `
Balance at the beginning of the year 16,000 22,000 43,000 28,000
Bonus issue of one for four 1.1.1998 16,000
27,000
Profit for the year (loss) 14,000 30,000 7,000 (4,000)
30,000 52,000 34,000 24,000
Proposed Dividends 8,000 9,000 6,000 Nil
Balance Carried Forward 22,000 43,000 28,000 24,000.
(Dec. 2013 - 15 Marks)
Ans. :- Goodwill - ` 750; (6875); 500.
Q.10. A Ltd. acquired 8,000 shares of ` 100 each in B Ltd. on 30th September, 1991. The summarized Balance Sheet of
the two companies as on 31st March 1992 were as follows :
`)
A Ltd. (`) `)
B Ltd. (`)
Share Capital
30,000 shares of ` 100 each 30,00,000 ---
10,000 shares of ` 100 each --- 10,00,000
Capital Reserves --- 5,50,000
General Reserves 3,00,000 50,000
Profit and Loss Account 3,82,000 1,80,000
Loans from B Ltd. 21,000 ---
Bills payable (including ` 5,000 to A Ltd.) --- 17,000
Creditors 1,79,000 70,000
Note : On the balance sheet of A Ltd :
There is a contingent liability for bills discounted of ` 6,000
38,82,000 18,67,000
Fixed Assets 15,00,000 14,47,000
Investment in B Ltd. at cost 17,00,000 ---
Stock in hand 4,00,000 2,00,000
Loans to A Ltd. 20,000
Bills Receivable(including ` 5,000 from B Ltd.) 12,000 ---
Debtors 2,50,000 1,80,000
Cash and Bank Balance 20,000 20,000
38,82,000 18,67,000
You are given the following information :
(1) B Ltd. made a bonus issue on 31st March, 1992 of one share for every two shares held, reducing the capital
reserve equivalently but the accounting effect to this has not been given in the above Balance Sheet.
(2) Interest receivable for the year (` 1,000) in respect of the loan due by A Ltd. to B Ltd. has not been credited
in the books of B Ltd.
(3) The credit balance in the Profit and Loss Account of B Ltd. as on 1.4.1991 was ` 21,000.
(4) The Director decided on the date of acquisition that the fixed assets of B Ltd. were over valued and should
be written down by ` 50,000. Consequential adjustments on depreciation are to be ignored.
Prepare the consolidated Balance Sheet as at 31st March, 1992 showing your working.
[May -1992, 1995 - 15 marks]

Ans. :-
Consolidated Balance Sheet of A Ltd. and its Subsidiary B Ltd.
(`
(a) Trade Payables [1,79,000 + 70,000 + 17,000 - 5,000] 2,61,000
Total 43,53,200
II. Assets
Fixed Assets
(i) Tangible [15,00,000 + 14,47,000 - 50,000] 28,97,000
(ii) Intangible Goodwill 3,79,200
(2) Current Assets
(a) Inventories [4,00,000 + 2,00,000] 6,00,000
(b) Trade Receivable [2,50,000 + 1,80,000 + 12,000 - 5,000] 4,37,000
(c) Cash and Cash equivalent [20,000 + 20,000] 40,000
Total 43,53,200
WN 1 : Analysis of Profit of Star Ltd. (Subsidiary)

Capital Rev. Reserve
General Reserve 5,50,000 --- 5,50,000
General Reserve 50,000 --- 50,000
PL A/c 21,000 1,59,000 1,80,000
Total 6,21,000 1,59,000
Interest 1,000
Total 6,21,000 1,60,000
Time adjustment 80,000 (80,000)
Total 7,01,000 80,000
Less : Bonus issue (5,00,000)
Less : Revaluation loss (50,000)
Total 1,51,000 80,000
Minority : 20% 30,200 16,000
A Ltd. : 80% 1,20,800 64,000
Particulars `
Total 17,00,000
Capital Profit 1,20,800
Total 13,20,800
(C) Goodwill (A - B) 3,79,200
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Particulars `
Total 3,46,200
WN 4 : Calculation of Consolidated Profit & Loss

Particulars `
Add : Share in Subsidiary 64,000
4,46,000
Note :- Interest is added in the current year profit because it has not been accounted.
Q.11. The following are the Balance Sheets of A Ltd. and its subsidiary B Ltd. as on 31.12.2010 :
A Ltd. B Ltd. A Ltd. B Ltd.
` ` ` `
Share capital (` 100) 1,60,000 1,20,000 Fixed Assets 24,000 1,10,000
General Reserve 20,000 15,000 Investments (at cost) 1,40,000 ---
P & L A/c 28,000 24,000 Stock-in-trade 25,000 42,000
Sundry creditors 10,000 9,000 Sundry Debtors 13,000 20,000
Current A/c with A Ltd. --- 12,000 Current A/c with B Ltd. 13,600
Cash and Bank 2,400 8,000
2,18,000 1,80,000 2,18,000 1,80,000
Notes :
(1) A Ltd. holds 1,000 shares of B Ltd. acquired on 30.06.2010.
(2) On 1.1.2010 B Ltd. has ` 12,000 in general Reserve and ` 6,000 in Profit & Loss Account.
(3) Included in the Current A/c with A Ltd. is an amount of ` 400 being interest credited to A Ltd. This interest has
not yet been considered in the books of A Ltd.
(4) Cash-in-transit from B Ltd. to A Ltd. is ` 2,000 as at the close of the business on 31.12.2010.
(5) Stock of A Ltd. includes ` 5,600 worth of purchase on which B Ltd. made a profit of ` 600.
Prepare a consolidated Balance Sheet as at 31.12.2010.
Ans. :-
Consolidated Balance Sheet of A Ltd. and its Subsidiary B Ltd.
as at 31st Dec., 2010
(`
(b) Reserves and Surplus [35,400 + 21,250] 56,650
(a) Trade Payables 19,000
2,62,050

II. Assets
Fixed Assets
(i) Tangible Fixed Assets [24,000 + 1,10,000] 1,34,000
(ii) Intangible [Goodwill] 16,250
(2) Current Assets
(a) Inventories [25,000 + 42,000 - 600] 66,400
(b) Trade Receivable [13,000 + 20,000] 33,000
(c) Cash and Cash equivalent [2,400 + 8,000 + 2,000] 12,400
Total 2,62,050
WN 1 : Analysis of Profit of B Ltd. (Subsidiaries)

General Reserve 12,000 3,000 --- 15,000
Profit & Loss A/c 6,000 --- 18,000 24,000
18,000 3,000 18,000
Time adjustment 10,500 (1500) (9,000)
28,500 1,500 9,000
28,500 1,500 8,400
Minority interest (2/12) 4,750 250 1,500
A Ltd. (10/12) 23,750 1,250 7,500

Particulars `
Total 1,40,000
Total 1,23,750

Particulars `
Revenue General Reserve 250
Less : Minority interest in Stock Reserve (100)
Total 26,400
WN 4 : Calculation of Consolidated Profit / Loss & Reserve

Particulars G/R P&L
Own Balance 20,000 28,000
Add : Share in Subsidiary 1,250 7,500
Add : Unrecorded interest 400
Less : Share in stock reserve (500)
21,250 35,400
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Q.12. The summarized Balance Sheets of Kush Ltd. and Shunk Ltd. as at 31st March, 2010 are as follows :
Fig. in lakhs
Liabilities Kush Ltd. Shuk Ltd. Assets Kush Ltd. Shuk Ltd.
` ` ` `
Share Capital : Plant at costless
Equity shares of Depreciation 86.4 72.9
` 10 each 216.0 108.0 Furniture, Fixtures
Share Premium 32.4 --- & Fittings 23.4 7.2
Capital Reserve on 1.4.09 --- 7.2 Stock at Cost 18.0 13.5
General Reserve on 1.4.09 13.5 9.0 Debtors 73.8 47.6
Profit & Loss A/c 70.2 21.6 Trade Investments --- 2.7
Creditors 29.7 19.7 Goodwill at Cost 45.0 13.6
Investment :
Shuk Ltd. at Cost 97.2 ---
Balance at Bank 18.0 8.0
361.8 165.5 361.8 165.5
Additional Information :
(1) On 1st April, 2009 Kush Ltd. acquired from the shareholders of Shuk Ltd. 8.64 lakhs shares of ` 10 each
in Shuk Ltd. and allotted in consideration thereof 6.48 lakhs of its own shares of ` 10 each at a premium
of ` 5 per share.
(2) The consideration for the shares of Shuk Ltd. was arrieved at inter-alia by valuing certain assets of Shuk
Ltd. on 1st April, 2009 as under :
(i) Plant at ` 90 lakhs.
(ii) Furniture, Fixtures & Fittings at ` 8 lakhs.
(iii) No value on Trade Investment and Goodwill.
No adjustments were made in the books of accounts of Shuk Ltd. in respect of the above valuation.
During 2009-10 there was no purchase or sale of these Assets. It is desired that such adjustments should
however be made in the Consolidated Accounts.
(3) The figures for Plant and Furniture-Fixtures and Fittings at 31.3.2010 shown in the Balance Sheet are
after providing depreciation for 2009-10 at the rates of 10% per annum and 20% per annum respectively,
on the Book values as at 1.4.09.
(4) The Profit and Loss Account of Shuk Ltd. showed a Credit balance of ` 27 lakhs on 1.4.09. A dividend
of 10% was paid in January, 2010 for the year 2008-09. This dividend was credited to Profit and Loss
A/c of Kush Ltd.
(5) The following point was not considered in making out the accounts :
In the year expenses at ` 4,500 per month were incurred by Kush Ld. on behalf of Shuk Ltd. It was by
mistake debited to Profit and Loss Account of Kush Ltd. and nothing has been done in the accounts of
Shuk Ltd.
(6) The stock of Shuk Ltd. included ` 4.5 lakhs of goods received from Kush Ltd. invoiced at cost plus
25 per cent.
(7) Debtors of Shuk Ltd. include ` 3.5 lakhs due from Kush Ltd. whereas Creditors of Kush Ltd. include `3.1
lakhs due to Shuk Ltd., the difference being represented by a cheque in transit.
You are required to consolidate the accounts of the two companies and prepare a Consolidated Bal-
ance Sheet of Kush Ltd. and its subsidiary as at 31st March, 2010. [May. 2010- 20 marks]
Ans. :- Capital Reserve - ` 17,12,000;Consolidated Reserve - ` 13,50,000; Consolidated P&L - ` 64,52,800.

Q.13. The Balance Sheet of Golden and Silver Limited as on 31.3.2006 are given below :
Liabilities Golden Silver Assets Golden Silver
Ltd. Ltd. Ltd. Ltd.
Equity share capital 2,40,000 2,40,000 Fixed Assets 88,000 1,68,000
General reserve 40,000 32,000 Investment 1,80,000 10,000
Profit & Loss accounts 24,000 39,000 Sundry debtors 12,000 30,000
Bills payable 4,000 10,000 Bills receivable 8,000 32,000
Sundry Creditors 8,000 15,000 Stock in trade 20,000 80,000
Cash at bank 8,000 16,000
3,16,000 3,36,000 3,16,000 3,36,000
Note : Contingent liability of Golden Ltd. : Bills discounted not yet matured at ` 5,000.
(i) On 1.10.2003, Golden Ltd. acquired 16,000 shares of ` 10 each at the rate of ` 11 per share.
(ii) Balances to General reserve and Profit and Loss account of Silver Ltd. stood on 1.4.2003 at ` 60,000 and
` 32,000 respectively.
(iii) Dividends have ben paid @ 10% for each of the years 2003-04 and 2004-05. Dividend for the year 2003-04
was paid out of the pre-acquisition profits. No dividend has been proposed for the year 2005-06 as yet and
no provision need to be made in consolidated Balance Sheet. Golden Ltd. has credited all dividends received
to Profit and Loss account.
(iv) On 13.2006, bonus shares were issued by Silver Ltd. at the rate of one fully paid share for every five held
and effect has been given to that in the above accounts. The bonus was declared from general reserves
from out of profits earned prior to 1.4.2003.
(v) On 1.10.2003, Fixed assets was revalued at ` 2,16,000, but no adjustment had been made in the books.
(vi) Depreciation had been charged @ 10% p.a. on the book value as on 1.4.2003 (on straight line method),
there being no addition or sale since then.
(vii) Out of current profits ` 4,000 have ben transferred to General reserve every year.
(viii) Bills receivable of Golden Ltd. include ` 4,000 bills accepted by Silver Ltd. Bills discounted by Golden Ltd.,
but not yet matured include ` 3,000 accepted by Silver Ltd.
(ix) Sundry creditors of Golden Ltd. include ` 4,000 due to Silver Ltd. sundry debtors of Silver Ltd. include `
8,000 due from Golden Ltd.
(x) It is found that Golden Ltd. has remitted a cheque of ` 4,000, which has not yet been received by Silver Ltd.
Prepare consolidated Balance Sheet as at 31.3.2006 of Golden Ltd. and its subsidiary as per Schedule III of
The Companies Act, 2013. [May, 1990, 2000 & Nov. 2006 - 16 Marks]
Ans. :-
Consolidated Balance Sheet of Golden and Group as at 31.3.2006
Particulars Notes `
(I) Equity & Liabilities
(1) Shareholder Fund
(b) Reserves & Surplus 1,29,600
(3) Current Liability
(a) Trade Payable [4000+10,000+ 8000+15000-4000-4000] 29,000
Total 4,59,000
(I) Assets
(a) Fixed Assets - Tangible [1,68,000 + 88000 - 12000 + 3000] 2,47,000
(b) Non-current investment [1,80,000 - 1,76,000 + 10,000] 14,000
(2) Current Assets
(a) Inventories 1,00,000
(b) Trade Receivables [8000 + 32000 - 4000 + 12000 + 30000 - 8000] 70,000
(c) Cash & cash equivalent [8000 + 16000 + 4000] 28,000
Total 4,59,000
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Q.14. (Dec. 2008 16 marks) On 31st March, 2002, the Balance Sheets of H Ltd. and S Ltd. stood as follows :
(`` in 000's)
H Ltd. S Ltd.
Liabilities :
Equity shares capital - Authorised 5,000 3,000
Issued and Subscribed in Equity shares of ` 10 each fully paid 4,000 2,400
General Reserve 928 690
Profit and Loss account 1,305 810
Bills payable 124 80
Sundry Creditors 487 427
Provision for Taxation 220 180
Other Provisions 65 17
7,129 4,604
Assets :
Plant and Machinery 2,541 2,450
Furniture and Fittings 615 298
Investment in the Equity shares of S Ltd. 1,500 ---
Stock 983 786
Debtors 700 683
Bills Receivables 120 95
Cash and Bank balance 410 102
Sundry Advances 260 190
7,129 4,604
Following Additional Information is available :
(1) H Ltd. purchased 90 thousand Equity Shares in S Ltd. on 1st April, 2001 at which date the following balances
stood in the books of S Ltd. General Reserve ` 1,500 thousand, Profit and Loss Account ` 633 thousand.
(2) On 14th July, 2001 S Ltd. declared a dividend of 20% out of pre-acquisition profits and paid corporate dividend
tax (including surcharge) at 11%. H Ltd. credited the dividend received to its Profit and Loss Account.
(3) On 1st November, 2001 S Ltd., issued 3 fuly paid Equity Shares of ` 10 each, for every 5 shares held as
bonus shares out of pre-acquisition general reserve.
(4) On 31st March, 2002, the stock of S Ltd. included goods purchased for ` 50 thousand from H Ltd., which had
made a profit of 25% on Cost.
Prepare a consolidated Balance Sheet as on 31st March, 2002. [Nov. 2002,2016 & May, 2004 - 16 Marks]
Ans.:-
Consolidated Balance Sheet of A Ltd. & its Subsidiary B Ltd. & C Ltd. as at 31.12.2000
Particulars Notes `
(a) Share Capital 4,000
(b) Reserve and Surplus 3,063
(3) Current Liabilities & Provision
(a) Trade Payables (204 + 914) 1,118
(b) Short term provision (400 + 82) 482
10,223
(II) Assets
(1) Fixed Assets
(a) Tangible 5,904
(2) Current Assets
(a) Inventories 1,759
(b) Trade Receivables (1,383 + 215) 1,598
(c) Cash & cash equivalent 512
(d) Short term advances 450
10,223

Q.15. On 1st April, 1999 Anand Limited paid ` 1,10,000 for 90% of the issued capital to Bhupesh Limited. The assets and
liabilities of the two companies as on 31st March, 2000 were as follows :
Anand Ltd. Bhupesh Ltd.
` `
Fixed Assets 94,000 96,000
Current Assets 30,000 18,000
Investment-at cost 1,56,000 ---
Goodwill 20,000 6,000
3,00,000 1,20,000
Issued Share Capital - (Re. 1 each fully paid 1,80,000 60,000
General Reserve - 1st April, 1999 45,000 20,000
Profit and Loss Account - 31st March, 2000 36,000 20,500
Current liabilities 39,000 9,500
6% Debentures held by Anand Ltd. --- 10,000
3,00,000 1,20,000
(1) On April 1, 1999 the opening credit balance of Anand Ltd.'s profit and loss account was ` 26,000. Out of this
balance, a 10% dividend was paid subsequently.
(2) The Profit and Loss Account of Bhupesh Limited showed the following :
` `
Balance b/f on April 1, 1999 22,000
Net Profit for the year ended 31st March, 2000 12,000
34,000
Less : Dividend paid
Final for the year ended 31st March, 1999 9,000
Interim on 30.9.99 4,500 13,500
Balance c/f on 31st March, 2000 20,500
(3) Included in the stock-in-trade of Bhupesh Limited at balance sheet date were goods purchased from Anand
Limited for ` 6,000 on which there was a profit of 50% on cost of Anand Limited.
(4) All dividends received by Anand Limited have ben correctly recorded in the books of account.
Prepare a Consolidated Balance Sheet as on 31st March, 2000 and show your workings.
Ans. :-
Consolidated Balance Sheet of Anand Ltd. and its subsidiary Bhupesh Ltd.
Note No. `
(i) Equity and Liabilities
(b) Reserves and Surplus [45,000 + 40,750] 85,750
(3) Current Liabilities [39,000 + 9,500] 48,500
Total 3,24,300
(ii) Assets
(1) Non-current assets
(a) Fixed assets
Tangible [94,000 + 96,000] 1,90,000
Intangible 44,200
(b) Non-current investment [1,56,000 - (1,10,000 - 8,100) - 10,000] 44,100
(2) Current Assets [30,000 + 18,000 - 2,000] 46,000
Total 3,24,300
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WN 1 : Analysis of Profit of Bhupesh Ltd. (Subsidiaries)
General Reserve 20,000 --- --- 20,000
Profit and Loss A/c 22,000 --- (1,500) 20,500
Total 42,000 --- (1,500)
Add : Dividend Paid --- --- 9,000
Add : Interim Dividend --- --- 4,500
Total 42,000 --- 12,000
Less : Dividend Paid (9,000) --- (4,500)
Total 33,000 --- 7,500
Minority Interest : 10% 3,300 --- 750
Anand Ltd. : 90% 29,700 --- 6,750

Particulars `
Less : Pre-acquisition dividend (8,100)
Total 1,01,900
Total 83,700
Add : Balance Sheet Goodwill of Anand Ltd. 20,000
Add : Balance Sheet Goodwill of Bhupesh Ltd. 6,000
44,200

Particulars `
Share Capital 6,000
Revenue Profit & Loss 750
Total 10,050
WN 4 : Calculation of Consolidated P/L

Particulars `
Own Balance 36,000
Add : Share in Subsidiary 6,750
Less : Stock Reserve [6,000 x 50 / 150] (2,000)
40,750
Note : Since Dividend has been correctly recorded by holding company hence, not rectified in CPL. But, in cost of
control dividend has been rectified because cost of investment after dividend rectification is not given in question.

Q.16. (Study Material) Able Ltd. made an offer to acquire all the shares of Baker Ltd. at a price of ` 25 per share, to be
satisfied by the allotment of five shares in Able Ltd. for every four shares in Baker Ltd.
By the date of expiration of the offer, which was on 1st January, 2010, shareholders owning 75% of the shares in
Baker Ltd accepted the offer and the acquisition was effective from that date.
The accounting date of Baker Ltd. was on 31st March in each year, but to conform to Able Ltd. accounts were
prepared to 30th June, 2010, covering the fifteen months to the date.
The draft summarized accounts of the companies on 30th June, 2010 which do not include any entries regarding
the acquisition of shares in Baker Ltd, were as follows :
Balance Sheet as on 30th June, 2010
Liabilities Able Ltd. Baker Ltd.
` ` ` `
Share capital
Equity shares of ` 10 each
Authorized : 3,00,000 75,000
Issued & Fully paid 1,50,000 60,000
Reserves & Surplus :
General Reserve 55,000
Profit & Loss Account 62,000 1,17,000 20,000
Current liabilities 27,000 7,000
Provision for taxation 33,000 6,000
3,27,000 93,000
Assets
Freehold property, at cost 2,00,000 38,000
Plant & Machinery at cost 50,000 12,000
Less : Depreciation 18,000 32,000 3,000 9,000
Quoted Investment at cos 7,000
Stock at cost 32,000 21,000
Debtors 41,000 17,000
Balance at Bank 15,000 8,000
3,27,000 93,000
Profit & Loss Account for the period ended on 30th June, 2010
Able Ltd. Baker Ltd.
One Year 15 months
` `
Balance brought forward 14,000 12,000
Profit for the period 80,000 18,000
94,000 30,000
Taxation for the period 32,000 6,000
Interim Dividend paid, on 30th Nov., 2009 --- 4,000
Balance carried forward 62,000 20,000
94,000 30,000
The directors of Able Ltd. recommended a final dividend of 20% to the shareholders on register as on 30th June,
2010. The Directors of Baker Ltd. proposed a final dividend of 12½% payable on 30th September, 2010.
You are required to prepare the consolidated Balance Sheet of Able Ltd. and Baker Ltd. on 30th June, 2010.
Ans. :- Goodwill - ` 84,225.
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Q.17. (Dec. 2013 - 15 Marks) Astha Ltd. acquired 80% of both classes of shares in Birat Ltd. on 1.4.2007. The draft
Balance Sheets of two companies on 31st March, 2008 were as follows :
(` in 000's)
Liabilities Astha Birat Assets Astha Birat
Ltd. Ltd. Ltd. Ltd.
Share capital : Plant & Machinery 2,060 600
Equity shares of ` 10 each, Furniture & fixtures 600 540
fully paid up 3,000 600 Investments in equity
14% Preference shares of shares of Birat Ltd. 1,920 ---
` 100 each, fully paid up --- 400 in preference shares
General reserve 1,900 40 of Birat Ltd. 320 ---
Profit and loss account 1,600 720 Stock 680 404
Creditors 300 320 Debtors 560 316
Cash at bank 660 220
6,800 2,080 6,800 2,080
Note :
Contingent liability - Astha Ltd. : Claim for damages lodged by a contractor against the company pending
in a law-suit - ` 1,55,000.
Additional Information :-
(i) General reserve balance of Birat Ltd. was the same as on 1.4.2007.
(ii) The balance in Profit and Loss A/c of Birat Ltd. on 1.4.2007 was ` 3,20,000, out of which dividend of 16%
p.a. on the Equity capital of ` 6,00,000 was paid for the year 2006-07.
(iii) The dividend in respect of preferene shares of Birat Ltd. for the year 2007-08 was still payable as on
31.3.2008.
(iv) Asthal Ltd. credited its Profit and Loss A/c for the dividend received by it from Birat Ltd. for the year 2006-07.
(v) Sundry creditors of Astha Ltd. included an amount of ` 1,20,000 for purchases from Birat Ltd. on which the
later company made a loss of ` 10,000.
(vi) Half of the above goods were still with the closing stock of Astha Ltd. as at 31.3.2008.
(vii) At the time of acquisition by Astha Ltd., while determining the price to be paid for the shares in Birat Ltd. it
was considered that the value of plant and machinery was to be increased by 25% and that of furniture and
fixtures reduced to 80%. There was no transaction of purchase or sale of these assets during the year. The
directors wish to give effect to these revaluation in the consolidated balance sheet.
(viii) The directors of Astha Ltd. are of opinion that disclosure of its contingent liability will seriously predudice the
company's position in dispute with the contractor.
Prepare consolidated balance sheet as at 31st March, 2008, as per Schedule III of The Companies Act, 2013
assuming the rate of depreciation charged as 25% p.a. and 10% p.a. on plant and machinery and furniture and
fixtures respectively. Workings should be part of the answer. [May 2008 - 16 Marks]
Ans.:- Goodwill - ` 1088.

Q.18.The following are the summarized Balance Sheet of X Ltd. and Y Ltd. as at 31st December, 1992 :
Authorized, issued & paid-up capital Fixed Assets 1015 809
Equity shares of ` 10 each 800 400 Investments in Y Ltd.:
12% preference shares of ` 10 each --- 200 30,000 equity shares 450 ---
General Reserve 360 200 15,000 Pref. shares 180 ---
P & L A/c 240 140 250 - 10% debentures
10% debentures of ` 100 each --- 50 (at face value) 25 ---
Proposed dividends : Current assets 260 480
On equity shares 120 60
On preference shares --- 24
Debentures interest accrued --- 5
Trade creditors 410 210
1930 1289 1930 1289
1. X Ltd. acquired its interest in Y Ltd. on 1st January, 1992, when the balance to the General Reserve Account
of Y Ltd. was ` 1,80,000.
2. The balance to the profit and loss account of Y Ltd. as on 31st December, 1992 was arrived at as under :
` `
Balance on 1.1.1992 40,000
Current Profit 2,04,000
2,44,000
Deduct Transfer to General Reserve 20,000
Proposed Dividends 84,000 1,04,000
Balance as on 31.12.1992 1,40,000
3. Balance to the profit and loss acocunt of Y Ltd. as on 1.1.1992 was after providing for dividends on preference
shares and 10% dividends on equity shares for the year ended 31st December, 1991; these dividends were
paid in cash by Y Ltd., in May, 1992.
4. No entries have ben made in the books of X Ltd. for debentures interest due or for proposed dividend of Y
Ltd. for the year ended 31.12.1992.
5. Mutual indebtedness of ` 24,000 is reflected in the balances shown in the Balance Sheets.
6. Y Ltd. in October, 1992, issued fully paid up bonus shares in the ratio of one share for every four shares held
by utilizing its general reserve. This was not recorded in the books of both the companies.
From the above information you are required to prepare the consolidated Balance Sheet of X Ltd., and its subsidiary
Y Ltd. as at 31st December, 1992. [May 1993 - 20 marks]
Ans. :- Capital Reserve - ` 33,000; Balance Sheet Total - ` 2540.
Q.19. (RTP - Nov. 06) The following are the balance sheets of S Ltd. and its holding company H Ltd. as at 31st March,
2006 :
Liabilities S Ltd. H Ltd. Assets S Ltd. H Ltd.
10% preference shares of Fixed Assets 4,40,000 5,00,000
` 100 each 1,60,000 --- Investment : 15,000
Equity shares of ` 10 each 2,00,000 6,00,000 Equity shares in S Ltd. --- 3,30,000
General Reserve 80,000 1,00,000 100 6% debentures in S Ltd. --- 10,000
Profit and Loss A/c (1.4.05) 25,000 50,000 Current Assets 2,87,000 2,60,000
Profit for the year 65,000 1,20,000
6% Debentures of ` 100 each 40,000 50,000
Debenture interest accrued 2,400 ---
Bills payable to H Ltd. 25,000 ---
Sundry Creditors 1,29,600 1,80,000
7,27,000 11,00,000 7,27,000 11,00,000
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Other information is as under :
(a) S Ltd. incurred a major expenditure of ` 30,000 on repairs of machinery in the beginning of the current year
and wrongly charged the amount to Profit and Loss Account. Rate of depreciation on Fixed Assets is 10%.
(b) No entries have been made in the books of H Ltd. for debenture interest due from S Ltd. for the year ended
31st March, 2006.
(c) H Ltd. acquired shares in S Ltd. on 31st March, 2006. For the purpose of acquisition of shares, fixed assets
of S Ltd. were revalued at ` 5,00,000.
(d) Contingent liability of H Ltd. ` 50,000 is in respect of bills discounted which includes bills of ` 10,000
accepted by S Ltd.
(e) Ignore tax aspects.
You are required to prepare consolidated balance sheet of H Ltd. and its subsidiary S Ltd. as at 31st March, 2006.
Ans. :-
Consolidated Balance Sheet of H Ltd. and its subsidiary S Ltd.
Note No. `
(I) Equity and Liabilities
(b) Reserves and Surplus [1,00,000 + 1,70,000 + 600] 2,70,600
(3) Non Current Liabilities
(a) Long term borrowing - 6% Debenture (40,000 + 50,000 - 10,000) 80,000
(a) Trade Payable (Creditors + Bills Payable - 15,000) 3,19,600
(b) Other Current Liability (Debenture Interest due - 600 contra) 1,800
(c) Short Term Provision (Minority Interest in pref. proposed dividend) 16,000
Total 15,51,500
(II) Assets
(a) Tangible Fixed assets [4,40,000 + 5,00,000 + 27,000 + 33,000] 10,00,000
(b) Intangible Assets (Goodwill) 19,500
(2) Current Assets [2,87,000 + 2,60,000 - 15,000 + 600 - 600] 5,32,000
Total 15,51,500
WN 1 : Analysis of Profit of S Ltd. (Subsidiaries)

General Reserve 80,000 --- --- 80,000
Profit and Loss A/c 90,000 --- --- 90,000
Total 1,70,000 --- ---
Add : Rectification of Machinery [30,000 x 90%] 27,000 --- ---
Add : Revaluation Profit 33,000 --- ---
Total 2,30,000 --- ---
Less : Pref. Dividend - Para 27 (16,000) --- ---
Total 2,14,000
Minority Interest = 25% 53,500 --- ---
H Ltd. = 75% 1,60,500 --- ---

WN 2 : Calculation of Revaluation Profit

Particulars `
Market value on the date of acquisition 5,00,000
Less : Book Value on the date of acquisition [4,40,000 + 27,000] 4,67,000
Revaluation Profit 33,000

Particulars `
Amount Invested in equity shares 3,30,000
Total 3,30,000
Equity share capital 1,50,000
Capital Profit 1,60,500
Total 3,10,500

Particulars `
Equity Share Capital 50,000
Preference Share Capital 1,60,000
Total 2,63,500
Note : Since date of acquisition and date of balance sheet is same hence all the profit are of capital nature.
Q.20. A Ltd. has acquired 80% share in the B Ltd. for ` 25 lacs. The net assets of B Ltd. on the day are ` 22 lacs. During
the year A Ltd. sold the investment for ` 30 lacs and net assets of B Ltd. on the date of disposal was ` 35 lacs.
Calculate the profit or loss on disposal of this investment to be recognised in consolidated financial statement.
Ans. :- Loss on Disposal - ` 5,40,000.
Q.21. A Ltd. had acquired 80% share in the B Ltd. for ` 15 lacs. The net assets of B Ltd. on the day are ` 22 lacs.
During the year A Ltd. sold the investment for ` 30 lacs and net assets of B Ltd. on the date of disposal was ` 35
lacs. Calculate the profit or loss on disposal of this investment to be recognised in consolidated financial statement.
Ans. :- Profit on disposal - ` 4,60,000. (May, 2013 - 5 Marks)
Q.22. The summarized Balance Sheet of A Limited and B Limited are as follows :
Balance Sheet as at 31st December, 2000
A Ltd. B Ltd.
` `
Source of Funds :
Share Capital in equity shares of ` 10 each 2,00,000 50,000
Reserves 20,000 5,000
P & L A/c as on 1st January, 2000 30,000 10,000
Profit for the year 8,000 8,000
Add : Dividends from B Ltd. 4,000 ---
Less : Dividends paid --- (5,000)
Creditors 30,000 20,000
2,92,000 88,000
Application of Funds :
Fixed Assets 2,00,000 80,000
Current Assets 32,000 8,000
Shares in B Ltd. at cost - 3,000 shares 60,000 ---
2,92,000 88,000
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A Limited had acquired 4,000 shares in B Ltd. at ` 20 each on 1st January, 2000 and sold 1,000 of them at the
same price on 1st October, 2000. The sale is ex dividend. An interim dividend of 10% was paid by B Ltd. on 1st
July, 2000.
Draft the consolidated Balance Sheet as at 31st December, 2000 as per Schedule III of The Comanies Act, 2013.
[Nov. 2001 - 16 Marks]
Ans. :-
Consolidated Balance Sheet of A Ltd. and its subsidiary of P Ltd. as at 31st Dec. 2000
Particulars Notes `
(b) Reserves & Surplus (43,800 + 20,000) 63,800
(3) Current Liabilities & Provisions
(a) Trade Payable 50,000
3,41,000
(II) Assets
(i) Fixed Assets
(a) Tangible 2,80,000
(b) Intangible 21,000
(2) Current Assets 40,000
3,41,000
WN 1 : Analysis of Profit of C Ltd.

Pre-acquisition Post Acquisition Total
Capital R P&L Rgr
General Reserve 5,000 --- --- 5,000
Profit & Loss 10,000 3,000 --- 13,000
Total 15,000 3,000 ---
Add : Interim dividend paid --- 5,000 ---
Total 15,000 8,000 ---
Time Adjustment --- --- ---
Total 15,000 8,000 ---
Less : Dividend paid --- (5,000) ---
Total 15,000 3,000 ---
Minority Interest @ 40% 6,000 1,200 ---
A Ltd. @ 60% 9,000 1,800 ---

Particulars `
Amount Invested [4,000 x 20] 80,000
Less : Investment sold [80,000 x 1,000 / 4,000] (20,000)
Total 60,000
(B) Share of Net Assets Represented by
Total 39,000


Particulars `
Revenue Profit 1,200
Total 27,200
WN 4 : Calculation of Consolidated Profit & Loss

Particulars `
Balance of A Ltd. 42,000
Share in B Ltd. 1,800
Total 43,800
Q.23. (RTP - May, 2018) From the following summarized Balance Sheet of X Ltd. and its subsidiary Y Ltd., prepare a
consolidated Balance Sheet as on 31st December, 1999.
` ` ` `
Share Capital Sundry Assets 93,000 32,000
Equity shares of ` 10 each 1,00,000 20,000 Shares in Y Ltd.
Profit on sale of shares 3,000 --- 1,200 shares at
P & L A/c ` 15 each 18,000 ---
Brought forward 6,000 7,200
For the year 2,000 4,800
1,11,000 32,000 1,11,000 32,000
X Ltd. bought in earlier year 1,600 equity shares in Y Ltd. @ 15 when the Profit and Loss Account balance in Y Ltd.
was ` 4,400. X sold 400 shares @ ` 22.50, credited the difference betwen the sale proceeds and cost to "Profit on
sale of investment account" on 30th June, 1999 and crediting the balance to the investment account. Profit during
the year accrued uniformly.
Ans .:- Goodwill - ` 3,360; Minority Interest - ` 12,800.
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Q.24. Following are the Balance Sheets of H Ltd. and S Ltd. as at 31st March, 1990 :
` in '000)
(`
Liabilities H Ltd. S Ltd. Assets H Ltd. S Ltd.
Equity share Land & Building 200 100
Capital of ` 10 each fully paid 600 100 Machineries 280 50
General reserve 50 30 7,000 shares of S Ltd. 100 ---
P & L A/c 80 40 Stock 70 40
Sundry creditors 100 40 Debtors 150 20
Bills payable 10 15 Bills receivable 10 ---
Cash at Bank 30 15
840 225 840 225
Additional information :
(1) All the Bills receivable of H Ltd. including those discounted were accepted by S Ltd.
(2) When 6,000 shares were acquired by H Ltd. in S Ltd., S Ltd. had ` 20,000 General Reserve and ` 5,000
Credit balance in Profit and Loss Account.
(3) At the time of acquisition of further 1,000 shares by H Ltd., S Ltd. had ` 25,000 General Reserve and `
28,000 Credit Balance in Profit and Loss Account from which 20% dividend shares were credited to Profit
and Loss Account.
(4) Stock S Ltd. include ` 20,000 purchased from H Ltd., which has made 25% profit on cost.
(5) Both the companies have proposed dividend - H Ltd. 10% S Ltd. 15% but no effect has yet been given in the
above Balance Sheets. [Nov. 1988; 1990 - 20 Marks]
Ans. :-
Consolidated Balance Sheet of H Ltd. and its subsidiary S Ltd.
Note No. `
(a) Share Capital 600.0
(b) Reserves and Surplus [98.2 + 56.5] 154.7
(2) Minority Interest 51
(a) Trade Payable [100 + 40 + 10 + 15 - 10] 155.0
Total 960.7
(ii) Assets
(a) Fixed Assets
Tangible assets [200 + 100 + 280 + 50] 630.0
Intangible Assets (Goodwill) 9.7
(2) Current Assets
(a) Inventories [70 + 40 - 4] 106.0
(b) Trade Receivable [150 + 20 + 10 - 10] 170.0
(c) Cash & Cash equivalent [30 + 15] 45.0
Total 960.7

WN 2 : Analysis of Profit of S Ltd. (Subsidiaries) - First Date of Acquisition

General Reserve 20 10 --- 30
Profit and Loss 5 --- 35 40
Total 25 10 35
Add : Dividend Paid --- --- 20
Total 25 10 55
Less : Dividend paid --- --- (20)
Total 25 10 35
Share of H Ltd. @ 60% 15 6 21
WN 3 : Analysis of Profit of S Ltd. (Subsidiaries) - Second Date of Acquisition

Profit and Loss 28 --- 12 40
Total 53 5 12
Add : Dividend Paid --- --- 20
Total 53 5 32
Less : Dividend paid (20) --- ---
Total 33 5 32
Minority interest @ 30% 9.9 1.5 9.6
Share of H Ltd. @ 10% 3.3 .5 3.2

Particulars `
Amount Invested in equity shares 100
Less : Pre-acquisition dividend 2
Total 98
Equity share capital 70
Capital Profit [15 + 3.3] 18.3
Total 88.3
(C) Goodwill (A - B) 9.7

Particulars `
Equity Share Capital 30
Capital Profit 9.9
Revenue General Reserve 1.5
Revenue Profit 9.6
Total 51.0
WN 6 : Calculation of consolidated P/L & Reserves

Profit & Loss Reserves
Own Balance 80 50
Add : Share in subsidiary 24.2 6.5
Less : Rectification of dividend [20 x 10%] (2) ---
Less : Unrealised profit [20 x 25/125] (4) ---
98.2 56.5
Note : It is assumed that dividend is proposed after balance sheet date.
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Q.25. (Study Material)The Balance Sheet of X Ltd. and its subsidiary Y Ltd. as on 31st December, 1999 are given below :
` ` ` `
Equity shares of ` 10 each 4,00,000 2,00,000 Goodwill 50,000 30,000
10% Preference shares of Machinery 80,000 50,000
` 10 each 80,000 40,000 Vehicles 1,60,000 75,000
General Reserve 80,000 50,000 Furniture and fixtures 60,000 40,000
Profit & Loss 1,30,000 1,00,000 Investments 2,50,000 45,000
Bank Overdraft 30,000 20,000 Stock-in-trade 50,000 50,000
Creditors 58,000 46,000 Cash and Bank 57,000 89,000
Bills Payable 3,000 Debtors 70,000 80,000
Bills Receivable 1,000 ---
7,78,000 4,59,000 7,78,000 4,59,000
(1) X Ltd. acquired 8,000 equity shares of Y Ltd. on 1.1.1998 and further acquired 7,000 equity shares on
1.1.1999 at cost of ` 96,000 and ` 80,000 respectively.
(2) The preference capital of Y Ltd. includes nominal value of ` 15,000 held by X Ltd. acquired on 1.1.1997 at
a cost of ` 36,000.
(3) The Profit and Loss Account of Y Ltd. had a credit balance of ` 40,000 as on 1.1.1999 and that of General
Reserve on that date was ` 20,000 whereas they were ` 25,000 and ` 10,000 respectively on 1.1.98.
(4) Y Ltd. had paid dividends @ 5% on its equity paid up capital out of its Profit and Loss Account balance on
1.1.1999 for the year 1998. The entire dividend received by X Ltd. has been credited to its Profits and Loss Account.
(5) In term of resolution dated 30th November, 1999 Y Ltd. had allotted bonus shares @ 1 for every 10 shares
held. No accounting effect has yet been given.
(6) Bills receivable of X Ltd. was drawn upon Y Ltd. Bills amounting to ` 2,000 have been discounted with Bank.
(7) During the year 1999 X Ltd. purchased goods from Y Ltd. for ` 10,000 at a sales price of ` 12,000. 40% of
these goods remained unsold on 31.12.1999.
(8) On 1.1.1998 machinery of Y Ltd. was under valued by ` 10,000 for which necessary adjustments are to be
made. The company charges depreciation @ 10%.
Prepare Consolidation Balance Sheet of X Ltd. and its subsidiary Y Ltd. as on 31st December, 1999.
Ans. :- Goodwill - ` 86,250, Adapted according to AS 21.
Q.26. Hanish Ltd. purchased on 1.4.1998 8,000 equity shares of ` 100 each in Sunil Ltd. when Sunil Ltd. had ` 10,00,000
share capital.
It sold 500 such shares on 1.4.1999 and purchased 1,000 shares on 1.4.2000.
Sunil Ltd. paid 15% dividend each year in September and there was no change in Share Capital Account up to
31.3.2001. Profit and Loss Account balance in Sunil Ltd. and Investments of Hanish Ltd. in Sunil Ltd. on different
dates was as under :
P & L Account Investment of Hanish Ltd.
Balance of Sunil Ltd. in Sunil Ltd.
1st April 1998 5,00,000 12,80,000
31st March 1999 6,20,000 12,80,000
31st March 2000 7,00,000 11,90,000
31st March, 2001 8,00,000 14,00,000
The amounts shown as investments represent cost price as reduced by sales and increased by further purchase
without making any adjustment for profit or loss on sale and dividend.
Prepare statements to show the relevant figures as on 1.4.98, 31st March, 1999, 2000 and 2001 for preparation of
Consolidated Accounts in respect of :
(1) Goodwill or Cost of Control
(2) Revenue Proffit [May 1988 - 15 Marks]
Ans. :- Goodwill - 80,000, 80,000; 75,000; 1,15,000; Revenue Profit - 2,16,000; 2,62,500; 3,62,5000.

Q.27.From the Balance Sheets of CAT Ltd. and RAT Ltd. as on 31.3.2013 furnished below, read with supplementary
information hereunder, you are required to prepare Consolidated Balance Sheet of CAT Ltd. as at 31st March,
2013 as per Schedule III of The Companies Act, 2013.
Liabilities CAT RAT Assets CAT RAT
` ` ` `
Equity Shares (` 10) 24,00,000 2,25,000 Fixed Assets (Tangible) 38,61,650 17,50,000
9% Cumulative Pref. Investments in RAT Ltd. 23,51,250 ---
shares (` 100) --- 20,25,000 Current Assets 1,87,500 18,60,000
Profit & Loss Account 29,10,000 2,60,000
12% Secured Debentures --- 6,50,000
Creditors (Trade) 10,90,400 4,50,000
64,00,400 36,10,000 64,00,400 36,10,000
Supplementary Information :
(1) CAT Ltd. was formed on the First of April, 2012 with an Authorized Capital of 3,00,000 Equity Shares of `
10 each. On 1st April, 2012 it acquired from the open market 9,000 equity shares in RAT Ltd. at ` 13 per
share. On 1st of August 2012 CAT Ltd. made a further acquisition of 4,950 Equity shares in RAT Ltd. @ `
15 per share and 20,000, 9% Cumulative Preference shares for ` 21,60,000, from the existing sharehold-
ers of RAT Ltd. The Shares acquired on 1st August, 2012 were Ex-Bonus and Ex-Dividend.
(2) On 1st August, 2012, CAT Ltd. received Bonus entitlements from RAT Ltd. @ 1 : 4 held, together with 12%
equity Dividend from RAT Ltd. The equity dividend received was credited to Profit and Loss Account by
CAT Ltd. Both the bonus issue and the dividend payment have been considered in the Profit and Loss
Account of RAT Ltd. on 1st August, 2012 itself.
(3) The Profit & Loss Account of CAT Ltd. included Current Year Profits amounting to ` 3,75,000 earned after
debiting a monthly sum of ` 8,000 in its P&L Account being expenditure incurred on behalf of RAT Ltd. The
entry to record the amount due from RAT Ltd. was not passed neither in the books of CAT Ltd. nor in the
books of RAT Ltd.
(4) RAT Ltd. earned a profit of ` 1,92,000 for the year ended March 2013 which included ` 61,000 towards
insurance claim received for loss of stock by a fire accident on 30th June, 2012. The cost of such stock,
which is part of the opening stock of the company as on 1st April, 2012, was ` 1,09,000.
(5) RAT Ltd. has discharged its obligations towards Preference Dividend only up to 31st March 2011.
(6) A 10% equity dividend has been proposed by CAT Ltd. which is not provided for as yet.
(Nov., 2000 & 2013 - 16 Marks)
Ans. :-
Consolidated Balance Sheet of CAT Ltd. and its Subsidiary RAT Ltd. as at 31st March, 2013
(`
(3) Non-Current Liabilities
(a) Long Term borrowing 6,50,000
(b) Other Liabilities & Provision 2,40,000
77,90,800
II. Assets
Fixed Assets
(i) Tangible Fixed Assets 56,11,650
(ii) Intangible Fixed Assets 1,31,650
77,90,800
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Q.28.‘HIM’ Limited is a company carrying on the business of beauty products and is having a subsidiary ‘SIM’ Limited.
Their Balance-sheets as on 31st March 2014 were as under :
Equity and Liabilities HIM Limited SIM Limited
` `
Shareholders’ Funds
Share Capital 25,00,000 5,80,000
Reserves and Surplus
General Reserves 2,00,000 1,20,000
Current Liabilities
Trade Payable 4,55,000 2,35,500
Bills Payable 28,000 83,000
Total Liabilities 34,95,500 12,23,500
Assets
Fixed Assets 21,70,000 6,25,000
Non-current Assets
Investments
4060 shares in SIM Limited 5,10,000 ---
Current Assets
Inventories 4,80,000 3,19,200
Trade Payable 1,80,000 1,64,000
Bills Receivable 68,000 1,00,000
Cash and Bank Balances 87,500 15,300
34,95,500 12,23,500
HIM Limited has also given the following information :
(i) HIM Limited has acquired the shares in SIM Limited in two lots on two different dates. The relevant infor-
mation at the time of acquisition of shares was as under :
No. of Shares Balance in General Balance in Profit and
acquired Reserves Loss Account
Ist Acquisition 3480 80,000 25,000
IInd Acquisition 580 85,000 1,02,000
(ii) Bill Receivable of HIM Limited includes ` 15,000 being acceptance from SIM Limited.
(iii) Both the companies have declared dividends of 10% for the year ended on 31st March, 2014, but it has not
been provided in the books of accounts.
(iv) SIM Limited’s inventory includes stock of ` 1,45,000 purchased from HIM Limited. HIM Limited sells goods
at mark up of 25% on its Cost.
Prepare the consolidated Balance Sheet of HIM Limited along with ‘Notes’ to accounts.
(Nov., 2014 & 2017 - 16 Marks)

Ans. :-
Consolidated Balance Sheet of HIM and it’s Subsidiary SIM Ltd. as at 31.3.2014
Particulars Notes `
(b) Reserve & Surplus 1 3,79,300
(2) Minority Interest [WN 5] 2,54,100
(a) Trade Payable 2 7,86,500
(b) Short Term provision 3 2,67,400
41,87,300
(II) Assets
(a) Fixed Assets
(i) Tangible (21,70,000 + 6,25,000) 27,95,000
(ii) Intangible - Goodwill (WN 4) 22,300
(2) Current Assets
(a) Inventories (4,80,000 + 3,19,200 - 29,000) 7,70,200
(b) Trade Receivable 2 4,97,000
(c) Cash and cash equivalent (87,500 + 15,300) 1,02,800
41,87,300
Notes to Accounts
(1) Reserve and Surplus
Particulars `
Profit and Loss Account 1,51,800
General Reserve 2,27,500
3,79,300
(2) Trade Payable and Receivable
Trade Payable Trade Receivable
Trade payable & Receivable
HIM Ltd. 4,55,000 1,80,000
SIM Ltd. 2,35,500 1,64,000
Total 8,01,500 5,12,000
Contra cancellation (15,000) (15,000)
7,86,500 4,97,500
(3) Short-term Provision
Particulars `
Proposed dividend of HIM Ltd. 2,50,000
Minority interest in proposed dividend of SIM Ltd. 17,400
2,67,400
WN 1 : Analysis of Holding Pattern
3480
Acquisition 1 : x 1 00 = 6 0 %
5800
580
Acquisition 2 : x 100 = 10%
5800
Note : Face value of share is assumed ` 100.
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WN 2 : Analysis of Profit and Reserve of SIM Ltd. with reference to Acquisition 1:

Profit and Loss Account 25,000 1,80,000 --- 2,05,000
General Reserve 80,000 --- 40,000 1,20,000
Total 1,05,000 1,80,000 40,000
Share of HIM Ltd. @ 60% 63,000 1,08,000 24,000
WN 3 : Analysis of Profit and Reserve of SIM Ltd. with reference to Acquisition 2 :

Profit and Loss 1,02,000 1,03,000 --- 2,05,000
General Reserve 85,000 --- 35,000 1,20,000
Total 1,87,000 1,03,000 35,000
Minority Interest @ 30% 56,100 30,900 10,500
HIM Ltd. @ 10% 18,700 10,300 3,500
Share of Acquistiion 1 - 60% 63,000 1,08,000 24,000
Total of Holding 81,700 1,18,300 27,500

(B) Share of Net Assets
Share Capital (5,80,000 x 70%) 4,06,000
4,87,700

Particulars `
Share in share capital (5,80,000 x 30%) 1,74,000
Revenue General Reserve 10,500
Minority Interest in equity proposed dividend [5,80,000 x 10% x 30%] (17,400)
WN 6 : Calculation of Consolidated
P&L GR
HIM Ltd. Balance 3,12,500 2,00,000
Share in SIM Ltd. 1,18,300 27,500
Proposed dividend of HIM [25,00,000 x 10%) (2,50,000) ---
Stock Reserve [1,45,000 x 25 / 125] (29,000) ---
1,51,800 2,27,500

6. Treatment of Foreign Subsidiaries in CFS

Q.29. The draft Balance Sheets of X Ltd. and its American Subsidiary Y Inc. is as at 31st March, 2000 are :
Assets X Ltd. Y Ltd.
` $
Fixed Assets 18,00,000 20,000
Investments in Y Inc. at cost 16,00,000
Stocks 12,00,000 30,000
Debtors 24,00,000 60,000
Cash and Bank 8,00,000 10,000
78,00,000 1,20,000
Liabilities
Equity Share Capital 30,00,000 30,000
Profit and Loss Account 20,00,000 40,000
Loan 12,00,000 20,000
Trade Creditors 6,00,000 10,000
Taxation 10,00,000 20,000
78,00,000 1,20,000
X Ltd. acquired 80% of shares in Y Inc. on 1st April, 1999, when the Profit and Loss Account showed a Balance of
$ 23,000 (before dividend). Y Inc. paid in September, 1999 dividend for 1998-1999 $ 3,000. When Y Inc. remitted
the amount to X Ltd., the exchange rate was 1 $ = ` 40. In Investment Account of X Ltd., so far, only one entry had
been made on the acquisition of shares.
The exchange rate prevalent on the relevant dates were :
1st April, 1999 1 $ = ` 30
31st March, 2000 1 $ = ` 42
X Ltd. decided to amortised goodwill if any over a period of 8 year.
There has been no movement in the fixed assets or share capital of Y Inc. during the year, Prepare the consolidated
Balance Sheet of X Ltd. and its subsidiary, Y Inc. at 31st March, 2000 in accordance with Schedule III of the
Companies Act, 2013. (May, 1999 - 16 Marks)
Ans. :-
Consolidated Balance Sheet of X Ltd. & its subsidiary Y Inc. as at 31.3.2000
Particulars Notes `
(3) Non-current Liabilities
Long term loan [12,00,000 + 8,40,000] 20,40,000
(4) Current Liability
(a) Trade Payable [6,00,000 + 4,20,000] 10,20,000
(b) Short-term provision [10,00,000 + 8,40,000] 18,40,000
Total 1,12,66,000
(II) Assets
(1) Non Current Assets
(a) Fixed Assets
(i) Tangible [18,00,000 + 6,00,000] 24,00,000
(ii) Intangible 2,66,000
(2) Current Assets
(a) Inventories [12,00,000 + 12,60,000] 24,60,000
(b) Trade Receivables [24,00,000 + 25,20,000] 49,20,000
(c) Cash & Cash Equivalents [8,00,000 + 4,20,000] 12,20,000
Total 1,12,66,000
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7. Cross Holding
Q.30. (CWA - June 2011) You are given below the Balance Sheets of two companies X Ltd. and Y Ltd. Prepare their
Consolidated Balance Sheet.
Liabilities X Ltd. Y Ltd. Asset X Ltd. Y Ltd.
` ` ` `
Share Capital : Investment :
(` 100 each) 5,00,000 2,00,000 1600 shares in Y Ltd. 2,20,000
Profits 1000 shares in X Ltd. 1,50,000
Capital Profit 1,00,000 80,000 Sundry assets 8,30,000 2,40,000
Revenue Profit 3,00,000 50,000
Creditors 1,50,000 60,000
10,50,000 3,90,000 10,50,000 3,90,000
Ans. :- Goodwill - ` 14,762.
Q.31. Following are the draft Balance Sheet of two companies A Ltd. and B Ltd. as at 31.3.1996 :
(` in lacs)
Liabilities A Ltd. B Ltd. Assets A Ltd. B Ltd.
Share capital (` 100 each) 6.00 3.00 Fixed Assets 5.00 1.50
Profits : Investment :
Capital Profit 0.80 0.85 2,400 shares in B Ltd. 3.00 ---
Revenue Profit 3.20 0.29 1,200 shares in A Ltd. --- 2.00
Creditors 1.50 0.81 Current Assets :
Debtors 2.00 0.80
Stock 0.40 0.30
Cash & Bank 1.10 0.35
11.50 4.95 11.50 4.95
The following adjustments were not yet made :
(1) Stock worth ` 5,000 in B Ltd. was found to be obsolete with no value.
(2) A Ltd. acquires an asset costing ` 50,000 on 31.3.1996. No effect has been given for both the purchase and payment.
(3) During the year A Ltd. sold an asset for ` 60,000 (original cost ` 40,000). The profit was included in the
revenue profit.
(4) Debtors of A Ltd. included a sum of ` 50,000 owed by B Ltd.
You are required to prepare the consolidated Balance Sheet of both the companies as on 31.3.1996 giving effect
to be above adjustments. [Nov. 1996 - 15 marks]
Ans. :- Goodwill - .4
Q.32. The summarized Balances sheets of two companies, Major Ltd. and Minor Ltd. as at 31st December, 2012 are
given below :-
Particulars Major Ltd. Minor Ltd.
Assets :
Plant and Machinery 4,14,000 1,00,800
Furniture 14,000 9,200
18,000, ordinary shares in Minor Ltd. 2,40,000 ---
4,000 ordinary shares in Major Ltd. --- 48,000
Stock in Trade 96,000 2,28,000
Sundry Debtors 1,40,000 1,70,000
Cash at Bank 34,000 26,000
9,38,000 5,82,000

Liabilities :
Ordinary shares of ` 10 each 3,60,000 2,00,000
7.5% preference shares of ` 10 each 3,00,000 1,60,000
Reserves 52,000 60,000
Sundry Creditors 1,06,000 1,22,000
Profit and Loss Account 1,20,000 40,000
9,38,000 5,82,000
Major Ltd. acquired the shares of Minor Ltd. on 1st July, 2012. As on 31st December, 2011, the plant & machinery
stood in the books at ` 1,12,000, the reserve at ` 60,000 and the profit and loss account at ` 16,000. The plant and
machinery was revalued by Major Ltd. on the date of acquisition of shares of Minor Ltd. at ` 1,20,000 but no
adjustments were made in the books of Minor Ltd.
On 31st December, 2011, the debit balance of profit and loss account was ` 45,500 in the books of Major Ltd.
Both the companies have provided depreciation on all their fixed asset at 10% p.a.
You are required to prepare a Consolidated Balance Sheet as on 31st December 2012 as per Schedule III of the
Companies Act, 2013 and Supporting Schedule for Computation. (May, 2013 - 16 Marks)
Ans. :-
Consolidated Balance Sheet of Major Ltd. and its Subsidiary Minor Ltd.
as at 31st Dec., 2012
Particulars Note No. (``)
(a) Share Capital 1 6,20,000
(b) Reserves and Surplus (WN 7) 1,69,611
(2) Minority Interest (WN 6) 1,93,089
(a) Trade Payables (1,06,000 + 1,22,000) 2,28,000
(b) Short Term Provision
(Proposed Pref. Dividend of both company) 34,500
Total 12,45,200
II. Assets
Fixed Assets
(i) Tangible Fixed Assets 2 5,51,200
(2) Current Assets
(a) Inventories [96,000+2,28,000] 3,24,000
(b) Trade Receivable [1,40,000 + 1,70,000) 3,10,000
(c) Cash and Cash equivalent [34,000 + 26,000] 60,000
Total 12,45,200
Notes to the Financial Statements

(1) Share Capital
Particulars `
Share Capital of Major Ltd. 3,60,000
Less : held by Minor Ltd. (40,000)
7½% Pref. Share Capital of Major Ltd. 3,00,000
6,20,000
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(2) Tangible Fixed Assets

Particulars `
Plant and Machinery of Major Ltd. 4,14,000
Plant and Machinery of Minor Ltd. 1,00,800
Revaluation Profit 13,600
Additional Depreciation (400)
Furniture of Major Ltd. 14,000
Furniture of Minor Ltd. 9,200
5,51,200
WN 1 : Holding Pattern
90%
18,000
x 100

20,000
Major Minor
Ltd. Ltd.

4,000 1
=
36,000 9
WN 2 : Analysis of Profit of Major Ltd.

Particulars Capital Revenue Total
Reserves 52,000 --- 52,000
Profit and Loss Account (45,500) 1,65,500 1,20,000
Total 6,500 1,65,500
Time Adjustment 82,750 (82,750)
Total 89,250 82,750
Less : Pref. Dividend (11,250) (11,250)
Total 78,000 71,500
Less : Transferred to Minor Ltd. (20,250) (9,449)
Balance 57,750 62,051
WN 3 : Analysis of Profit of Minor Ltd.

Particulars Capital Revenue Total
Reserve 60,000 --- 60,000
Profit & Loss A/c 16,000 24,000 40,000
Total 76,000 24,000
Time Adjust 12,000 (12,000)
88,000 12,000
Less : Pref. Dividend (6,000) (6,000)
Add : Revaluation Profit (1,20,000 - 1,12,000 x 95%) 13,600
Less : Additional Depreciation (1,20,000 x 5% - 5,600) --- (400)
Total 95,600 5,600
Add : Transfer from Major Ltd. (b/f) 20,252 9,449
Total 1,15,852 15,049
Minority Interest @ 10% 11,585 1,504
Major Ltd. @ 90% 1,04,267 13,545

WN 4 : Application of Simultaneous equation [Assuming Major Ltd. = X & Minor Ltd. = Y]

(a) Capital Profit
X = 78,000 + .9Y ....................... (i)
1
Y = 95,600 + x ...................... (ii)
9
 X = 1,64,040 /.9 = 1,82,266

Y = 95,600 + x 1,82,266 = 1,15,852
(b) Revenue Profit

X = 71,500 + .9Y ......................... (i)
1
Y = 5,600 + x ......................... (ii)
9
 X= = 85,044
1
Y = 5,600 + x 85,044 = 5,600 + 9,449 = 15,049
9
`
Amount Invested
Major Ltd. in Minor Ltd. 2,40,000
Minor Ltd. in Major Ltd. 48,000
2,88,000
Share Capital of Minor Ltd. 1,80,000
Share Capital of Major Ltd. 40,000
Capital Profit [WN 3] 1,04,267
3,24,267
(C) Capital Reserve (A - B) 36,267
Particulars `
Share in Share Capital 20,000
Pref. Share Capital of Minor Ltd. 1,60,000
Total 1,93,089
WN 7 : Calculation of Reserve and Surplus
Particulars `
Capital Profit of Major Ltd. 57,748
Revenue Profit of Major Ltd. 62,051
Share in revenue profit of Minor Ltd. 13,545
Capital Reserve from cost of control 36,267
Total 1,69,611
Note 1 : Pref. Dividend is assumed not paid for current year.
Note 2 : Reserve is assumed out of pre-acquisition profit. Alternatively, it can be assumed from current year.
Note 3 : Method of depreciation is assumed WDV.
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8. Consolidation After Balance Sheet Date
Q.33. (Study Material) Consider the following balance sheets :

(As on (As on (As on (As on
31.3.17) 31.12.16) 31.3.17) 31.12.16)
` ` ` `
Share capital Fixed assets 6,50,000 4,05,000
(Shares of ` 10 each) 10,00,000 5,00,000 Investment :
Reserve and surplus 4,50,000 2,05,000 40,000 Shares in Y Ltd. 8,00,000 ---
10,000 Deb. in Y Ltd. 1,50,000 ---
Secured Loan : Current Assets :
13% Debentures (` 10 each) --- 3,00,000 Stock 2,00,000 3,50,000
Current Liabilities Debtors 1,50,000 2,65,000
Creditors 3,80,000 80,000 Cash and Bank 80,000 1,05,000
Other liabilities 2,00,000 40,000
20,30,000 11,25,000 20,30,000 11,25,000
On 5th Janury 2017, certain stock of Y Ltd. costing ` 20,000 were completely destroyed by fire. The insurance
company paid 75% of the claim.
On 20th January, 2017, X Ltd. sold goods to Y Ltd. costing ` 1,50,000 at an invoice price of cost plus 20%. 50%
of those goods were resold by Y Ltd. to X Ltd. within 31st March, 2017 (these were then sold by X Ltd. to a third
party before 31st March, 2017). As on 31st March, 2017, Y Ltd. owes ` 60,000 to X Ltd. in respect of those goods.
Pre-acquisition profits of Y Ltd. were ` 75,000.
Prepare cosolidated balance sheet as on 31st March, 2017 after making necessary adjustments in the balance
sheet of Y Ltd. in accordance with AS 21.
Ans. :-
Consolidated Balance Sheet of X Ltd. and its subsidiary Y Ltd.
Note No. `
(3) Non Current Liabilities
(a) Long term borrowing - 13% Debenture 2,00,000
(a) Trade Payable (Creditors) 4,60,000
(b) Other current liabilities 2,40,000
25,55,000
(ii) Assets
(a) Tangible Assets 10,55,000
(b) Intangible Assets (Goodwill) 3,40,000
(2) Current Assets
(b) Trade Receivable 3,55,000
(c) Cash & Cash equivalent 2,00,000
25,55,000

WN 1 : Updated Balance Sheet of Y Ltd. as on 31st March, 2017

1 2 3 4 5 6 7 8 9
Share Reserve 13% Creditors Liab. F.A. Stock Debtors Cash
Capital & Surplus Deben.
Opening 5,00,000 2,05,000 3,00,000 80,000 40,000 4,05,000 3,50,000 2,65,000 1,05,000
Addition
Adjustment 1 --- --- --- --- --- --- --- --- 15,000
Adjustment 2 --- 30,000 --- 1,80,000 --- --- 1,80,000 --- ---
Less : Adjustment 1 --- (5,000) --- --- --- --- (20,000) --- ---
Adjustment 2 --- --- --- (1,20,000) --- --- (90,000) --- ---
Closing 5,00,000 2,30,000 3,00,000 1,40,000 40,000 4,05,000 4,20,000 2,65,000 1,20,000
WN 2 : Analysis of Profit of B Ltd.

Capital Revenue Total
Reserves & Surplus 75,000 1,55,000 2,30,000
X Ltd. @ 80% 60,000 1,24,000

Particulars `
Less : Pre-dividend ---
Total 8,00,000
Total 4,60,000
(C) Goodwill (A - B) 3,40,000

Particulars `
Total 1,46,000
WN 5 : Calculation of Consolidated Reserve

Particulars `
Reserves & Surplus own balance 4,50,000
Add : Share in Y Ltd. 1,24,000
Less : Stock Reserve (1,50,000 x ½ x 20/100) (15,000)
Less : Loss on cancellation of debenture [1,50,000 - 1,00,000] (50,000)
Reserve Balance for CBS 5,09,000
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Q.34. (RTP - May, 2017) The Balance Sheets of Aqua Ltd. and Baqa Ltd. as on the dates of last closing of Accounts are
as under :
Aqua Baqa
Liabilities As on 31.3.2009 As on 31.12.2008
` `
Share Capital (equity shares of ` 10 each) 11,00,000 5,00,000
Accumulated Profits & Reserves 4,50,000 2,05,000
15% ` 100 non-convertible debentures ---- 3,00,000
Accounts Payable 4,80,000 2,80,000
Other liabilities 1,00,000 40,000
Tax Provision 1,50,000 2,50,000
Total 22,80,000 15,75,000
Assets
Fixed Assets at Cost 8,45,000 5,26,500
Less : Depn. 1,95,000 1,21,500
6,50,000 4,05,000
Investments :
40,000 share in Baqa Ltd. 8,00,000 ----
1,000 debentures in Baqa Ltd. 1,50,000 ----
Current Assets :
Inventories 2,00,000 3,50,000
Accounts Receivable 2,50,000 4,65,000
Cash & Bank 2,30,000 3,55,000
Total 22,80,000 15,75,000
The following information is also available :
(1) On 8th February, 2009 there was a fire at the factory of Baqa Ltd. resulting in inventory worth ` 20,000 being
destroyed. Baqa received 75 per cent of the loss as insurance.
(2) The same fire resulted in destruction of a machine having a written down value of ` 1,00,000. The Insurance
Company admitted the Company's claim to the extent of 80 per cent. The machie was insured at its fair
value of ` 1,50,000.
(3) On 13th March, 2009 Aqua sold goods costing ` 1,50,000 to Baqa at a mark-up of 20 per cent. Half of these
goods were resold to Aqua who in turn was able to liquidate the entire stock of such goods before closure of
accounts on 31st March, 2009. As on 31st March, 2009 Baqa's accounts payable show ` 60,000 due to Aqua
on the two transactions.
(4) Aqua acquired the holdings in Baqa on 1st January, 2007 when the reserves and accumulated profits of
Baqa Ltd. stood at ` 75,000.
(5) Both Companies have not provided for tax on current year profits. The Current year taxable profits are `
33,000 and ` 66,000 for Aqua Ltd. and Baqa Ltd. respectively. The tax rate is 33%.
(6) The incremental profits earned by Baqa Ltd. for the period January, 2009 to March 2009 over that earned in
the corresponding period in 2008 was ` 56,000. Expect for the profits that resulted from the transactions with
Aqua in the aforesaid period the entire profits have been realised in cash before 31st March, 2009.
You are requested to consolidate the accounts of the two companies and prepare a Consolidated Balance Sheet
of Aqua Limited and its subsidiary as at 31st March, 2009 as per Schedule III of The Companies Act, 2013.
[Nov., 2009 - 20 Marks & Dec. 2011 - 15 Marks]

Ans. :-
Consolidated Balance Sheet
Particulars Notes `
(3) Non-current Liability
(a) Long term borrowing (3,00,000 - 1,00,000) 2,00,000
(4) Current Liability & provisions
(a) Trade Payables (4,80,000 + 3,40,000 - 60,000) 7,60,000
(b) Other Current Liabilities (1,00,000 + 40,000) 1,40,000
(c) Short Term Provision (1,50,000 + 10,890 + 2,71,380) 4,32,670
33,01,000
(II) Assets
(a) Fixed Assets
(i) Tangible (6,50,000 + 3,05,000) 9,55,000
(ii) Goodwill 3,40,000
(2) Current Assets
(a) Inventories (2,00,000 + 4,20,000 - 15,000) 6,05,000
(b) Trade Receivable (2,00,000 + 4,65,000 - 60,000) 6,55,000
(c) Cash & Cash Equivalent (2,30,000 + 5,16,000) 7,46,000
33,01,000
WN 1 : Updated Balance Sheet of Baga as at 31.3.2009

Particulars Assets Liabilities
FA Inven Debtor Cash Tax Other Account Debt Reserve Share
tory Liab. Payable
Opening 4,05,000 3,50,000 4,65,000 3,55,000 2,50,000 40,000 2,80,000 3,00,000 2,05,000 5,00,000
Addition
Adj.-1 ---- ---- ---- 15,000 ---- ---- ---- ---- ---- ----
Adj.-2 ---- ---- ---- 1,20,000 ---- ---- ---- ---- 20,000 ----
Adj.-3 ---- 1,80,000 ---- ---- ---- ---- 1,80,000 ---- 30,000 ----
Adj-5 ---- ---- ---- ---- 21,780 ---- ---- ---- ---- ----
Adj-6 ---- ---- ---- 26,000 ---- ---- ---- ---- 26,000 ----
Deletion
Adj-1 ---- (20,000) ---- ---- ---- ---- ---- ---- (5,000) ----
Adj-2 (1,00,000) ---- ---- ---- ---- ---- ---- ---- ---- ----
Adj-3 ---- (90,000) ---- ---- ---- ---- (1,20,000) ---- ---- ----
Adj-5 ---- ---- ---- ---- ---- ---- ---- ---- (21,780) ----
Adj-6 ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
3,05,000 4,20,000 4,65,000 5,16,000 2,71,780 40,000 3,40,000 3,00,000 2,54,220 5,00,000
17,06,000 17,06,000
WN 2 : Analysis of Profit
Pre Post Total
Reserve & Surplus 75,000 1,79,220 2,54,220
Aqua @ 80% 60,000 1,43,376
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Particulars `
Share Capital (5,00,000 x 80%) 4,00,000
Capital Profit 60,000 4,60,000
(C) Goodwill (A - B) 3,40,000
WN 4 : Minority Interest
Particulars `
Share Capital (5,00,000 x 20%) 1,00,000
1,50,844

Particulars `
Aqua’s Balance 4,50,000
Tax Provision (33,000 x 33%) (10,890) 4,39,110
Share in Baga 1,43,376
Unrealised profit (30,000 x ½) (15,000)
Loss on Cancellation of Debentures (50,000)
5,17,486
Q.35. War Ltd. purchased on 31st March, 2010, 48,000 shares in Peace Ltd., at 50% premium over face value by issue
of 8% debentures at 20% premium. The balance sheets of War and Peace Ltd. as on 31.3.2010; the date of
purchase were as under :
(Figures in '000)
Liabilities War Peace Asses War Peace
Ltd. Ltd. Ltd. Ltd.
Share capital (` 10) 1,050 600 Fixed Assets 650 200
General reserve 120 40 Stock in trade 300 180
Profit and Loss account 80 --- Sundry Debtors 320 200
Sundry creditors 100 60 Cash in hand 60 30
Preliminary expenses 20 10
Profit and loss account 80
1350 700 1350 700
Particulars of War Ltd .:
(i) Profit made : 2010-2011 - 1,60,000
2011-2012 - 2,00,000
(ii) The above profit was made after charging depreciation of ` 60,000 and ` 40,000 respectively.
(iii) Out of profit shown above every year ` 20,000 had been transferred to general reserve.
(iv) 10% dividend had been paid in both the years.
(v) It has been decided to write down investment to face value of shares in 10 years and to provide for share of
loss to subsidiary.
Particulars of Peace Ltd. :
The company incurred losses of ` 40,000 and ` 60,000 in 2010-2011 and 2011-2012 after charging depreciation
of 10% P.A. of the book value as on 1.4.2010. Prepare consolidated balance sheet as at 31.3.2012, of War Ltd.,
and its subsidiary in accordance with Schedule III of Companies Act, 2013. [Nov. 1999 & 2012 - 16 marks]

Ans. :-
Consolidation Balance Sheet of War Ltd. & its Subsidiary Peace Ltd.
(as at 31.3.2012)
Particulars Notes `
(a) Share Capital 1050
(b) Reserves & Surplus (160 + 42 + 120) 322
(3) Long term borrowing - debenture 600
(a) Short-term borrowings 30
(b) Trade Payable 160
2252
(II) Assets
(a) Fixed Assets - Tangible 710
(b) Fixed Assets - Intangible 232
(2) Current Assets
(a) Inventories 480
(b) Trade Receivable 520
(c) Cash & cash equivalent 310
2252
WN 1 : Updated Balance Sheet on 31.3.2012

War Peace War Peace
Share Capital 10,50,000 6,00,000 Fixed Assets 5,50,000 2,60,000
General Reserve 1,40,000 30,000 Stock 3,00,000 1,80,000
P&L 62,000 Debtors 3,20,000 2,00,000
8% Debebture 6,00,000 ---- P&L A/c ---- 1,80,000
Securities premium 1,20,000 ---- Investment 6,72,000 ----
Sundry Creditors 1,00,000 60,000 Cash & Bank (b/f) 3,10,000 ----
Provision for loss 80,000
Overdraft (b/f) ---- 30,000
21,52,000 7,20,000 21,52,000 7,20,000
WN 2 : Journal Entries for investment in peace

Date Particulars Dr. Cr.
31.3.10 Investment in peace Dr. 7,20,000
To 8% Debentures 6,00,000
To Sec. Premium 1,20,000
31.3.11 Profit & Loss A/c Dr. 24,000
To Investment in peace 24,000
(Being investment written off 48,000 x 5/10)
31.3.12 Profit & Loss A/c Dr. 24,000
To investment in peace 24,000
(Being investment written off)
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WN 3 : Calculation of Profit on 31st March, 2012
War Peace
Balance as on 31.3.10 80,000 (80,000)
Profit earned
2010-11 1,60,000 (40,000)
2011-12 2,00,000 (60,000)
Transfer to General Reserve
2010-11 (20,000) ----
2011-12 (20,000) ----
Dividend Paid
2010-11 (10,50,000 x 10%) (1,05,000) ----
2011-12 (1,05,000) ----
Investment written off
2010-2011 (24,000) ----
2011-2012 (24,000) ----
Provision for Loss
2010-11 (40,000 x 80%) (32,000) ----
2011-12 (60,000 x 80%) (48,000) ----
62,000 (1,80,000)
WN 4 : Calculation of General Reserve

War Peace
Balance on 31.3.2010 1,20,000 40,000
P/E written off (20,000) (10,000)
Transfer - 2010-11 20,000 ----
2011-12 20,000 ----
1,40,000 30,000
Pre Post Total
Profit & Loss (80,000) (1,00,000) (1,80,000)
General Reserve 30,000 ---- 30,000
(50,000) (1,00,000)
Minority interest @ 20% (10,000) (20,000)
War Ltd. @ 80% (40,000) (80,000)
Particulars `
Amount invested 6,72,000
Share Capital (6,00,000 x 80%) 4,80,000
Capital Loss (40,000)
4,40,000
(C) Goodwill 2,32,000

Particulars `
Share Capital (6,00,000 x 20%) 1,20,000
Capital Loss (10,000)
Revenue Loss (20,000)
90,000
WN 8 : Calculation of Consolidated Reserves
P&L GR
War’s Balance 62,000 1,40,000
Share in peace (80,000) ----
Cancellation of Provision 80,000 ----
62,000 1,40,000

9. Consolidated Profit / Loss account
(1) Preparation of Consolidated Profit and Loss Account of Holding company and its subsidiaries is not very
difficult.
(2) 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.
(3) For example, a holding company may sell goods or services to its subsidiary, receives consultancy fees,
commission, royalty etc. These items are included in sales and other income of the holding company and in
the expense items of the subsidiary. Alternatively, the subsidiary may also sell goods or services to the holding
company. These inter-company transactions are to be eliminated in full.
(4) If there remains any unrealised profit in the inventory of good, of any of the Group Company, such unrealised
profit is to be eliminated from the value of inventory to arrive at the consolidated profit.
(5) Also it is necessary to eliminate the share of holding company in the proposed dividend of the subsidiary.
(6) Schedule III only prescribed format of P&L Account and not appropriation hence, appropriation shall be
presentation below the line as follows :
 Transfer to cost of control
 Transfer to Minority Interest
 Stock Reserve
 Minority interest in stock reserve
 Proposed dividend (equity & preference)
 Minority Interest in equity proportion
 Any other appropriation
 Balance profit transfer to Balance Sheet.
Q.36. (RTP - Nov., 2008) Mohan Ltd. holds 3,000 Equity Shares of ` 100 each in Sohan Ltd. whose capitalconsists of
4,000 Equity shares of ` 100 each and 6% 1,000 Cumulative preference shares of ` 100 each. Sohan Ltd. has
also issued 6% Debenture to the extent of ` 2,00,000 out of which Mohan Ltd. holds ` 1,00,000.
The following are the Profit & Loss Account of the two Companies for the year ending 31.12.2007 :
(` 000s)
Expenditure Mohan Sohan Income Mohan Sohan
Ltd. Ltd. Ltd. Ltd.
To Purchase (Adjusted) 1,500 600 By Sales 1,900 1,500
To Manufacturing expenses Nil 400
To Gross Profit c/d 400 500
1,900 1,500 1,900 1,500
To Administrative overheads 150 200 By Gross Profit b/d 400 500
To Debenture Interest Nil 12 By Debenture Interest Received 6 Nil
To Profit c/d 298 288 By Interim dividend 42 Nil
448 500 448 500
To Income Tax 140 120 By Profit b/d 298 288
To Preference Dividend Nil 6
To Interim Dividend Nil 56
To Proposed Dividend 100 84
To Balance c/d to bal. sheet 58 22
298 288 298 288
Prepare Consolidated Profit and Loss Account from the following further information -
Shares were acquired by Mohan LTd. on 1.4.2007, but the Debenture were acquired on 1.1.2007. Sohan Ltd. was
incorporated on 1.1.2007.
During theyear, Sohan Ltd. sold goods costing ` 1,00,000 to Mohan Ltd., at a selling price of ` 1,50,000. One
fourth of the goods remained unsold on 31.12.2007. The goods were valued at cost to the Holding Company for
the closing stock purposes.
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Ans. :-
Consolidated Profit and Loss Account of Mohan Ltd. and Sohan Ltd.
for the year ended 31st December, 2007
Particulars Note No. `
I. Revenue from operations 1 32,50,000
II. Total Revenue 32,50,000
III. Expenses
Adjusted Purchase 2 19,50,000
Manufacturing Expenses 4,00,000
Finance Expenses (12,000 - 6,000) 6,000
Other Expenses (1,50,000 + 2,00,000) 3,50,000
Total expenses 27,06,000
IV. Profit before Tax (II - III) 5,44,000
V. Tax Expenses (1,40,000 + 1,20,000) 2,60,000
VI. Profit after Tax (IV - V) 2,84,000
Profit transferred to Consolidated Balance Sheet
Profit after Tax 2,84,000
Less : Stock Reserve (50,000 x ¼) (12,500)
Less : Preference Dividend (6,000)
Less : Proposed Dividend of Mohan (1,00,000)
Less : Minority interest in Pref. Proposed dividend (84,000 x 25%) (21,000)
Less : Transferred to Cost of Control (19,875)
Less : Minority Interest (6,625 + 19,875 - 3,125 - 21,000) (2,375)
Less : Pre-acquisition dividend (14,000 x 75%) (10,500)
Less : Minority Interest in Interim Dividend (56,000 x 25%) (14,000)
Profit transferred to Balance Sheet 97,750
Notes to Accounts
(1) Revenue from Operation
Particulars `
Sales of Mohan Ltd. 19,00,000
Sales of Sohan Ltd. 15,00,000
Inter Company sales (1,50,000)
32,50,000
(2) Calculation of Adjusted Purchase
Particulars `
Purchase of Mohan Ltd. 15,00,000
Purchase of Sohan Ltd. 6,00,000
Inter Company cancellation (1,50,000)
19,50,000

WN 1 : Analysis of Profit of Sohan Ltd.

Profit and Loss Account ---- 22,000 22,000
Add : Interim Dividend ---- 56,000
Add : Proposed equity dividend ---- 84,000
Add : Pref. Proposed Dividend ---- 6,000
Total ---- 1,68,000
Time Adjustment 42,000 (42,000)
Less : Proposed Prefence Dividend (1,500) (4,500)
Less : Interim Dividend (14,000) (42,000)
Total 26,500 79,500
Mohan Ltd. @75% 19,875 59,625
Q.37. (Study Material) The Trial Balances of H Ltd. and S Ltd. as on 31st December, 2011 were as under.
H Ltd. S Ltd.
Dr. Cr. Dr. Cr.
` ` ` `
Equity Share Capital (Share of ` 100 each) 10,00,000 2,00,000
7% Preference Share Capital (Share of ` 100 each) --- 2,00,000
Reserves 3,00,000 1,00,000
6% Debentures 2,00,000 2,00,000
Sundry Debtors / Creditors 80,000 90,000 50,000 60,000
P&L A/c balance 20,000 15,000
Purchases / Sales 5,00,000 9,00,000 6,00,000 9,50,000
Wages & Salaries 1,00,000 --- 1,50,000
Debenture Interest 12,000 12,000
General Expenses 80,000 60,000
Preference dividend
up to 30.6.2011 3,500 7,000
Stock (31.12.2011) 1,00,000 50,000
Cash at Bank 13,500 6,000
Investment in S Ltd. 5,28,000 ---
Fixed Assets 11,00,000 7,90,000
25,13,500 25,13,500 17,25,000 17,25,000
Investment in S Ltd. were acquired on 1.4.2011 and consisted of 80% of Equity Capital and 50% of Preference
Capital. Depreciation on fixed assets is written off @ 105 p.a. After acquiring control over S Ltd., H Ltd. supplied
to it goods at cost plus 20%, the total invoice value of such goods being ` 60,000; 1/4 of such goods was still in
stock at the end of the year.
Prepare the Consolidated Profit and Loss Account for the year ended on 31st December, 2011.
www.indasfundas.in
Ans. :-
Consolidated Profit and Loss Account of H Ltd. and S Ltd.
for the year ended 31st December, 2011
Particulars Note No. ` in crores)
(`
I. Revenue from opeations 1 17,90,000
II. Total Revenue 17,90,000
III. Expenses
Cost of Material purchased / consumed 2 10,40,000
Changes of Inventories of finished goods
Employee benefit expense 2,50,000
Finance Cost 24,000
Depreciation and amortization expense 1,89,000
Other expenses 1,40,000
Total expenses 16,43,000
IV. Profit before Tax (II - III) 1,47,000
Profit transferred to Consolidated Balance Sheet
Profit after Tax 1,47,000
Preference dividend 3,500
Preference dividend payable 3,500 7,000
1,40,000
Less : Minority Interest 7,000
Capital Reserve 7,000
Investment Account - dividend for 3 months (prior to acquisition) 1,750
Stock reserve 2,500
Profit to be transferred to consolidated Balance Sheet 1,21,750
Notes to Accounts
(1) Revenue from Operation
Particulars `
Sales of H Ltd. 9,00,000
Sales of S Ltd. 9,50,000
Inter Company sales (60,000)
17,90,000
(2) Calculation of Adjusted Purchase
Particulars `
Purchase of H Ltd. 5,00,000
Purchase of S Ltd. 6,00,000
Inter Company cancellation (60,000)
10,40,000
WN : Analysis of Profit of S Ltd.
Particulars `
Revenue from operations 9,50,000
Less : Cost of Material purchased / Consumed (6,00,000)
Less : Employee benefit expense (1,50,000)
Less : Finance Expense (12,000)
Less : Depreciation and amortization expenses (79,000)
Less : Other Expenses (60,000)
Profit before tax 49,000
Preference Dividend 7,000
Preference Dividend Payable 7,000
Profit available for shareholders 35,000
Minority Share (20%) 7,000

Q.38. Given below are the Profit & Loss Account of H Ltd. and its subsidiary Ltd. for the year ended 31st March, 2006.
H Ltd. S Ltd.
(` in lacs) (` in lacs)
Incomes :
Sales and other income 5,000 1,000
Increase in stock 1,000 200
6,000 1,200
Expenses :
Raw material consumed 800 200
Wages and Salaries 800 150
Production expenses 200 100
Administrative Expenses 200 100
Selling and Distribution Expenses 200 50
Interest 100 50
Depreciation 100 50
2,400 700
Profit before tax 3,600 500
Provision for tax 1,200 200
Profit after tax 2,400 300
Other Information :
H Ltd. sold goods to S Ltd. of ` 120 lacs at cost plus 20%. Stock of S Ltd. includes such goods valuing ` 24 lacs.
Administrative Expenses of S Ltd. include ` 5 lacs paid to H Ltd. as consultancy fees. Selling and Distribution
expenses of H Ltd. include `10 lacs paid to S Ltd. as commission.
H Ltd. holds 80% of equity share capital of ` 1,000 lacs in S Ltd. H Ltd. took credit to its Profit and Loss Account,
the proportionate amount of dividend declared and paid by S Ltd. for the year 2004-2005.
Ans. :-Profit and loss balance - ` 1436 lakhs.
www.indasfundas.in
10. Consolidated Cash Flow Statement

(1) A holding company has to prepare a consolidated cash flow statement if it is required to prepare cash flow
statement.
(2) Same as Consolidated Profit and Loss Account, the preparation of consolidated Cash flow statement is also
not difficult. 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, inter-company transactions should be
eliminated.
(3) Format of Consolidated Cash Flow Statement
Particulars Holding Subsidiary Contra Total
Cash Flow from Operating Activities xxx xxx xxx
Cash Flow from Investment Activities xxx xxx xxx
Cash Flow from Financing Activities xxx xxx xxx
Cash Flow of the year xxx xxx xxx
Opening Cash & Cash equivalent xxx xxx xxx
Closing cash & cash equivalent xxx xxx xxx
Q.39. H Ltd. acquired 60% of share capital of S Ltd. on 1st April, 2005. Following are the cash flow statements of H Ltd.
and S Ltd. for the year ended 31st March 2011 :
Particulars H Ltd. S Ltd.
` ` ` `
Cash flows from opearating activities
Net Profit before tax 90,000 60,000
Adjustment for :
Interest expense 5,000 2,000
Dividend income (6,000)
Depreciation and amortisation 26,000 17,000
Operating profit before working capital changes 1,15,000 79,000
Decrease in sundry debtors 7,000 8,000
Increase in inventories (3,000) (3,000)
Increase in sundry creditors 6,000 7,000
Cash generated from operations 1,25,000 91,000
Income taxes paid (15,000) (10,000)
Net cash from operating activities 1,10,000 81,000
Cash flows from investing activities

Purchase of fixed assets (56,000) (40,000)
Investment in debt securities (30,000) (20,000)
Dividend received 6,000 ---
Net cash used in investing activities (80,000) (60,000)
Cash flows from financing activities

Interest paid (4,000) (3,000)
Interim Dividend paid (12,000) (10,000)
Net cash used in financing activities (16,000) (13,000)
Net increase in cash and cash equivalents 14,000 8,000
Cash and cash equivalents at the beginning of the year 5,000 4,000
Cash and cash equivalents at the end of the year 19,000 12,000
During the year, S Ltd. sold to H Ltd. goods costing ` 6,000 at a profit cost plus 30%. As at the year end, ` 3,000
was still outstanding for payment on this account. H Ltd. managed to sell 50% of such goods to outsiders before
the year end. During the year, S Ltd. paid an interim dividend of ` 10,000 to its shareholders. A final dividend of
` 20,000 has been recommended by the directors of H Ltd. Prepare consolidated cash flow statement.
Ans. :-Cash flow from Operating activities - ` 1,91,000. Cash flow from investing activities - ` (1,46,000), Cash flow
from financing activities - ` (23,000).

11. Consolidation of Multiple Subsidiary Single Date of Acquisition
Q.40. On 1st January 2001 X Ltd. acquired 90% of the shares of Y Ltd. and 80% of the shares of Z Ltd. with a
view to increase its holding in Z Ltd., X Ltd. disposed of 400 shares in Y Ltd. at a price of ` 160 per share
on 30th June 2001 and on the said date purchased a further 10% of the shares of Z Ltd. in exchange for
the proceeds received on the sale of shares of Y Ltd.
The following are the balance sheets of these three companies as on 31st December, 2001 in a condensed
form :
X Ltd. Y Ltd. Z Ltd.
` ` `
Assets :
Fixed Assets 1,20,000 3,80,000 3,40,000
Current Assets 2,27,000 2,40,000 4,10,000
Loans and Advances 95,000 25,000 ---
Investments :
Shares of Y Ltd. 4,40,000 --- ---
Shares of Z Ltd. 4,28,000 --- ---
13,10,000 6,45,000 7,50,000
Liabilities :
Share Capital :
Ordinary shares of ` 100 each 7,00,000 4,00,000 2,00,000
Other liabilities 3,77,000 1,35,000 2,00,000
Profit & Loss (Surplus) account 2,33,000 1,10,000 3,50,000
13,10,000 6,45,000 7,50,000
Each of the companies has maintained a consolidated profit and loss (surplus) account, which shows the following
position :
` ` `
Balance as on 1st January, 2001 3,33,000 1,20,000 2,90,000
Net Profit for 2001 40,000 30,000 80,000
3,73,000 1,50,000 3,70,000
Less : Dividends 1,40,000 40,000 20,000
2,33,000 1,10,000 3,50,000
(1) The investment accounts in the books of X Ltd. are carried at cost except the account representing
investment in Y Ltd., which has been credited with the proceeds of the 400 shares sold, viz. ` 64,000.
(2) Dividend is paid before the disposal of shares in Y Ltd. and acquisition of share in Z Ltd.
You are required to prepare
(i) the consolidated balance sheet as on 31st December, 2001 and
(ii) the supporting work sheet.
Ans.:- Goodwill - 17,000.
www.indasfundas.in
Q.41. On 31st March, 2004 Bee Ltd. became the holding company of Cee Ltd. and Dee Ltd. by acquiring 450 lakhs fully
paid shares in Cee Ltd. for ` 6,750 lakhs and 240 lakhs fully paid shares in Dee Ltd. for ` 2,160 lakhs. On that date,
Cee Ltd. showed a balance of ` 2,550 lakhs in General Reserve and a credit balance of ` 900 lakhs in Profit and
Loss Account. On the same date, Dee Ltd. showed a debit balance of ` 360 lakhs in Profit and Loss Account while
its Preliminary Expenses Account showed a balance of ` 30 lakhs.
After one year, on 31st March, 2005 the Balance Sheets of three companies stood as follows :
(All amounts in lakhs of Rupees)
Liabilities Bee Ltd. Cee Ltd. Dee Ltd.
Fully paid equity shares of ` 10 each 27,000 7,500 3,000
General reserve 33,000 3,150 ---
Profit and Loss Account 9,000 1,200 750
15 lakh fully paid 9.5%
Debentures of ` 100 each --- --- 1,500
Loan from Cee Ltd. --- --- 75
Bills Payable --- --- 150
Sundry Creditors 14,100 2,700 930
83,100 14,550 6,405
Assets
Machinery 39,000 7,500 2,100
Furniture and Fixtures 6,000 1,500 600
Investments :
450 lakhs shares in Cee Ltd. 6,750 --- ---
240 lakhs shares in Dee Ltd. 2,160 --- ---
3 lakhs debentures in Dee Ltd. 294 --- ---
Stocks 16,500 3,000 1,500
Sundry Debtors 9,000 1,350 1,290
Cash and Bank balances 3,201 1,050 900
Loan to Dee Ltd. --- 90 ---
Bills Receivable 195 60 ---
Preliminary expenses --- --- 15
83,100 14,550 6,405
The following point relating to the above mentioned Balance Sheets are to be noted :
(i) All the bills payable appearing in Dee Ltd.'s Balance Sheet were accepted in favour of Cee Ltd. out of which
bills amounting to ` 75 lakhs were endorsed by Cee Ltd. in favour of Bee Ltd. and Bills amounting to ` 45
lakhs had been discounted by Cee Ltd. with its bank.
(ii) On 29th March, 2005 Dee Ltd. remitted ` 15 lakhs by means of a cheque to Cee Ltd. to return part of the
loan; Cee Ltd. received the cheque only after 31st March, 2005.
(iii) Stocks with Cee Ltd. includes goods purchased from Bee Ltd. for ` 200 lakhs. Bee Ltd. invoiced the goods
at cost plus 25%.
(iv) In August, 2004 Cee Ltd. declared and distributed dividend @ 10% for the year ended 31st March, 2004.
Bee Ltd. credited the dividend received to its Profit and Loss Account.
You are required to prepare a Consolidated Balance Sheet of Bee Ltd. and its subsidiaries Cee Ltd and Dee Ltd.
as at 31st March, 2005 as per Schedule III of The Companies Act, 2013. [Nov. 2005 - 16 Marks]

Ans. :-
Consolidated Balance Sheet of Bee Ltd. & its
Subsidiary Lee Ltd. & Dee Ltd. as at 31.3.2005
Particulars Notes `
(1) Shareholder Fund 27,000
(b) Reserve & Surplus 5,487
(2) Minority Interest
(a) Long-term loan (1500 - 300) 1200
(4) Current Liabilities [(14,100 + 2,700 + 930) + (150 - 105)] 17,775
Total 94,868
(II) Assets
(a) Fixed Assets
(i) Tangible [Machine + Furniture] 56,700
(ii) Goodwill 252
(2) Current Assets
(a) Inventories [16,500 + 3,000 + 1,500 - 40] 20,960
(b) Trade Receivables [9,000 + 1,350 + 1,290 + 60 - 105 + 195] 11,790
(c) Cash & Cash equivalent [3,201+ 1,050 + 900 + 15] 5,166
Total 94,868
Q.42. The draft Balance Sheets of 3 Companies as at 31st March, 2007 are as below :
(In ` 000's)
Liabilities Morning Ltd. Evening Ltd. Night Ltd.
Share Capital - shars of ` 100 each 40,000 20,000 10,000
Reserves 1,800 1,000 900
P/L A/c (1.4.06) 1,500 2,000 800
Profit for 2006-07 7,000 3,800 1,800
Loan from Morning Ltd. --- 5,000 ---
Creditors 2,500 1,000 1,400
52,800 32,800 14,900
Assets
Investments :
1,60,000 shares in Evening 18,000 --- ---
75,000 shares in Night 8,000 --- ---
Loan to Evening Ltd. 5,000 --- ---
Sundry Assets 21,800 32,800 14,900
52,800 32,800 14,900
Following additional information is also available :
(a) Dividend is proposed by each company at 10%.
(b) Stock transferred by Night Ltd. to Evening Ltd. fully paid for was ` 8 lacs on which the former made a profit
of ` 3 lacs. On 31st March, 2007, this was in the inventory of the latter.
(c) Loan referred to is against 8% interest. Neither Morning Ltd. nor Evening Ltd. has considered the interest.
(d) Reserves as on 1.4.2006 of Evening Ltd. and Night Ltd. were ` 8,00,000 and ` 7,50,000 respectively.
(e) Cash-in-transit from Evening Ltd. to Morning Ltd. was ` 1,00,000 as on 31.3.2007.
(f) The shares of the subsidiaries were all acquired by Morning Ltd. on 1st April, 2006.
Prepare consolidated Balance Sheet as on 31st March, 2007 as per Schedule III of The Companies Act,
2013. Working should be part of the answer. Nov. 2007 - 16 Marks]
www.indasfundas.in
Ans. :-
Consolidated Balance Sheet of Morning Ltd. and its subsidiaryes Evening Ltd. and Night Ltd.
Particulars Notes ` (000)
(I) EQUITY & LIABILITIES
(1) Shareholders Fund
(b) Reserve and Surplus 1 11,720
(c) Minority Interest (WN 5) 7,930
(a) Trade Payable (Creditors) 4,900
(b) Short term provision 2 4,650
69,200
(II) ASSETS
(1) Sundry Assets (Note 1) [21,800 + 32,800 + 14,900 - 300] 69,200
69,200
(1) Reserve and Surplus
Particulars `
Capital Reserve (WN 4) 902.5
Revenue General Reserve (WN 6) 2072.5
Revenue Profit & Loss (WN 6) 8745.0
11,720.0
(2) Short Term Provision
Particulars `
Proposed dividend of Morning Ltd. 4,000
Minority Interest in equity proposed dividend of Evening Ltd. 400
Minority Interest in equity proposed dividend of Night Ltd. 250
4,650
Note 1 : Cash in transit from Evening Ltd. to Morning Ltd. should be once deducted and then added because
breakup of sundry assets not available in question.
WN 2 : Analysis of Profit of Evening Ltd. ` 000)

(`
General Reserve 800 200 --- 1,000
Profit & Loss A/c 2,000 --- 3,800 5,800
Total 2,800 200 3,800
Less : Interest on Loan [5,000 x 8%] --- --- (400)
Total 2,800 200 3,400
Minority Interest : 20% 560 40 680
Morning Ltd. : 80% 2,240 160 2,720

WN 3 : Analysis of Profit of Night Ltd. ` 000)

(`
Profit & Loss 800 --- 1,800 2,600
Total 1,550 150 1,800
Minority Interest : 25% 387.5 37.5 450
Morning Ltd. : 75% 1162.5 112.5 1,350
WN 4 : Calculation of Cost of Control ` 000)

(`
Morning in Evening Morning in Light
Ltd. @ 80% Ltd. @ 75%
(A) Cost of Investment 18,000 8,000
Less : Pre-acquisition dividend (---) (---)
Total 18,000 8,000
(B) Share of Morning Ltd. represented by
Share Capital 16,000 7,500
Capital Profit 2,240 1,162.5
Total 18,240 8,662.5
(C) Goodwill / (Capital Reserve) [A - B] (240) (662.5)
Total Capital Reserve (Evening & Night) 902.5
WN 5 : Calculation of Consolidated Profit & Loss & Reserve ` 000)

(`
Profit & Loss Reserve
Add : Share in Evening 2,720 160
Add : Share in Night 1,350 112.5
Add : Unrecorded Interest 400 ---
Less : Proposed dividend of holding (4,000) ---
Less : Share in Stock Reserve (225) ---
Total 8,745 2,072.5

Evening Ltd. @ 20% Night Ltd. @ 25%
Share in Capital Profit 560 387.5
Share in Revenue Profit & Loss 680 450.0
Share in Revenue General Reserve 40 37.5
Less : Minority Interest in equity proposed dividend (400) (250)
Less : Share in Stock Reserve (300 x 25%) ---- (75)
Total 4,880 3,050
Total Minority Interest (Evening & Night) 7,930
www.indasfundas.in
Q.43. Kim and Kin floated a new company KimKin Ltd. on 1st April, 2010 with a capital of ` 5 lakhs represented
by 50,000 ordinary shares of ` 10 each, subscribed equally by both groups. Kimkin Ltd. made the following
acquisition on the same date :
(1) 3000 shares of ` 10 each in Klean Ltd. at ` 35,000.
(2) 10,000 shares of ` 10 each in Klinic Ltd. for ` 72,000.
(3) 8,000 equity shares of ` 10 each in Klear Ltd. for ` 92,000 and 200 8% Cumulative Preference shares
@ ` 140 per share.
The following are the summarized Balance Sheet of the three companies as on 31.3.2011.
Liabilities Klean Ltd. Klinic Ltd. Klear Ltd.
Equity Share Capital 40,000 1,20,000 1,00,000
8% Cumulative Preference Capital (` 100 shares) 25,000
Reserves (31.3.2010) 3,000 7,500
Profit and Loss Account 6,000 15,000
Sundry Creditors 2,900 8,000 7,500
51,900 1,28,000 1,55,000
Assets
Goodwill (Self Generated) 4,000 15,000
Freehold Land 8,000 52,000 50,000
Plant & Machinery 16,000 19,000 37,000
Inventories 8,900 25,000 26,000
Sundry Debtors 4,000 12,000 15,500
Bank 11,000 2,000 11,500
Profit & Loss A/c 18,000
51,900 1,28,000 1,55,000
You are supplied with the following information and requested to compile the consolidated Balance Sheet
as on 31st March 2011 of the entire Group as per Schedule III of the Companies Act, 2013.
(1) The Freehold Land of Klear Ltd. carries a Fair Value of ` 65,000 as on 1.4.2010.
(2) The Plant & Machinery of Klinic Ltd. to be depreciated by ` 3,000.
(3) Inventories of Klean Ltd. ar undervalued by ` 2,000.
(4) On Balance Sheet date Kimkin Ltd. owed Klean Ltd. ` 10,500 and is owed ` 8,200 by Klinic Ltd. Klear
Ltd. is owed ` 1,300 by Klean Ltd. and ` 2,000 by Klinic Ltd.
(5) The balances in P&L A/c on date of acquisition were : Klean Ltd. ` 2,000 (Cr.); Klinic Ltd. ` 12,000
(Dr.) and Klear Ltd. ` 4,000 (Cr.).
The Credit balanaces of Klean Ltd. & Klear Ltd. were wholly distributed as Dividends in June 2010.
(6) During 2010-11 Klean Ltd. & Klear Ltd. declared and paid interim dividends of 8% and 10% respectively.
(7) Klear Ltd. has discharged dividend obligations towards its Preference shareholders up-to March 2009.
[Nov., 2011 - 16 Marks]

Ans. :-
Consolidated Balance Sheet of KimKin Ltd. and its subsidiary Klean Ltd, Klinik Ltd. and Klear Ltd.
(b) Reserve and Surplus 38,210
(a) Trade Payable (Creditors Less Contra 9300) 19,600
6,20,200
(II) ASSETS
(1) Non-Current Assets
(a) Fixed Assets
(i) Tangible 1,94,000
(ii) Intangible (Goodwill) 19,000
(2) Current Assets
(a) Inventories 61,900
(b) Trade Receivable Less Contra 11,500 28,200
(c) Cash and cash equivalent (including 2200 cash in transit) 3,17,100
6,20,200
Q.44. X Ltd. purchases its raw materials from Y Ltd. and sells goods to Z Ltd. in order to ensure regular supply of raw
materials and patronage for finished goods. X Ltd. through its wholly owned subsidiary, X Investment Ltd. acquired
on 31st December, 1996, 51% of equity capital of Y Ltd. for ` 15 crores and 76% of equity capital of Z Ltd. for `
30 crores. X Investments Ltd. was floated by X Ltd. in 1990 from which date, it was wholly owned by X Ltd.
The following are the balance sheets of the four companies as on 31st December, 1996 :
(` in Crores)
X Ltd X Investment Ltd. Y Ltd. Z Ltd.
` ` ` ` ` ` ` `
Share Capital
Equity (fully paid) ` 10 each 25 5 10 15
Reserves and Surplus 75 100 20 25 15 25 20 35
Loan funds :
Secured 15 -- 5 20
Unsecured 10 25 50 50 10 15 15 35
Total Sources 125 75 40 70
Fixed Assets :
Cost 60 -- 15 30
Less : Depreciation 35 25 -- -- 7 8 17 13
Investmetns at cost in fully paid
Equity shares of :
X Investments Ltd. 5 --- -- --
Y Ltd. -- 15 -- --
Z Ltd. -- 30 -- --
Other Companies -- 29 -- --
(Market value ` 116 Cr.)
www.indasfundas.in
Net Current Assets :

Current assets 105 1 96 200
Less : Current Liabiliites (10) 95 -- 1 64 32 143 57
Total Application 125 75 40 70
There are no inter company transactions outstanding between the companies.
You are asked to prepare Consolidated Balance Sheet as at 31st December, 1996 in vertical form.
[May 1997 - 15 Marks]
Ans. :-
Consolidated Balance Sheet of X Ltd. and its subsidiaryes X investment Ltd., Y Ltd, and Z Ltd.
as at 31st December, 1996
Particulars Notes `
(a) Share Capital 25.00
(b) Reserve and Surplus (75 + 20) 95.00
(c) Minority Interest (WN 6) 20.65
(a) Long term borrowing (25 + 50 + 15 + 35) 125.00
(3) Current Liabilities (10 + 64 + 143) 217.00
482.65
(II) ASSETS
(a) Fixed Assets
(i) Tangible Assets (25 + 8 + 13) 46.00
(ii) Intangible Assets (Goodwill) 5.65
(b) Non-Current Investments 29.00
(2) Current Assets (105 + 1 + 96 + 200) 402.00
482.65
100% 51%
X Ltd.  X Invest-  Y Ltd.
ment Ltd.
76%

Z Ltd.
WN 2 : Analysis of Profit of X investment Ltd.

Reserves and Surplus 0 20 20
Transfer from Y Ltd. --- 0
Transfer from Z Ltd. --- 0
Total 0 20
Minority Interest --- 0
Share of X Ltd. 0 20

Note : Since X investment Ltd. is floated (incorporated) on date of acquisition hence entire profit is post.
WN 3 : Analysis of profit of Y Ltd.

Reserve and Surplus 15 0 15
Minority Interest = 49% 7.35 0
X Investment Ltd. = 51% 7.65
WN 4 : Analysis of Profit of Z Ltd.

Reserve & Surplus 20 0 20
Minority Interest = 24% 4.8 0
X Investment Ltd. = 76% 15.20

X Ltd. in X X Investment X Investment
Investment Ltd. Ltd. in Y Ltd. Ltd. in Z Ltd.
@ 100% @ 51% 76%
Amount invested 5 15 30
Less : Pre-acquisition dividend --- --- ---
Total 5 15 30
(B) Share in Net assets represented by

Share Capital 5 5.10 11.40
Capital Profit --- 7.65 15.20
5 12.75 26.6
(C) Goodwill / (Capital Reserve) (A - B) 0 2.25 3.40

Y Ltd. @ 49% Z Ltd. @ 24%
Equity share capital 4.90 3.6
Share in Capital Profit 7.35 4.80
Share in Revenue Profit --- ---
Total 12.25 8.4
Combined 20.65
www.indasfundas.in
Q.45. From the following, Balance Sheet of a group of companies and the other information provided, draw up the
consolidated Balance Shet as on 31.3.1998.
Balance Sheet as on 31.3.1998
(` in lacs)
X Y Z X Y Z
Share capital Fixed assets less dep. 130 150 100
(in share of ` 100 each) 300 200 100 Cost of investment in Y Ltd. 180 --- ---
Reserve 50 40 30 Cost of investment in Z Ltd. 40 --- ---
P & L balance 60 50 40 Cost of investment in Z Ltd. --- 80 ---
Bills payable 10 --- 5 Stock 50 20 20
Creditors 30 10 10 Debtors 70 10 20
Y Ltd. balance --- --- 15 Bills receivables --- 10 20
Z Ltd. balance 50 --- --- Z Ltd. balance --- 10 ---
X Ltd. balance --- --- 30
Cash & Bank Balance 30 20 10
500 300 200 500 300 200
X Ltd. holds 1,60,000 shares and 30,000 shares respectively in Y Ltd. and Z Ltd. Y Ltd. holds 60,000 shares in Z
Ltd. These investments were made on 1.7.1994 on which date the position was as follows :
Y Ltd. Z Ltd.
Reserves 20 10
Profit & Loss Account 30 16
In December 1997 Y Ltd. invoiced goods to X Ltd. for ` 40 lakhs at cost plus 25%. The closing stock of X Ltd.
includes such goods valued at ` 5 lakhs.
Z Ltd. sold to Y Ltd. an equipment costing `24 lakhs at a profit of 25% on selling price on 1.1.1998. Depreciation
at 10% per annum was provided by Y Ltd. on this equipment.
Bills payables of Z Ltd. represent acceptances given to Y Ltd. out of which Y Ltd. has discounted bills worth 3 lakhs.
Debtors of X Ltd. include ` 5 lakhs being the amount due from Y Ltd.
X Ltd. proposes dividend at 10%. [May 1998 & 2011 - 16 Marks]
Ans. :- Capital Reserve 13.40 lakhs; Minority Interest - ` 78.36.
Q.46. From following data, you are required to prepare the consolidated Balance Sheet of a group of companies :
Balance Sheet as on 31st December, 2000
Liability A Ltd. B Ltd. C Ltd. Assets A Ltd. B Ltd. C Ltd.
` ` ` ` ` `
Share Fixed Assets 56,000 1,10,000 75,000
Capital 2,50,000 2,00,000 1,20,000 Investment at cost
Reserves 36,000 20,000 14,400 Share in B Ltd. 1,70,000
P & L A/c 32,000 4,000 10,200 Share in C Ltd. 36,000 1,06,000
C Ltd. Bal. 6,600 Stock-in-trade 24,000
Creditors 14,000 10,000 B Ltd. Bal. 16,000
A Ltd. 14,000 Debtors 36,600 32,000 63,000
A Ltd. Bal. 6,600
3,38,600 2,48,000 1,44,600 3,38,600 2,48,000 1,44,600
Other particulars are as under :
(1) The capital of all companies is divided into shares of ` 100 each.
(2) A Ltd. held 1,500 shares of B Ltd. and 300 shares of C Ltd.
(3) B Ltd. held 800 shares of C Ltd.
(4) All investments were made on 30th June, 2000.

(5) There were the following balances on 1st January, 2000.

`)
B Ltd. (` `)
C Ltd. (`
Reserves 18,000 12,000
Profit & Loss 2,000 1,680
(6) Dividends have not been declared by any company during the year nor are any proposed.
(7) B Ltd. sold goods costing ` 8,000 to A Ltd. at the price of ` 8,800. These goods were still unsold on 31st
December, 2000.
(8) A Ltd. remitted ` 2,000 to B Ltd. on 30th December, 2000 but the same was not received by 31st December,
2000.
Ans .:-
Consolidated Balance Sheet of A Ltd. and its subsidiaries B Ltd. and C Ltd.
Particulars Notes `
(b) Reserve and Surplus (WN 6) 72,995
(c) Minority Interest (WN 5) 68,760
(a) Trade Payables [Creditors] (14,000 + 10,000) 24,000
4,15,775
(II) ASSETS
(a) Fixed Assets
(i) Tangible Assets (56,000 + 1,10,000 + 75,000) 2,41,000
(ii) Intangible Assets (Goodwill) [WN 4] 17,955
(2) Current Asses
(a) Inventories (24,000 - 800) 23,200
(b) Trade Receivables [Debtors] (36,600 + 32,000 + 63,000) 1,31,600
(c) Cash & cash equivalent (Cheque in transit) 2,000
4,15,775
75% B Ltd.
A Ltd. 
3/12 8/12

 C Ltd.
www.indasfundas.in
WN 2 : Analysis of Profit of B Ltd.

General Reserve 18,000 2,000 --- 20,000
Profit and Loss 2,000 --- 2,000 4,000
Total 20,000 2,000 2,000
Time adjustment 2,000 (1,000) (1,000)
Total 22,000 1,000 1,000
Add : Transfer from C Ltd. --- 800 2,840
Total 22,000 1,800 3,840
Minority Interest - 25% 5,500 450 960
A Ltd. - 75% 16,500 1,350 2,880
WN 3 : Analysis of Profit of C Ltd.

General Reserve 12,000 2,400 --- 14,400
Profit and Loss 1,680 --- 8,520 10,200
Total 13,680 2,400 8,520
Time Adjustment 5,460 (1,200) (4,260)
19,140 1,200 4,260
Minority Interest - 1/12 1,595 100 355
A Ltd. - 3/12 4,785 300 1,065
B Ltd. - 8/12 12,760 800 2,840

A Ltd. in A Ltd. in B Ltd. in
B Ltd. C Ltd. C Ltd.
@ 750% @ 3/12 @ 8/12
(A) Amount Invested
Cost of Investment 1,70,000 36,000 1,06,000
Total 1,70,000 36,000 1,06,000
(B) Share in net assets represented by
Share Capital 1,50,000 30,000 80,000
Capital Profit 16,500 4,785 12,760
1,66,500 34,785 92,760
(C) Goodwill / (Capital Reserve) 3,500 1,215 13,240
Combined 17,955


B Ltd. C Ltd.
@ 25% @ 1/12
Capital Profit 5,500 1,595
Revenue General Reserve 450 100
Revenue Profit and Loss 960 355
Less : Share in Stock Reserve (200)
Total 56,710 12,050
Combined 68,760
WN 6 : Calculation of Consolidated Reserve & Surplus

Profit General Reser.
Share in B 2,880 1,350
Share in C 1,065 300
Less : Share in Stock Reserve (600)
35,345 37,650
Combined 72,995
Q.47. The Balance Sheets of three companies Angle Ltd., Bolt Ltd., and Canopy Ltd., as at 31st December, 2007
are given below :
Liabilities Angle Ltd. Bolt Ltd. Canopy Ltd.
` ` `
Share capital (Equity shares of ` 100 each) 15,00,000 10,00,000 6,00,000
Reserves 2,00,000 1,25,000 75,000
Profit and Loss A/c 5,00,000 2,75,000 2,50,000
Sundry creditors 2,00,000 2,50,000 1,00,000
Bills Payable --- --- 50,000
Angle Ltd. --- 1,00,000 80,000
24,00,000 17,50,000 11,55,00
Goodwill 2,50,000 5,80,000 4,50,000
Plant and Machinery 4,00,000 2,50,000 3,25,000
Furniture and Fittings 2,00,000 1,50,000 1,40,000
Shares in -
Bolt Ltd. (7,500 shares) 9,00,000 --- ---
Canopy Ltd. (1,000 shares) 1,50,000
Canopy Ltd. (3,500 shares) --- 5,20,000 ---
Stock in trade 1,00,000 1,50,000 1,60,000
Sundry debtors 1,40,000 70,000 70,000
Bills receivables 50,000 20,000 ---
Due from -
Bolt Ltd. 1,20,000 --- ---
Canopy Ltd. 80,000 --- ---
Cash in hand 10,000 10,000 10,000
Total 24,00,000 17,50,000 11,55,000
www.indasfundas.in
(a) All shares were acquired on 1st July 2006
(b) On 1st January, 2006, the balances were :
Angle Ltd. Bolt Ltd. Canopy Ltd.
` ` `
Reserves 1,00,000 1,00,000 50,000
Profit and Loss Account 50,000 (50,000) Dr. 30,000
Profit during 2006 were earned evenly over the year 3,00,000 2,50,000 1,00,000
(c) Each company declared a dividend of 10% in the year 2007 on its shares out of Profits for the year 2006;
Angle Ltd. and Bolt Ltd. have credited their Profit and Loss Account with the dividends received.
(d) The increase in reserves in case of Angle Ltd., Bolt Ltd., and Canopy Ltd., was effected in the year 2006.
(e) All the bills payable appearing in Canopy Ltd.'s Balance Sheet were accepted in favour of Bolt Ltd., out of
which bills amounting ` 30,000 were endorsed by Bolt Ltd., in favour of Angle Ltd.
(f) Stock with Bolt Ltd. includes goods purchased from Angle Ltd., for ` 18,000. Angle Ltd., invoiced the goods
at cost plus 20%.
Prepare consolidated Balance Sheet of the group as at 31st December, 2007. Working should be part of the
answer. Ignore taxation including dividend distribution tax, disclose minority interest as per AS 21.
[Nov., 2008- 20 Marks]
Ans. :- Total Goodwill - ` 14,21,250.
Q.48. Below is given the balance shet of Rich Ltd., Poor Ltd., and Solvent Ltd. as at 30th June, 2001.
Particulars Rich Poor Solvent
Ltd. Ltd. Ltd.
` ` `
Fixed Assets (at cost less depreciation) 2,00,000 2,50,000 2,00,000
Investments :
3200 Equity Shares in Poor Ltd. 3,50,000
1,500 Equity shares in Solvent Ltd. 2,00,000
400 Equity Shares in Poor Ltd. 45,000
Current Assets :
Debtors 20,000 90,000 40,000
Stock 20,000 70,000 50,000
Cash and Bank Balance 10,000 1,65,000 45,000
8,00,000 5,75,000 3,80,000
Equity Share Capital (` 100 each) 5,00,000 4,00,000 2,50,000
Profit & Loss Account 2,50,000 1,00,000 30,000
Current Liabilities :
Bills Payable 4,000 8,000 20,000
8,00,000 5,75,000 3,80,000
(a) Profit and Loss Account of Poor Ltd. includes ` 25,000 as pre-acquisition profits, the balance representing
post-acquisition profits.
(b) The balance in the Profit and Loss Account of Solvent Ltd., is arrived at after setting off ` 7,500 being pre-
acquisition loss against the post-acquistiion profit of ` 37,500.
(c) Rich Ltd., and Solvent Ltd., acquired the shares of Poor Ltd., on the same date.
You are required to prepare the Consolidated Balance Sheet of Rich Ltd., and its subsidiaries Poor Ltd., and
Solvent Ltd. as at 30th June 2001.

Ans. :-
Consolidated Balance Sheet of Rich Ltd. and its subsidiaries Poor Ltd. and Solvent Ltd.
as at 30th June, 2001
(b) Reserve and Surplus (WN 6) 3,37,000
(a) Trade Payable (Creditor + Bills Payable) 2,25,000
12,27,000
(II) ASSETS
(a) Fixed Assets
(i) Tangible assets 6,50,000
(ii) Intangible Assets (Goodwill) 67,000
(2) Current Assets
(b) Trade Receivable 1,50,000
12,27,000
Rich 80% Poor
Ltd. 
Ltd.

60% 10%
 Solvent
Ltd.
WN 2 : Analysis of Profit of Poor Ltd.

Capital Rev. P/L
Profit and Loss A/c 25,000 75,000 1,00,000
Minority Interest - 10% 2,500 7,500
Solvement Ltd. - 10% 2,500 7,500
Rich Ltd. - 80% 20,000 60,000
WN 3 : Analysis of Solvent Ltd.

Capital Rev. P/L
Profit and Loss (7,500) 37,500 30,000
Transfer from Poor ---- 7,500
Total (7,500) 45,000
Minority Interest - 40% (3,000) 18,000
Rich Ltd.- 60% (4,500) 27,000
www.indasfundas.in
Particulars Rich in Poor Rich in Solvent Solvent in
Ltd. @ 80% Ltd. @ 60% Poor @ 10%
Amount interested 3,50,000 2,00,000 45,000
Total 3,50,000 2,00,000 45,000
Share Capital 20,000 (4,500) 2,500
Capital Profit 3,20,000 1,50,000 40,000
Total 3,40,000 1,45,500 42,500
(C) Goodwill / (Capital Reserve) 10,000 54,500 2,500
Combined Goodwill 67,000

Poor Ltd. Solvent Ltd.
@ 10% @ 40%
Share Capital 40,000 1,00,000
Capital Profit 2,500 (3,000)
Revenue Profit 7,500 18,000
Total 50,000 1,15,000
Combined 1,65,000

Particulars `
Add : Share in Poor 60,000
Less : Share in Solvent 27,000
3,37,000
Q.49. (RTP - Nov., 2017)Following are the Balance Sheet of Mumbai Limited, Delhi Limited, Amritsar Limited and
Kanpur Limited as at 31st December, 2000 :
Liabilities Mumbai Ltd. Delhi Ltd. Amritsar Ltd. Kanpur Ltd.
Share capital (` 100 face value) 50,00,000 40,00,000 20,00,000 60,00,000
General Reserve 20,00,000 4,00,000 2,50,000 10,00,000
Profit & Loss Account 10,00,000 4,00,000 2,50,000 3,20,000
Sundry Creditors 3,00,000 1,00,000 50,000 80,000
83,00,000 49,00,000 25,50,000 74,00,000
Assets
Investments :
30,000 shares in Delhi Ltd. 35,00,000 --- --- ---
10,000 shares in Amritsar Ltd. 11,00,000 --- --- ---
5,000 shares in Amritsar Ltd. --- 5,00,000 --- ---
Shares in Kanpur Ltd. @ ` 120 36,00,000 18,00,000 6,00,000 ---
Fixed Assets --- 20,00,000 15,00,000 70,00,000
Current Assets 1,00,000 6,00,000 4,50,000 4,00,000
83,00,000 49,00,000 25,50,000 74,00,000

Balance in General Reserve Account and Profit and Loss Account, when shares were purchased in different
companies were :
Liabilities Mumbai Delhi Amritsar Kanpur
Ltd. Ltd. Ltd. Ltd.
General Reserve Account 10,00,000 2,00,000 1,00,000 6,00,000
Profit & Loss Account 6,00,000 2,00,000 50,000 60,000
Required :-
Prepare, the consolidated Balance Sheet of the group as at 31st December, 2000 as per Schedule III of
The Companies Act, 2013 (calculations may be rounded off to the nearest rupee). [May 2001 - 16 Marks]
Ans. :-
Consolidated Balance Sheet of Mumbai Ltd. & its subsidiary Delhi Ltd., Amritsar Ltd. & Kanpur Ltd.
as at 31st Dec. 2000
Particulars Notes `
(c) Minority Interest 31,25,312
(2) Current Liabilities & Provisions
(a) Trade Payable 5,30,000
1,26,87,500
(II) Assets
(i) Fixed Assets
(a) Tangible 1,05,00,000
(b) Intangible 6,37,500
1,26,87,500
Q.50. P Limited is a holding company and Q Ltd. and R Ltd. are subsidiaries of P Ltd. The summarized balance sheets
of all the companies as on 31.3.2016 are given below :
P Ltd. Q Ltd. R Ltd. P Ltd. Q Ltd. R Ltd.
Share Capital 200,000 200,000 120,000 Fixed Assets 40,000 120,000 86,000
Reserves 96,000 20,000 18,000 Investments :
Profit and Loss A/c 32,000 24,000 18,000 Shares in Q Ltd. 190,000
Trade payable 14,000 10,000 Shares in R Ltd. 26,000 106,000
P Ltd. balance 14,000 Inventory in Trade 24,000
R Ltd. balance 6,000 Q Ltd. - balance 16,000
Trade Receivables 52,000 42,000 64,000
P Ltd. balance 6,000
348,000 268,000 156,000 348,000 268,000 156,000
(1) The share capital of all companies is divided into shares of ` 10 each.
(2) P Ltd. held 16000 shares of Q Ltd. and 2000 shares of R Ltd.
(3) Q Ltd. held 8000 shares of R Ltd.
(4) All the investments were made on 30.9.2015.
www.indasfundas.in
(5) The position on 31.3.2015 was as under :
Q Ltd. R Ltd.
`)
(` `)
(`
Reserve 16,000 15,000
Profit and Loss Account 8,000 6,000
Trade Payables 10,000 2,000
Fixed Assets 120,000 86,000
Inventory in trade 8,000 71,000
Trade receivables 96,000 66,000
(6) The whole of inventory in trade of Q Ltd. as on 30.9.2015 (` 8,000) was later sold to P Ltd. for ` 8800 and
remained unsold by P Ltd. as on 31.3.2016.
(7) Cash in transit from Q Ltd. to P Ltd. was ` 2,000 as at the close of business.
(8) All the companies proposed dividend of 10%.
Prepare the consolidated Balance Sheet of the group as on 31.3.2016 using direct method.
(May, 2002 & 2016; Nov., 2018 - 16 Marks)
Ans. :-
Consolidated Balance Sheet of P Ltd. & its Subsidiary Q Ltd. & R Ltd. as at 31.3.2016
Particulars Notes `
(b) Reserve and Surplus (21,960 + 98,650) 1,20,610
(2) Minority Interest (24,000 + 45,640) 69,640
(a) Trade Payables (14,000 + 10,000) 24,000
(b) Short term provision (20,000 + 4,000 + 2,000) 26,000
4,40,250
(II) Assets
(a) Fixed Assets
(i) Tangible (40,000 + 1,20,000 + 86,000) 2,46,000
(ii) Intangible - Goodwill (7,000 + 1,250 + 2,800) 11,050
(2) Current Assets
(a) Stock [Inventories] (24,000 - 800) 23,200
(b) Trade Receivables (52,000 + 42,000 + 64,000) 1,58,000
(c) Cash & cash equivalent (cash in transit) 2,000
4,40,250
80% Q Ltd.
P Ltd. 
1/6 4/6

 R Ltd.

WN 2 : Analysis of Profit of R Ltd.

Capital R P&L Rgr
General Reserve 15,000 --- 3,000 18,000
Profit & Loss 6,000 12,000 --- 18,000
Total 21,000 12,000 3,000
Time Adjustmet 7,500 (6,000) (1,500)
Total 28,500 6,000 1,500
Q Ltd. (4/6) 19,000 4,000 1,000
P Ltd. (1/6) 4,750 1,000 250
Minority Interest (1/6) 4,750 1,000 250
WN 3 : Analysis of Profit of Q Ltd.

Pre-acquisition Post Acquisition Total
Capital R P&L Rgr
General Reserve 16,000 --- 4,000 20,000
Profit & Loss 8,000 16,000 --- 24,000
Total 24,000 16,000 4,000
Time Adjustment 10,000 8,000 2,000
Total 34,000 8,000 2,000
Minority Interest @ 20% 6,800 1,600 400
P Ltd. @ 80% 27,200 6,400 1,600

Q in R Ltd. P in R Ltd. P in Q Ltd.
(4/6) (1/6) 80%
Amount Invested 1,06,000 26,000 1,90,000
Share Capital 80,000 20,000 1,60,000
Capital Profit 19,000 4,750 27,200
Total 99,000 24,750 1,87,200
(C) Goodwill (A - B) 7,000 1,250 2,800

R Ltd. Q Ltd.
(1/6) 20%
Revenue Profit & Loss 1,000 1,600
Revenue General Reserve 250 400
Share of Minority Interest of Q Ltd. in post profit of R Ltd. 800
Share of minority interest of Q Ltd. in post reserve of R Ltd. 200
Less : Minority Interest in Equity Proposed Dividend (2,000) (4,000)
Less : Share in Stock Reserve (800 x 20%) (160)
Total 24,000 45,640
www.indasfundas.in
WN 6 : Calculation of Consolidated
Particulars P&L General Reserve
Share in Q Ltd. 6,400 1,600
Share in R Ltd. 1,000 250
Share of P Ltd. through Q Ltd. in post acquisition profit of R Ltd. (4,000 x 80%) 3,200
Share of P Ltd. through Q in post acquisition reserve of R Ltd. (1,000 x 80%) 800
Less : Share in Stock Reserve (800 x 80%) (640) ----
Less : Proposed Dividend (2,00,000 x 10%) (20,000) ----
Total 21,960 98,650
Note 1 : Under Direct method post profit and reserve of lower subsidiary are not transferred to upper subsidiary but
directly distributed between ultimate holding and minority.
Notes 2 : It is assumed that dividend has been proposed by the companies before balance sheet date.
Q.51.The following are the Balance Sheets of Arun Ltd., Brown Ltd. and Crown Ltd. as at 31.12.2005 :
Liabilities Arun Ltd. Brown Ltd. Crown Ltd.
` ` `
Share captial (shares of ` 100 each) 6,00,000 4,00,000 2,40,000
Reserves 80,000 40,000 30,000
Profit and Loss Account 2,00,000 1,20,000 1,00,000
Sundry creditors 80,000 1,00,000 60,000
Arun Ltd. -- 40,000 32,000
9,60,000 7,00,000 4,62,000
Assets :
Goodwill 80,000 60,000 40,000
Fixed Assets 2,80,000 2,00,000 2,40,000
Brown Ltd. (3,000 shares) 3,60,000 --- ---
Crown Ltd. (400 shares) 60,000 --- ---
Crown Ltd. (1,400 shares --- 2,08,000 ---
Due from : Brown Ltd. 48,000 --- ---
Crown Ltd. 32,000 --- ---
Current Assets 1,00,000 2,32,000 1,82,000
Total 9,60,000 7,00,000 4,62,000
(i) All shares were acquired on 1.7.2005.
(ii) On 1.1.2005 the balances to the various accounts were as under :
Particulars Arun Ltd. Brown Ltd. Crown Ltd.
` ` `
Reserves 40,000 40,000 20,000
Profit and Loss Account 20,000 (Dr.) 20,000 12,000
(iii) During 2005, Profits accrued evenly.
(iv) In August 2005, each company paid interim dividend of 10%. Arun Ltd. and Brown Ltd. have credited
their profit and loss account with the dividends received.
(v) During 2005, Crown Ltd. sold an equipment costing ` 40,000 to Brown Ltd. for ` 48,000 and Brown
Ltd. in turn sold the same to Arun Ltd. for ` 52,000.
Prepare the consolidated Balance Sheet as at 31.12.2005 of Arun Ltd. and its subsidiary as per Schedule III
of The Companies Act, 2013. [May , 2006 - 20 Marks]

Ans. :-
Consolidated Balance Sheet of Arun Ltd. and its subsidiaries Brown Ltd. and Crown Ltd.
as at 31.12.2005
(b) Reserve and Surplus (WN 6) 3,36,273
(a) Trade Payable (80,000 + 1,00,000 + 60,000) 2,40,000
14,10,000
(II) ASSETS
(a) Fixed Assets
(i) Tangible assets (2,80,000 + 2,00,000 + 2,40,000 - 12,000l) 7,08,000
(ii) Intangible Assets (80,000 + 60,000 + 40,000) 1,80,000
(2) Current Assets
(a) Cash and Cash equivalent (note) 8,000
(b) Other Current Assets 5,14,000
14,10,000
Note : Inter company owings from crown fully eliminated but from Crown difference of 8,000.
WN 2 : Analysis of Profit of Crown Ltd.

General Reserve 20,000 10,000 --- 30,000
Profit & Loss A/c 12,000 --- 88,000 1,00,000
Total 32,000 10,000 88,000
Add : Interim dividend paid @ 10% --- --- 24,000
Total 32,000 10,000 1,12,000
Time Adjustment 61,000 (5,000) (56,000)
F
10,000 x 6 I
G F1,12,000 x 6 I
H 12 J K G
H 12 J K
Total 93,000 5,000 56,000
Less : Interim dividend paid (note 1) (18,000) (6,000)
F
G24,000 x 6 I F24,000 x 2 I
H 8 J K G
H 8 J K
Less : Unrealised profit on equipment --- --- (8,000)
Total 75,000 5,000 42,000
Minority Interest - 3  12 18,750 1,250 10,500
Brown Ltd. - 43,750 2,917 24,500
Arun Ltd. - 12,500 833 7,000
Note : Interim dividend is assumed paid at the end of august and it is also assumed that profit from 1.1.2005 to
31.8.2005 has been used.
www.indasfundas.in
WN 3 : Analysis of Profit of Brown Ltd.

General Reserve 40,000 --- --- 40,000
Profit and Loss A/c (20,000) --- 1,40,000 1,20,000
Total 20,000 --- 1,40,000
Less : Pre-interim dividend received from
Crown wrongly credited (10,500)
F
18,000 x 7 I
G
H 12 J K
Add : Interim dividend paid @ 10% 40,000
Total 20,000 --- 1,69,500
Time Adjustment for 6 month period 84,750 --- (84,750)
F
1,69,500 x 6 I
G
H 12 J K
Total 1,04,750 84,750
Less : Interim dividend (30,000) --- (10,000)
F
40,000 x 6 I
G F
40,000 x 2 I
H 8 J K G
H 8 J K
Less : Unrealised profit on equipment --- --- (4,000)
Add : Share in profit of Crown Ltd. (Post) --- 2,917 24,500
Total 74,750 2,917 95,250
Minority Interest @ 25% 18,686 729 23,812
Arun Ltd. @ 75% 56,064 2,188 71,438

Particulars Arun in Brown Arun in Crown Brown in Crown
@ 75% @ 2/12 @ 7/12
Amount interested 3,60,000 60,000 2,08,000
Less : Pre-acquisition dividend (22,500) (3,000) (10,500)
Total 3,37,500 57,000 1,97,500
Share Capital 3,00,000 40,000 1,40,000
Capital Profit 56,064 12,500 43,750
Total 3,56,064 52,500 1,83,750
(C) Goodwill / (Capital Reserve) (a - b) (18,564) 4,500 13,750

Particulars Brown Ltd. Crown Ltd.
Share Capital 1,00,000 60,000
Add : Share in Capital Profit 18,686 18,750
Add : Share in Revenue Profit 23,812 10,500
Add : Revenue Reserve 729 1,250
1,43,227 90,500
All right reserved © 2019 IQS


Particulars Reserve Profit & Loss
Own Balance 80,000 2,00,000
Add : Share in Post Profit
Brown Ltd. 2,188 71,438
Crown Ltd. 833 7,000
Less : Pre-acquisition dividend
Brown Ltd. --- (22,500)
Crown Ltd. --- (3,000)
Total 83,021 2,53,938
Q.52. Draw the consolidated Balance-sheet as on 31st March, 2015 as per Schedule III with Notes to Accounts (following
indirect method) based on the following information :
Balance Sheet as on 31st March, 2015
` in lacs)
(`
Liabilities P Q R
Share Capital
Equity Share Capital (FV ` 100) 600 400 100
Reserves and Surplus
Reserves 40 10 20
Surplus in Profit and Loss Account 60 40 30
Current Liabilities
Trade Payables 30 10 35
Other Payable
Q Limited 15
R Limited 50
780 460 200
Assets
Fixed Assets (Net of Depreciation) 230 150 100
Investments
Q Limited 320
R Limited 40 100
Current Assets
Inventories 50 30 40
Trade Receivables 60 50 20
Other Receivables
R Limited 40
P Limited 30
Bank Balance 80 90 10
780 460 200
(a) P Limited acquired 1,50,000 (cum bonus) shares of Q Limited and 30,000 shares of R Limited and Q
Limited acquired 50,000 shares of R Limited on 29th March, 2014.
(b) Q Limited fixed 1st April, 2014 as record date for allotment of bonus share in the ratio of 1 : 1 and the same
were duly allotted.
(c) P Limited proposed dividend @ 7.50% for the year ended on 31st March, 2015.
(d) In December, 2014, Q Limited invoiced goods to P Limited for ` 30 lacs on a loan of 25% on cost. 1/3rd of
such goods are in stock with P Limited as at the end of the year.
www.indasfundas.in
(e) R Limited sold to Q Limited on 1st January, 2015, an asset costing ` 20 lacs and made a profit of 20% on
invoice value. Q has provided depreciation @ 10% per annum on such assets.
(f) As on 31st March, 2014, the balances in reserves and profit and loss account of Q Limited were ` 5 lacs
and ` 15 lacs respectively.
(g) R Limited made a profit of 12.40 lacs during the current year. During the year, ` 0.55 lacs was received
from insurance company against loss of stock due to flood which occurred on 31st January 2014in which
goods worth ` 0.75 lacs were damaged and were part of R’s stock as on 31st March, 2014.
(h) R Limited transferred, at the year-end on 31st March, 2015, an amount from Profit and Loss Account to
Reserves which equals to 20% of the reported aggregate figures of Reserves and Profit and Loss Account
in the balance-sheet.
(May, 2015 - 16 Marks)
Ans. :-
Consolidated Balance Sheet of P Ltd. and its subsidiaries as on 31.3.2015
(I) Equity and Liabilities
(1) Shareholder’s Fund
(a) Share capital 600.00
(b) Reserves and Surplus 87.964
(2) Minority Interest 146.666
(a) Trade Payables (30 + 10 + 35) 75.00
(b) Short term provision (600 x 7.5%) 45.00
(c) Other current Liabilities (50 - 30) 20.00
974.63
(II) Assets
(a) Fixed Assets
(i) Tangible Assets (230 + 150 + 100 - 4.875) 475.125
(ii) Intangible Assets (goodwill) 46.505
(2) Current Assets
(a) Inventories (50 + 30 + 40 - 2) 118.00
(b) Trade receivables (60 + 50 + 20) 130.00
(c) Cash & cash equivalents (80 + 90 + 10 + 25 CIT) 205.00
974.63

12. Consolidation of Multiple Subsidiary with Chain Holding and Different Dates of Acquisition
Q.53. (Study Material) The Balance Sheet of A Ltd., B Ltd. and C Ltd. on 31st December, 2006 contained the following
items relating to the profits and losses of the companies:
A Ltd. B Ltd. C Ltd.
` ` `
Net Profit (or loss) for year 800 1,800 480 Dr.
Add : Balance forward 1,500 Loss 800 Profit 1,920
2,300 1,000 1,440
A Ltd. acquired 75% of the share capital of B Ltd. on 1st August, 2005.
B Ltd. was incorporated on lst Jan., 2005.
A Ltd. acquired 10% of the share capital of C Ltd. on 1st December, 2006.
B Ltd. acquired 80% of the share capital of C Ltd. on 1st September, 2006.
Prepare draft schedule of consolidated profit and loss account of the group showing the amount to be transferred to
other essential accounts to be included in the consolidated balance sheet, i.e., the credit total of ` 4,740.
Ans. :-
Statement of CPL / CC / MI
CPL CC MI
A Ltd. 2300
B Ltd. 1004 (350) 218
C Ltd. (4) 1428 144
3300 1078 362
Q.54. Following are the particulars regarding the purchases made by H Ltd. in its subsidiaries A Ltd. and B Ltd. and
also by A Ltd. in B Ltd.
Profit on date of purchase
Cr. Dr.
A Ltd. B Ltd.
` `
April 1, 2001 H Ltd. purchased 60% of share holdings of B Ltd. 1,000
Sept. 1, 2001 A Ltd. purchased 10% of share holdings of B Ltd. 600
Nov. 1, 2001 H Ltd. purchased 80% of share holdings of A Ltd. 2,000
You are required to prepare a statement showing (i) minority interest in the profits; (ii) holding company's share
in pre-acquisition profit; and (iii) holding company's share in post-acquisition profit. You have been given that
total profits on 31st December, 2001 (dated of consolidation) were :
A Ltd. ` 3,000 (Cr.)
B Ltd. ` 2,400 (Cr.)
Ans. :- H Ltd. Pre acquisition profits - ` 1060, Minority Interest - ` 1,380.
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Q.55. (MTP S2 - Nov., 2018) The following are the balance sheet of A Ltd., B Ltd., and C Ltd. as at st December, 2001
Liabilities A Ltd. B Ltd. C Ltd.
` ` `
Share Capital (Shares of ` 100 each) 10,00,000 5,00,000 2,00,000
General Reserve 2,00,000 35,000
Liabilities 1,60,000 3,75,000 1,40,000
15,30,000 10,30,000 3,40,000
Investments
4,000 shares in B Ltd. 6,00,000
500 shares in C Ltd. 25,000
1,500 shares in C Ltd. 90,000
Profit and Loss Account 80,000
Other Assets 9,05,000 9,40,000 2,60,000
15,30,000 10,30,000 3,40,000
The following information is available :
(1) Included in A Ltd.'s liabilities are ` 50,000 due to C Ltd.
(2) B Ltd. has advanced to C Ltd. ` 1,00,000.
(3) A Ltd. acquired its investment in B Ltd. on 1st January 2001 on which date the amounts standing to the credit
of General Reserve and Profit and Loss Account in B Ltd. was ` 35,000 and ` 65,000 respectively.
(4) A Ltd. acquired its investment in C Ltd. on 1st January, 2001 when the debit balance in Profit and Loss
Account in C Ltd.'s books was ` 60,000.
(5) B Ltd. acquired its investment in C Ltd. on 1st January, 1999 when the debit balance in the Profit and Loss
Account in C Ltd.'s books was ` 20,000.
(6) Neither B Ltd. nor C Ltd. has paid any dividends.
(7) Included in B Ltd.'s assets are stocks valued at ` 60,000 which were invoiced by A Ltd. at a price which was
20 percent above cost.
You are required to prepare a consolidated balance sheet as at 31st December 2001 showing your workings.
(Nov, 2008 - 16 Marks)
Ans. :-
Consolidated Balance Sheet
Particulars Note No. ` in ‘000)
(`
(b) Reserve & Surplus 3,87,000
(3) Liabilities (1,60,000 + 3,75,000 + 1,40,000 - 50,000 - 1,00,000) 5,25,000
20,34,000
II. Assets
(1) Sundry Assets (9,05,000 + 9,40,000 + 2,60,000 - 50,000 - 1,00,000 - 10,000) 19,45,000
(2) Goodwill 89,000
20,34,000

Q.56. The following is a summary of the Balance Sheet of A Ltd. and its two subsidiaries Ram Ltd. and Rahim Ltd. as
on 31st March, 1991 :
A Ltd. Ram Ltd. Rahim Ltd.
` ` `
Issued Share Capital :
Fully paid up shares of Rs 10 each 2,00,000 1,60,000 1,00,000
Profit and Loss Account 5,23,500 2,00,100 2,59,400
7,23,500 3,60,100 3,59,400
Sundry Assets less Liabilities 5,63,500 2,10,100 3,59,400
10,000 shares in Ram Ltd. at cost 1,60,000 --- ---
9,000 shares in Rahim Ltd. at cost --- 1,50,000 ---
7,23,500 3,60,100 3,59,400
When A Ltd. purchased shares in Ram Ltd. on 30th September, 1988, there was a credit balance of ` 1,46,500
in the profit and loss account of Ram Ltd. and when Ram Ltd. purchased shares of Rahim Ltd. on 31st March, 1989,
there was a credit balance of ` 40,000 in the profit and loss account of Rahim Ltd.
Prepare a consolidated Balance Sheet of the group as on 31st March 1991, showing your working, Calculations
to be made to the nearest rupee. [Nov. 1991 & May, 2014 - 16 Marks]
Ans. :-
Consolidated Balance Sheet of A Ltd. and it’s subsidiaries Ram Ltd. and Rahim Ltd.
Particulars Notes `
(b) Reserve and Surplus 6,87,975
(c) Minority Interest 2,45,025
Total 11,33,000
(II) ASSETS
Net Sundry Assets 11,33,000
11,33,000
A Ltd.
10/16
 Ram
30-9-1988 Ltd.
Profit & Loss = 1,46,500

90%

Rahim
31-3-1989 Ltd.
P&L = 40,000
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WN 2 : Analysis of Profit of Rahim Ltd.
Capital Rev. P/L
Profit and Loss A/c 40,000 2,19,400 2,59,400
Ram Ltd. @ 90% 36,000 1,97,460
WN 3 : Analysis of Profit of Ram Ltd.

Capital Rev. P/L
Profit and Loss Account 1,46,500 53,600 2,00,100
Add : Transfer from Rahim Ltd. --- 1,97,460
Total 1,46,500 2,51,060
Minority Interest @ 6/16 54,938 94,147
A Ltd. @ 10/16 91,562 1,56,913

Particulars A Ltd. in Ram Ram Ltd. in
Ltd. @ 10/16 Rahim Ltd. @ 90%
Amount invested 1,60,000 1,50,000
Less : Pre-acquisition dividend --- ---
Total 1,60,000 1,50,000
Share Capital 1,00,000 90,000
Capital Profit / Loss 91,562 36,000
Total 1,91,562 1,26,000
(C) Goodwill / (Capital Reserve) (31,562) 24,000
Combined Capital Reserve 7,562

Ram Ltd. Rahim Ltd.
@ 6/16 @ 10%
Total 2,09,085 35,940
Combined 2,45,025
WN 6 : Calculation of Consolidated Profit and Loss

Particulars `
Add : Share in Ram Ltd. 1,56,913
Total 6,80,413
Add : Capital Reserve 7,562
Total 6,87,975

Q.57. (Study Material) The Balance Sheet of three companies showed the following positions as on 30th June,
2006.
Star Ltd. Blue Ltd. Green Ltd.
` ` ` ` ` `
Fixed Assets :
Land and Building at cost 1,60,000 60,000 80,000
Furniture and Fittings at cost 1,50,000 50,000 46,000
Less: Depreciation upto June 30, 2006 70,000 80,000 26,000 24,000 15,000 31,000
2,40,000 84,000 1,11,000
Shares in Blue Ltd. at cost 1,25,000
Shares in Green Ltd. at cost 1,60,000
Current Assets :
Stock-in-trade 42,400 50,300 61,200
Debtors 82,390 46,610 44,300
Bank Balance 1,30,400 22,350 77,750
6,20,190 3,63,260 2,94,250
Share Capital :
Authorised and Issued
Equity Shares of ` 10 each fully paid 2,50,000 1,00,000 1,50,000
Reserve and Surpluses:
Capital Reserve 40,000 --- 30,000
Revenue Reserve 77,496 61,420 32,425
Current Liabilities and Provisions :
Creditors 80,194 90,940 16,340
Income-tax 72,500 60,900 35,485
Proposed Dividends 1,00,000 50,000 30,000
6,20,190 3,63,260 2,94,250
You also obtain the following information :
(1) Blue Ltd. acquired 12,000 shares in Green Ltd. in 2002-2003 when the balance on Capital Reserve
had been ` 20,000 and on Revenue Reserve ` 22,000.
(2) Star Ltd. purchased 7,500 shares in Blue Ltd. in 2002-2003 when the balance on the Consolidated Revenue
Reserve had been ` 25,000. The balance on Capital Reserve in Green Ltd. at that time was ` 30,000.
(3) Star Ltd. purchased a further 1,500 shares in Blue Ltd. in 2004-2005 when the balance on the consolidated
Revenue Reserve had been ` 40,000.
(4) Proposed dividends from subsidiary companies have been included in the figure for debtors in the
accounts of parent companies.
You are required to prepare the Consolidated Balance Sheet of Star Ltd. and its subsidiaries as on 30th
June, 2006 together with your consolidation schedule.
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Ans. :-
Consolidated Balance Sheet as on 1 April, 2010
(`
(a) Trade Payable (80,194 + 90,940 + 16,340) 1,87,474
(b) Tax Provision 1,68,885
(c) Other Provision (Proposed Dividend) 1,11,000
9,33,150
II. Assets
(a) Fixed Assets
Tangible 4,35,000
Intangible 9,450
(2) Current Assets
(b) Trade Receivable 1 1,04,300
9,33,150
Notes to Account
Trade Receivable
Particulars `
Debtor Star 82,390
Blue 46,610
Green 44,300 1,73,300
Less : Dividend Rectification
Blue (24,000)
Green (45,000)
1,04,300
Star Ltd.
15%
75%
2002 - 2003 2003 - 04 2004- 05 2005 - 06


Blue
○
○
Revenue Reserve = 25,000 Ltd.

○
80%
○
○
○
○
○
○
○
 2002 - 2003 2003 - 04 2004 - 05 2005 - 06

○
Gram Ltd.
○
CR = 20,000 CR = 30,000
Revenue Reserve = 25,000

WN 2 : Analysis of Profit of Green Ltd.

Capital Rev. PR Rev. CR
Revenue Reserve 22,000 10,425 ---- 32,425
Capital Reserve 20,000 ---- 10,000 30,000
Total 42,000 10,425 10,000
Proposed Dividend ---- 30,000 ----
42,000 40,425 10,000
Minority Interest @ 20% 8,400 8,085 2,000
B Ltd. @ 80% 33,600 32,340 8,000
WN 3 : Analysis of Profit of Blue Ltd.

(a) DOA - 1
Pre Post (RR) Total
Revenue Reserve 25,000 36,420 61,420
Rectification of Dividend wrongly recorded ---- (24,000)
Proposed Dividend ---- 50,000
Transferred from green 8,000 32,340
33,000 94,760
Star Ltd. @ 75% 24,750 71,070
(b) DOA - 2
Pre Post (RR) Total
Revenue Reserve 40,000 21,420 61,420
Rectification of Dividend Received (24,000)
Cancellation of Proposed dividend 50,000
Transfer from Green - CR 8,000 ----
- RR ---- 32,340
Total 48,000 79,760
Minority @ 10% 4,800 7,976
Star Ltd @ 15% 7,200 11,964
A1 24,750 71,070
31,950 83,034
Note : Since breakup of revenue receive of green on different dates are not available. Hence, entire transfer
in blue is treated as POST.

Blue Ltd. @ 90% Green Ltd. @ 80%
(B) Share of net assets
Share Capital 90,000 1,20,000
1,21,950 1,53,600
(C) Goodwill 3,050 6,400
9,450
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WN 5 : Cost of Minority Interest
Blue Ltd. @ 10% Green Ltd. @ 20%
Revenue Reserve 7,976 8,085
Capital Reserve ---- 2,000
Minority Interest in equity proposed (5,000) (6,000)
17,776 42,485

Balance of Star Ltd. - RR 77,496
- CR 40,000
Share of Blue Ltd. 83,034
Share in proposed dividend of Blue wrongly recorded (50,000 x 90%) (45,000)
1,55,530
Q.58.(Study Material) The following information was extracted from the books of A Limited group as on 31st
December, 2011 :
A Ltd. B Ltd. C Ltd.
Profit and Loss Account:
Balance on 31st December, 2009 after provision for
dividends of 10% in respect of calendar year 2009
but excluding dividend received 50,000 36,000 26,000
Net trading profit earned in 2010 60,000 42,000 28,000
1,10,000 78,000 54,000
Less: Dividends of 10 per cent (received
in 2011) in respect of calendar year 2010 40,000 30,000 20,000
70,000 48,000 34,000
Net trading profit earned in 2011 (before taking into
account proposed dividends of 10 per cent in respect
of calendar year 2011) 50,000 50,000 30,000
1,20,000 98,000 64,000
Dividends Received :
From B Limited in 2010 20,000 --- ---
From B Limited in 2011 25,000 --- ---
From C Limited in 2011 --- 15,000 ---
Share Capital Authorised and Fully paid - Equity Shares
of Re 1 each 4,00,000 3,00,000 2,00,000
5,85,000 4,18,000 2,81,000
Fixed Assets at cost less Depreciation 2,10,000 1,88,000 2,61,000
Current Assets 60,000 30,000 20,000
Investment at Cost :
2,00,000 Equity Shares in B Ltd. bought on December 31, 2009 2,50,000 --- ---
50,000 Equity Shares in B Ltd. bought on December 31, 2010 65,000 --- ---
1,50,000 Equity Shares in C Ltd. bought on December 31, 2010 --- 2,00,000 ---
5,85,000 4,18,000 2,81,000

All the companies pay dividends of 10 per cent on Paid-up share capital in March following the end of the
accounting year. The receiving companies enter the dividends in their books when dividends are received.
You are required to prepare :
(a) Consolidated Balance Sheet as on 31st December, 2011.
(b) Statements showing the composition of :
(i) Consolidated Profit and Loss Account.
(ii) Minority Interest, and
(iii) Cost of Control, Goodwill.
Ignore taxation.
Ans. :-
Consolidated Balance Sheet of A Ltd. & Group
as at 31 December, 2011
(`
(b) Short term provision 50,000
Total 7,86,500
II. Assets
Fixed assets
(i) Tangible assets 6,59,000
(ii) Intangible assets 17,500
Total 7,86,500
Q.59. (RTP, May 2012) The following information has been extracted from the boosk of 'X' Limited group (as at 31st
December, 2006) :
X Ltd. Y Ltd. Z Ltd. X Ltd. Y Ltd. Z Ltd.
` ` ` ` ` `
Share capital Fixed assets
(fully paid equity shares less depreciation 4,20,000 3,76,000 5,22,000
of ` 10 each) 8,00,000 6,00,000 4,00,000 Inestment at cost 6,30,000 4,00,000 ---
Profit and Loss A/c 2,10,000 1,90,000 1,28,000 Current Assets 1,20,000 60,000 40,000
Dividend received :
From Y Ltd. in 2005 60,000
From Y Ltd. in 2006 60,000
From Z Ltd. in 2006 36,000
Current liabilities 40,000 10,000 34,000
11,70,000 8,36,000 5,62,000 11,70,000 8,36,000 5,62,000
All the companies pay dividends of 12 percent of paid-up share capital in March following the end of the
accounting year. The receiving companies account for the dividends in their books when they are received.
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'X' Limited acquired 50,000 equity sahres of Y Ltd. on 31st December, 2004.
'Y' Limited acquired 30,000 equity shares of Z Ltd. on 31st December, 2005.
The detailed information of Profit and Loss Accounts is as follows :
` ` `
Balance of profit and loss account on 31st December, 2004
after dividends of 12% in respect of calendar year 2004, but excluding
dividends received 86,000 78,000 60,000
Net Profit earned in 2005 1,20,000 84,000 56,000
2,06,000 1,62,000 1,16,000
Less : Dividends of 12% (paid in 2006) 96,000 72,000 48,000
1,10,000 90,000 68,000
Net profit earned in 2006 (Before taking into account proposed
dividends of 12% in respect of calendar year 2006) 1,00,000 1,00,000 60,000
2,10,000 1,90,000 1,28,000
Taking into account the transactions from 2004 to 2006 and ignoring taxation, you are requied to prepare :
(i) The consolidated Balance Shet of X Ltd. group as at 31st Dec., 2006 as per Schedule III of The Companies
Act, 2013.
(ii) The consolidated Profit and Loss account for the year ending 31st December, 2006 as per Schedule III
of The Companies Act, 2013.
(iii) Cost of control.
(iv) Minority shareholders interest. [May, 2007 - 16 Marks]
Ans. :-
(i) Consolidated Balance Sheet of X Ltd. and its subsidiaries Y Ltd. and Z Ltd.
(b) Reserve and Surplus 3,04,833
(b) Other Current Liabilities 1,20,000
Total 15,56,000
(II) ASSETS
Fixed assets
(i) Tangible Assets 13,18,000
(ii) Intangible Assets 18,000
Total 15,56,000

(ii) Consolidated Profit and Loss Account

(for the year ending 31st Dec. 2006)
Particulars X Y Z Adjust Total
Balance b/d 2,06,000 1,62,000 1,16,000 --- 4,84,000
Dividend Received for 2009 in 2010 60,000 --- --- --- 60,000
Dividend Received for 2010 in 2011 60,000 36,000 --- 96,000
Profit for the year 1,00,000 1,00,000 60,000 --- 2,60,000
Total 4,26,000 2,98,000 1,76,000 96,000 8,04,000
Less : Dividend paid for 2010 (96,000) (72,000) (48,000) 96,000 (1,20,000)
Less : Minority Interest --- (39,167) (32,000) (71,167)
Less : Cost of Control (65,000) (51,000) --- --- (1,16,000)
Less : Pre-acquisition dividend (60,000) (36,000) --- --- (96,000)
Less : Proposed dividend (96,000) --- --- --- (96,000)
Total 1,09,000 99,833 96,000 96,000 3,04,833
(iii) Calculation of Cost of Control

Particulars X Ltd. in Y Y Ltd. in
Ltd. @ 5/6 Z Ltd. @ 75%
Less : Pre-acquisition dividend (60,000) (36,000)
Total 5,70,000 3,64,000
Share Capital 5,00,000 3,00,000
Capital Profit / Loss 65,000 51,000
Total 5,65,000 3,51,000
(C) Goodwill / (Capital Reserve) 5,000 13,000
(iv) Calculation of Minority Interest

Particulars Y Ltd. Z Ltd.
@ 1/6 @ 25%
Share Capital 1,00,000 1,00,000
Total 1,39,167 1,32,000
Less : Minority interest in equity proposed dividend (12,000) (12,000)
Total 1,27,167 1,20,000
WN 2 : Analysis of Profit of Z Ltd.

Capital Rev. P/L
Profit and Loss A/c 68,000 60,000 1,28,000
Y Ltd. @ 75% 51,000 45,000
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WN 3 : Analysis of Profit of X Ltd.
Capital Rev. P/L
Profit and Loss Account 78,000 1,12,000 1,90,000
Add : Transfer from Rahim Ltd. --- 45,000
Total 78,000 1,57,000
Minority Interest @ 1/6 13,000 26,167
X Ltd. @ 5/6 65,000 1,30,833
Q.60. (Study Material) The summarised Balance Sheets of the following three companies are given below as
on 31st March, 2012 :
(` in lakhs)
Eagle Garuda Bird
Ltd. Ltd. Ltd.
Liabilities
Equity Shares (` 10 each, fully paid up) 60 48 40
7½% Cumulative Preference Shares (` 100 each fully paid up) 15 12 10
Capital Reserve on Revaluation of Land, Buildings and Machinery 120 --- ---
General Reserve 25 15 10
8% 2,500 Mortgage Debenture Bonds of ` 1,000 each 25 --- ---
Secured Loans and Advances from Banks 153 71 52
Unsecured Loans:
(i) From Garuda Ltd. --- --- 12
(ii) From Bird Ltd. 15 --- ---
(iii) Deposits from Public 18 12 3
Current Liabilities and Provisions:
(i) Inter-Company Balances 9 --- ---
(ii) Other liabilities and provisions 314 125 72
Total 754 283 199
Assets
Fixed Assets (Net) 272 104 42
Investments (at Cost)
2,50,000 Equity Shares of Garuda Ltd. 25 --- ---
80,000 Equity Shares of Bird Ltd. 8 --- ---
1,60,000 Equity Shares of Bird Ltd. --- 20 ---
10,000 Cumulative Preference Shares of Eagle Ltd. --- --- 10
1,500 Mortgage Debentures of Eagle Ltd. --- --- 14
Current Assets 353 123 112
Profit and Loss Account 96 36 21
Total 754 283 199
(i) Eagle Ltd. subscribed for the shares of Garuda Ltd. and Bird Ltd. at par at the time of first issue of shares
by the latter companies.
(ii) Garuda Ltd., subscribed for 80,000 shares of Bird Ltd. at par at the time of first issue and latter acquired by
purchase in the market 80,000 shares of Bird Ltd. at ` 15 each when Reserves and Surplus of Bird Ltd.
stood at ` 5 lakhs.
(iii) Current Assets of Garuda Ltd. and Bird Ltd. included ` 4 lakhs and ` 6 lakhs respectively being the current
accounts balance against Eagle Ltd. These accounts remained unreconciled.

(iv) Preference dividends were in arrears for 8 years in the case of Eagle Ltd. and 4 years in the case of other
two companies.
Prepare the Consolidated Balance Sheet as per Schedule III of The Companies Act, 2013.
[June, 2009 & Nov, 2010 - 16 Marks]
Ans. :-
Consolidated Balance Sheet of A Ltd. and its subsidiaries B Ltd. and C Ltd.
Particulars Notes ` in lakhs
(a) Share Capital 1 65.00
(b) Reserve and Surplus 2 31.94
(2) Minority Interest 44.06
(3) Non - Current Liabilities
Long term borrowings 3 319.00
(4) Current Liabilities (314 + 125 + 72) 511.00
971.00
(II) ASSETS
Fixed assets
(i) Tangible Assets (272 + 104 + 42) 418.00
(ii) Intangible Assets (Goodwill) 1.00
(2) Current Assets 552.00
971.00
(1) Share Capital
Particulars `
(a) Authorised ---
(b) Issued, subscribed and fully paid up
6,00,000 equity shares of ` 10 each 60.00
5,000 7.5% preference shares of ` 100 each 5.00
65.00
(2) Reserves and Surplus
Particulars `
(a) Capital Reserve 120.00
(b) Profit & Loss A/c as WN - Net of Reserve (88.06)
31.94
(2) Long-term borrowings
Particulars `
(a) Bonds and debentures
[8% Mortgage debenture bonds of ` 1,000 each - secured] 10.00
(b) Loans and advances from banks - secured (153 + 71 + 52) 276.00
(c) Deposits from - unsecured (18 + 12 + 3) 33.00
319.00
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13. Accounting for Investment in Associates (AS 23)

Q.61. A Ltd. acquired 25% of shares in B Ltd. as on 31.3.2002 for ` 3 lakhs. The Balance Sheet of B Ltd. as on 31.3.2002
is given below :
`
Share capital 5,00,000
Reserves and Surplus 5,00,000
Total 10,00,000
Fixed Assets 5,00,000
Investments 2,00,000
Current Assets 3,00,000
10,00,000
During the year ended 31.3.2003 the following are the additional information available :
(1) A Ltd., received dividend from B Ltd., for the year ended 31.3.2002 at 40% from the reserves.
(2) B Ltd., made a profit of ` 7 lakhs for the year ended 31.3.2003.
(3) B Ltd., declared a dividend @ 50% for the year ended 31.3.2003 on 30.4.2003.
A Ltd. is preparing Consolidated Financial Statements in accordance with AS - 21 for its various
subsidiaries. Calculate :
(1) Goodwill if any on acquisition of B Ltd. shares.
(2) How A Ltd., will reflect the investment value of B Ltd., in the consolidated financial statements ?
(3) How the dividend received from B Ltd., will be shown in the consolidated financial statements ?
[May, 2003 - 6 marks]
Ans. :-
(i) Calculation of Goodwill
Particulars `
Less : Pre-dividend [5,00,000 x 40% x 25%] (50,000)
2,50,000
Share Capital (5,00,000 x 25%) 1,25,000
Capital Profit (5,00,000 - 2,00,000) x 25% 75,000
2,00,000
(ii) Disclosure of Investment in CFS

Particulars `
Non Current Assets
Non Current Investment
Cost of Investment (including goodwill 50,000) 3,00,000
Add : Post acquisition profit (7,00,000 x 25%) 1,75,000
Less : Pre-dividend (50,000)
4,25,000
(iii) Dividend received from B Ltd. should be deducted from value of investment.

Q.62. (RTP - Nov. 2010) Consolidated balance sheet of Mohan Ltd. group and its associate Sohan Ltd. as on 31.3.2010
before adjustment for equity method are given below :
` 000
Liabilities Group Sohan Ltd. Assets Group Sohan Ltd.
Equity Share Capital (` 10) 900 300 Sundry Assets 2,200 630
Capital Reserve 25 --- Investment in Sohan Ltd. 150
P & L A/c 500 200
Minority Interest 150 ---
Sundry Liabilities 675 100
Proposed Dividend 100 30
2,350 630 2,350 630
Mohan Ltd. acquired 30% ordinary equity shares of Sohan Ltd. on 1.4.2008 for ` 1,50,000. The balance of Sohan
Ltd. profit and loss account on that date was ` 1,80,000.
Mohan Ltd. is preparing consolidated financial statement of the group as on 31.3.2010 as per equity method. You
are required to :
(i) Compute goodwill, if any, arising on acquisition of Sohan Ltd. shares;
(ii) Show how Mohan Ltd. will reflect the value of investment in Sohan Ltd. in the consolidated financial statements ?
Ans. :- Investment 165 including goodwill 6.
Q.63. (RTP, May 2012) Morning Ltd. acquired 60,000 equity shares of ` each in Evening Ltd. on 1.1.2011 at ` 15 per
share. The total issued equity share capital of Evening Ltd. was ` 15,00,000 dividend into 1,50,000 equity shares
of ` 10 each. During the year 2011, the fixed assets of Evening Ltd., have been revalued up by ` 2,50,000. On the
date of acquisition of shares, reserves and surplus of Evening Ltd. was ` 5,00,000. Evening Ltd. earned a profit after
tax of ` 3,37,500 for the year 2011. During 2011, Evening Ltd. paid an Interim dividend of 5%.
Show in the books of Morning Ltd. the value of investments in shares of Evening Ltd. that would appear at
31.12.2011 :
(i) In separate Balance Sheet of Morning Ltd., and
(ii) In the Consolidated Balance Sheet of Morning Ltd. and its subsidiaries.
Ans.:- In Separate Financial statement - ` 9,00,000, In consolidated financial statement - ` 11,05,000.
Q.64. Bright Ltd. acquired 30% of East India Ltd. shares for ` 2,00,000 on 1.6.09. By such an acquisition Bright can exrcise
significant influence over East India Ltd. During the financial year ending on 31.3.09 East India earned profits `
80,000 and declared a dividend of ` 50,000 on 12.8.2009. East India reported earnings of ` 3,00,000 for the
financial year ending on 31.3.2010 and declared dividends of ` 60,000 on 12.6.2010.
Calculate the carrying amount of investment in :
(i) Separate financial statement ofBright Ltd. as on 31.3.2010.
(ii) Consolidated financial statement of Bright Ltd., as on 31.3.2010.
(iii) What will be the carrying amount as on 30.6.2010 in consolidated financial statement ?
(Nov. 2010, 2017 & 2018 - 5 Marks)
Ans. :- Value of investment under AS 13 - 1,85,000.
Q.65. (RTP, Nov. 2013) X Limited holds 6% shares of Y Limited. Z Limited holds 8% shares of Y Limited. Z Limited is
a subsidiary of X Limited, which virtually participate in most of the policy making proces of Y Limited. Does X
Limited have significant influence over Y Ltd. Explain ?
Ans. :-
(i) Provision of AS 23
If the investor holds directly or indiretly through subsidiaries, 20% or more of voting power, he is said to have
significant influence.
(ii) Analysis and Conclusion

In the given case, X Ltd., holds only 14% (directly or indirectly) of the shares of Y Ltd. Although it holds only 14%,
it is said to have significant influene because its subsidiary Z Ltd. virtually participate in most of the policy making
process of the company. As per para 5, significant influence can be evidenced by participating in policy decision
making, therefore, X Ltd. has significant influence over Y Ltd.
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Q.66. (RTP, May, 2014) H Limited, a company registered with SEBI, has three subsidiaries and one associate. While
doing the audit of Consolidated Financial Statements (CFS) of H Limited you have come to know that the associate
entity had made a provision for proposed dividend in its financial statements. H Limited computed its share of the
results of operations of the associate after taking into account the proposed dividend. Comment.
Ans. :-
Adjustments to the carrying amount of invetment in an investee arising from changes in the investee’s equity that
have not been included in the statement of profit and loss of the investee are directly made in the carrying amount
of investment without routing it through the consolidated statement of profit and loss. The corresponding debit/
credit is made in the relevant head of the equity interest in the consolidated balance sheet.
In the given case an asociate has made a provision for proposed dividend in its financial statements, the investor’s
share of the results of operations of the associate is computed without taking in to consideration the proposed
dividend. Applyng these provisions to the given problem. H Ltd. should have compute its share of the results of
operations of the associate without taking into consideration the proposed dividend. Therefore, treatment made
by H Ltd. is not correct.
Q.67. (RTP, Nov., 2014) A Ltd. has a share capital of 50,000 shares @ ` 100 per share. H Ltd. acquired 15% shares in
A Ltd. on 1.4.2013. It also acquired all the 5,000, 12% convertible debentures of ` 100 each of A Ltd. These
debentures will be converted at par into equity shares of A Ltd. after 3 years. State whether A Ltd. is an Associate
of H Ltd. or not with reasons ?
Ans. :-
An associate is an enterprise in which the investor has significant influence and which is neither a subsidiary nor
a joint venure of the investor.
Standard further explain that as regards share ownership, if an investor holds, directly or indirectly through
subsidiay(ies), 20% or more of the voting power of the investee, it is presumed that the investor has significant
influence, unless it can be clearly demonstrated that this is not the case. Conversely, if the investor holds, directly
or indirectly through subsidiary(ies), less than 20% of the voting power of the investee, it is presumed that the
investor does not have significant influence, unless such influence can be clearly demonstrated.
For the purpose of classification of associate, the potential equity share of the investee held by the investor will
not be taken into account for determining the voting power of the investor. In other words the voting power should
be determined on the basis of the current outstanding securities with voting rights.
As per the information given in the question, H Ltd. presently holds indirectly 22.7% shares (with and without
voting rights) in A Ltd. However, the current outstanding securities with voting rights in A Ltd. is only 15% and the
remaining holding is on account of potential equity shares. Since potential equity shares do not have voting rights
they will not be taken into consideration while determining the significant influence of H Ltd. on A Ltd. Hence, A
Ltd. is not an associate of H Ltd.
WN : Calculation of percentage of holding of shares after conversion

`
Current holding is 15% i.e. 7,500 shares of ` 100 each 7,50,000
Potential equity shares i.e. 5,000 shares of ` 100 each 5,00,000
12,50,0000
Total share capital of A Ltd. after conversion of debentures into equity shares iwll be
= ` 50,00,000 + ` 5,00,000 = ` 55,00,000.
Percentage of Holding = ` (12,50,000/55,00,000) x 100 = 22.7% approx.

14. Financial Reporting of Interest in Joint Venture (AS 27)

Q.68. (RTP, Nov., 2014) The Consolidate balance sheets of M Ltd. and its subsidiary N Ltd. and balance sheet of Joint
venture entity C Ltd. as on 31.3.2014 are as follows :
M Ltd. C Ltd.
(CBS) `
Share Capital : Shares of ` 100 each 6,00,000 2,00,000
General reserve 2,00,000 ---
Profit and loss account 80,000 ---
6% Debentures --- 1,50,000
Trade creditor 75,000 67,500
Total 9,55,000 4,17,500
Assets
Fixed assets 4,50,000 1,50,000
Stock-in-trade 1,40,000 60,000
Debtors 80,000 45,000
6% Debentures of C Ltd. acquired at par 90,000 ---
Shares of C Ltd. 1,500 @ ` 80 1,20,000 ---
Cash at Bank 75,000 12,500
Profit and Loss A/c --- 1,50,000
Total 9,55,000 4,17,500
M Ltd. acquired the shares on 1st Aug., 2013. The Profit and Loss account of C Ltd., showed a debit balance of `
2,25,000 on 1.4.2013. During June 2013, goods costing ` 9,000 were destroyed against which the insurer paid only
` 3,000. Trade creditors of C Ltd., incldue ` 30,000 for goods supplied by M Ltd., on which M Ltd. made a profit of `
3,000. Half of the goods were still in stock on 31.3.2014.
Prepare a consolidated balance sheet incorporating the Joint Venture entity operations using proportionate
consolidation method.
Ans. :-
Consolidated Balance Sheet of M Ltd. and its subsidiary N Ltd. and Joint Venture C Ltd. as at 31st March, 2014
(`
(b) Resreves and Surplus 3,19,375

Long-term borrowings [6% Debentures] 1,12,500
Trade Payables (75,000 + 75% of 67,500) 1,25,625
Total 11,57,500
II. Assets
(a) Fixed Assets
(i) Tangible Assets (4,50,000 + 75% of 1,50,000) 5,62,500
(ii) Intangible assets [Goodwill] 1,23,000
(b) Non-current investments [6% debentures of C Ltd.] 90,000
(2) Current Assets
(b) Trade receivables (80,000 + 75% of 45,000) 1,13,750
(c) Cash and cash equivalents (75,000 + 75% of 12,500) 84,375
Total 11,57,500
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Q.69. (RTP, Nov., 2016) Jointly Controlled Entity (JCE) sold to venturer (who holds 40% share in JCE) goods costing `
1,00,000 at ` 1,50,000. Entire stock is held at ` 1,20,000 at net realisable value by venturer. Show how the stock
will be reflected in the Consolidated Financial Statement.
Ans. :-
 It is clear that stock is valued at net realisable value, which is lower than the buying cost of ` 1,50,000.
 However, the net realisable value is greater than the original cost to the group.
 Therefore, there is an overstatement of the extent of ` 20,000.
 However, elimination of stock reserve is however restricted to venturer’s share and the remaining portion
shall continue to be there is in stock value.
 Accordingly, in the CFS, it will reduce only ` 8,000 from the stock (i.e. 20,000 x 40%). This will result in stock
to be shown in the Consolidated Financial Statements at ` 1,12,000.
Q.69A. Vijeta Industries has 40% share in joint venure with Sujata Industries. Vijeta Industries sold a machinery of Rs.
200 lakhs (WDV value), for Rs. 240 lakhs. Calculate how much profit Vijeta Industries should recognise in its book
in case the joint venture is a
 Jointly controlled operation.
 Jointly controlled asset.
 Jointly controlled entity.
(Nov., 2018 - 4 Marks)

15. Composite Problems (Holding, Subsidiary, Associates & Joint Venture)
Q.70.(RTP - May, 2013) The draft consolidated balance sheet of Helpful Ltd. group as at 31.3.12 is given below :
Liabilities ` in ‘000 Assets ` in ‘000
Share Capital 1,200 Fixed Assets 3,000
Capital Reserve 30 Investment in Need Ltd. 180
Profit & Loss A/c 875 Investment in Desire Ltd. 375
Minority Interest 450 Current Assets 500
Non-current liabilities 900
Current Liabilities 600
4,055 4,055
Helpful Ltd. acquired 25% stake in Need Ltd. for ` 1.80 lakh and 40% stake in joint venture Desire Ltd. for ` 3.75
lakh on 1.1.2011. Profit & Loss A/c balance of Need Ltd. and Desire Ltd. on that date were ` 2 lakh and Rs 3 lakh
respectively.
Summarised Balance Sheets of Need Ltd. and Desire Ltd. as at 31.12.2011 are given below :
Liabilities Need Desire Assets Need. Desire
Ltd Ltd Ltd Ltd
` in ‘000 ` in ‘000 ` in ‘000 ` in ‘000
Share Capital 500 600 Fixed Assets 600 800
Profit & Loss Account 300 400 Current Assets 400 700
Non-current Liabilities 100 150
Current Liabilties 100 350
1,000 1,500 1,000 1,500
Earnings of Need Ltd. for the first quarter 2012 was ` 32,000. There were no changes in long term assets and
liabilities. Current assets and liabilities increased during the period by ` 27,000 and ` 18,000 respectively.
In first quarter of 2012, Desire Ltd. redeemed debentures of ` 1 lakh at par (standing in the books as non-current
liability) and earned ` 40,000. Current Assets and liabilities increased during the period by ` 38,000 and Rs 25,000
respectively.
Adjust the draft consolidated balance sheet if necessary.
Ans. :-
Consolidated Balance Sheet as at 31.3.2012
Particulars Note No. ` in ‘000)
(`
(b) Reserves and Surplus 1 994
(3) Non-current Liabilities (900 + 20) 920
(4) Current Liabilities (600 + 150) 750
Total 4,314
II. Assets
(a) Fixed Assets
Tangible Assets (3,000 + 320) 3,320
Intangible Assets 15
(b) Non-current Investment in Need Ltd. 213
(2) Current Assets (500 + 266) 766
Total 4,314
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Notes to Accounts
1. Reserves and Surplus
Particulars `
Capital Reserve 30
Profit & Loss A/c of Helpful Ltd. and its subsidiary 875
Profit & Loss A/c ofNeed Ltd. [25% of (332 - 200)] 33
Profit & Loss A/c of Desire Ltd. [40% of (440 - 300] 56
994
WN 1 : Draft Balance Sheet of Need Ltd. and Desire Ltd. as at 31.3.12 are drawn below :
` in 000)
(`
Liabilities Need Ltd. Desire Ltd. Assets Need Ltd. Desire Ltd.
Share Capital 500 600 Fixed Assets 600 800
Profit & Loss A/c 332 440 Current Assets (bal. fig.) 450 665
Non-Current Liabilities 100 50
Sundry Liabilities 118 375
1,050 1,465 1,050 1,465
WN 2 : Calculation of Goodwill / Capital Reserve

Need Ltd. (Associates) Desire Ltd. (JV)
Amount Invested 180 375
Capital Profit 50 120
Share Capital 125 240
175 360
(C) Goodwill (A - B) 5 15
WN 3 : Valuation of Investment (AS 23)

`
Cost of Investment (including goodwill 5) 180
Share of Post Profit 33
213
Q.71. (Dec., 2011 & June, 2014 - 15 Marks) P Ltd. owns 80% of S and 40% of J and 40% of A. J is jointly controlled
entity and A is an associate Balance Sheet of four companies as on 31.3.09 are :
Assets P Ltd. S J A
` ` ` `
Investment in S 800 --- --- ---
Investment in J 600 --- --- ---
Investment in A 600 --- --- ---
Fixed Assets 1000 800 1400 1000
Current Assets 2200 3300 3250 3650
Total 5200 4100 4650 4650
Liabilities : ` ` ` `
Share capital Re. 1
Equity share 1000 400 800 800
Retained earnings 4000 3400 3600 3600
Creditors 200 300 250 250
Total 5200 4100 4650 4650

P Ltd. acquired shares in S many years ago when S retained earnings were ` 520. P Ltd. acquired its shares in J
at the beginning of the year when J retained earnings were ` 400. P Ltd. acquired its shares in ‘A’ on 1.4.08 when ‘A’
retained earnings were ` 400.
The Balance of goodwill relating to S had been written off three years ago. The value of goodwill in J remains
unchanged.
Prepare the consolidated Balance Sheet of P Ltd. as on 31.3.09. As per AS-21, 23 and 27 as per Schedule III of
The Companies Act, 2013. [Nov., 2009 - 16 Marks)]
Ans. :-
Consolidated Balance Sheet of P Ltd. & its susidiary S Ltd., Joint Venture J Ltd.
and associates A Ltd. as at 31.3.2009
Particulars Notes `
(a) Share capital 1,000
(b) Reserves & Surplus 8,800
(a) Trade Payable 600
Total 11,160
(II) Assets
(a) Fixed Assets
- Tangible 2,360
- Intangible 120
(b) Non-current Investment (A) 1,880
(2) Current Assets 6,800
Total 11,160
Q.72.The draft Balance Sheet of three companies W, H, O, as at 31.3.2010 is as under :

` in thousands
Assets W H O
Fixed Assets 697 648 349
Investments
1,60,000 shares in H 562 — —
80,000 shares in O 184 — —
Cash at Bank 101 95 80
Trade receivables 386 321 251
Inventory 495 389 287
Total 2,425 1,453 967
Liabilities
Share capital 600 200 200
(Nominal value Re. 1 per share)
Reserves 1,050 850 478
Trade payables 375 253 189
Debentures 400 150 100
2,425 1,453 967
You are given the following information :
(a) W purchased the shares in H on 13.10.2005 when the balance in reserves was ` 500 thousands.
(b) The shares in O were purchased on 11.5.2005 when the balance in reserves was ` 242 thousands.
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(c) The following dividend have been declared but not accounted for before the accounting year end :
W ` 65 thousands
H ` 30 thousands
O ` 15 thousands
(d) Included in inventory figure of O is inventory valued at ` 20 thousands which had been purchased from W
at cost plus 25%.
(e) Goodwill in respect of the acquisition of H has been fully written off.
(f) On 31.3.2010 H made bonus issue of one share for every share held. This had not been accounted in the
Balance Sheet as on 31.3.2010.
(g) Included in trade payables of W is ` 18 thousands to O, which is included in trade receivables of O.
Prepare Cosolidated Balance Sheet of W as at 31.3.2010 as per Schedule III of The Companies Act, 2013.
[May, 2010 - 16 Marks]
Ans. :-
Consolidated Balance Sheet of W Ltd.
& its group as at 31.3.2010
Particulars Notes `
(a) Share capital 600.00
(b) Reserves & Surplus 1355.80
(2) Non Current Liability
Long term borrowing - Debenture [400 + 150] 550
(a) Trade Payable 628.00
(b) Short-term provision [65+6] 71.00
Total 3408.80
(II) Assets
(a) Fixed Assets - Tangible 1345
(b) Non-current Investment (O) 276.8
(2) Current Assets
(a) Inventories 884.00
(b) Trade Receivables 707.00
(c) Cash & cash equivalent 196.00
Total 3408.80
Q.73. Air Ltd., a listed company, entered into an expansion programme on 1st October, 2009. On that date the company
purchased from Bag Ltd. its investments in two Private Limited Companies. The purchase was of
(a) the entire share capital of Cold Ltd., and
(b) 50% of the share capital of Dry Ltd.
Both the investments were previously owned by Bag Ltd. After acquisition by Air Limited, Dry Ltd. was to be
run by Air Ltd. and Bag Ltd. as a joinly controlled entity.
Air Ltd. makes its financial statements upto 30th September each year. The terms of acquisition were :
Cold Ltd.
The total consideration was based on price earnings ratio (P/E) of 12 applied to the reported profit of ` 20
lakhs of Cold Ltd. for the year 30 September, 2009. The consideration was settled by Air Ltd. issuing 8%
debentures for ` 140 lakhs (at par) and the balance by a new issue of `1 equity shares, based on its market
value of ` 2.50 each.

Dry Ltd.
The market value of Dry Ltd. on first October, 2009 was mutually agreed as ` 375 lakhs. Air Ltd. satisfied its
share of 50% of this amount by issuing 75 lakhs ` 1 equity shares (market value ` 2.50 each) to Bag Ltd.
Air Ltd. has not recorded in its books the acquisition of the above investments or the discharge of the
consideration.
The summarized statements of financial position of the three entities at 30th September, 2010 are :
` in thousands
Air Ltd. Cold Ltd. Dry Ltd.
Assets
Tangible Assets 34,260 27,000 21,060
Inventories 9,640 7,200 18,640
Debtors 11,200 5,060 4,620
Cash --- 3,410 40
Total Assets 55,100 42,670 44,360
Liabilities
Equity capital (` 1 each) 10,000 20,000 25,000
Retained earnings 20,800 15,000 4,500
Trade and other payables 17,120 5,270 14,100
Overdraft 1,540 --- ---
Provision for taxes 5,640 2,400 760
55,100 42,670 44,360
The following information is relevant.
(a) The book values of the net asses of Cold Ltd. and Dry Ltd. on the date of acquisition were considered to be
a reasonable approximation to their fair values.
(b) The current profits of Cold Ltd. and Dry Ltd. for the year ended 30th September, 2010 were ` 80 lakhs and
` 20 lakhs respectively. No dividends were paid by any of the companies during the year.
(c) Dry Ltd., the jointly controlled entity, is to be accounted for using proportional consolidation, in accordance
with AS-27 "Interests in joint venture".
(d) Goodwill in respect of the acquisition of Dry Ltd. has been impaired by ` 10 lakhs at 30th September, 2010.
Gain on acquisition, if any, will be separately accounted.
Prepare the consolidated Balance sheet of Air Ltd. and its subsidiaries as at 30th September, 2010 as per Schedule
III of The Companies Act, 2013. [Nov., 2010 & May, 2017 - 16 Marks]
Ans. :-
Consolidated Balance Sheet of Air Ltd. Group as at 30th Sept. 2010
Particulars Notes `
(1) Shareholder fund
(a) Share Capital [10000 + 4000 + 7500] 21,500
(b) Reserves & Surplus 49,050
Long term borrowings - 8% Debenture 14,000
(a) Short term borrowings [overdraft] 1,540
(b) Trade Payable [17,120 + 5,270 + 14,100 x 50%] 29,440
(c) Short-term provision [5,640 + 2,400 + 760 x 50%] 8,420
1,23,950
(II) Assets
(A) Non-current Fixed Assets
(i) Tangible [34,260 + 27,000 + 21,060 x 50%] 71,790
(ii) Intangible [Goodwill of Dry Ltd.] 4,000
(B) Current Assets
(i) Inventories [9640 + 7200 + 18640 x 50%] 26,160
(ii) Trade Receivable [11200 + 5060 + 4620 x 50%] 18,570
(iii) Cash & Cash Equivalent [3410 + 40 x 50%] 3,430
1,23,950
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Q.74. Eagle Ltd. had acquired 51% in Sparrow Ltd. for ` 75.80 lakhs on April, 1 2010. On date of the acquisition
Sparrow's Assets stood at ` 196 lakhs and liabilities at ` 16 lakhs. The net assets position of Sparrow Ltd. as on
31st March, 2011 & 30th September 2011 were ` 280 lakhs & ` 395 lakhs respectively, the increase resulting from
profits earned during the period.
On 1st Oct., 2011 25.5% holdings were sold for ` 125 lakhs. You are required explain the nature of the relationship
between the two companies on the relevant dates and the accounting adjustments that are necessary as a result
of any change in the relationship. The profit arising on part sale of investment, carrying value of the portion unsold
& goodwill/capital reserve that arises on change in nature of the investment may also be worked out by you.
[Nov. 2011 - 8 Marks]
Ans . :-
(i) Analysis of Relation and decomposition of carrying amount
Sparrow Ltd. became a subsidiary of Eagle Ltd. on 1st April, 2010 when 51% thereof was acquired. The holding-
subsidiary relationship continued till 30th September 2011 and from 1st Oct., 2011 the relationship between the
two companies will change to Associate.
As per para 24 of AS 21, “Consolidated Financial Statements”,
the carrying value of the investment at the date it ceases to be subsidiary is regarded as Cost thereafter.
Accordingly, if the nature of the investee changes to that of an associates, the carrying amount of the investment
in CFS of the investor, as on date it ceases to be a subsidiary, would be considered as cost of investment in the
associate.
Goodwill or capital reserve arising on accounting of the change in the nature of the investment will be computed
as on the date of such change. Accordingly, when a part of the investment takes the form of an investment in an
associates, the results of operation of the subsidiary will be included in the consolidated statement of P&L for the
period from the beginning of the period until it ceased to be a subsidiary.
(ii) Statement of Profit on Disposal

Particulars `
Consideration received 1,25,00,000
Less : Share of Net Assets on the date of disposal (3,95,00,000 x 25.5%) (1,00,72,500)
Add : Capital Reserve (16,00,000 x 25.5% / 51%) 8,00,000
32,27,500
(iii) Statement of Carrying Amount of Unsold portion
Particulars `
Share of Net Assets of unsold portion (3,95,00,000 x 25.5%) 1,00,72,500
Less : Share in Capital Reserve (16,00,000 x 50%) (8,00,000)
92,72,500
(iv) Statement of Capital Reserve of unsold portion

Particulars `
Capital Reserve on the date of acquisition 16,00,000
Less : Related to sold portion (8,00,000)
8,00,000

Q.75. (RTP - Nov., 2018) The following information relates to the results of the parent and subsidiary (jointly) and the
investment in associate and joint venture.
Summarised Balance Sheet as at 31.3.2011
Holding and Subsidiary Associate Joint Venture
Equity and Liabilities
Called up equity shares of Rs. 1 each 1,00,000 40,000 10,000
General Reserve 40,000 ---
Profit and Loss Account 37,000 27,000 83,000
Minority Interest 20,000 --- ---
Current Liabilities
Trade payables-Creditors 20,000 32,000 6,000
Provision for tax 19,000 11,000 11,000
2,36,000 1,10,000 1,10,000
Assets
Non-current assets
Fixed assets - Tangible Assets 1,95,000 74,000 41,000
Investments :
8,000 shares in Associate 15,000 --- ---
5,000 shares in Joint Venture 5,000 --- ---
Current Assets 21,000 36,000 69,000
2,36,000 1,10,000 1,10,000
Details of Profit and Loss Account for the year ended 31.3.2011
Holding and Subsidiary Associate Joint Venture
Retained profit for the year 15,000 11,000 23,000
Add : Retained profit brought forward 22,000 16,000 60,000
Retained profit carried forward 37,000 27,000 83,000
You are given the following additional information :
(a) The parent company purchased its investment in the associate two years ago when the balance on the profit
and loss account was Rs.17,000. There are no signs of impairment of the goodwill.
(b) The parent company entered into a joint venture to access a lucrative market in the former East Germany.
It set up a company two years ago and has 50% of the voting rights of the company set up for this joint
venture.
Prepare the consolidated balance sheet for the Group as per relevant Accounting Standards for the year ended
31.3.2011
Q.76. The Balance Sheets of A Limited and its subsidiaries B Limited and C Limited as on 31.3.2011 were as follows :
` in Lakhs
A B C
` ` `
Investments :
1,00,000 shares in B Ltd. 100 --- ---
80,000 shares in C Ltd. 200 --- ---
Other Assets 700 600 500
1,000 600 500
Share Capital :
Shares of ` 100 each 400 100 100
Liabilities 200 200 200
1,000 600 500
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A Limited acquired shares in B Limited in April 2008 when B Limited was formed with Share Capital of ` 100 lakhs.
A Limited acquired shares in C Limited in April 2008 when C Ltd. had share Capital of ` 100 lakhs and Reserves
and surplus of ` 100 lakhs.
The group amortises goodwill on consolidation on a SLM basis over a period of 5 years. A full year’s amortisation
is provided if the goodwill exists for more than 6 months.
On 1st April, 2011 A Limited sold 40,000 shares of C Limited for cash cosideration of ` 150 lakhs. The Balance
Sheets of the companies for the year 2011-12 were as follows :
(1) Balance Sheet as on 31.3.2012 ` in lakhs
A B C
` ` `
Investments at cost :
1,00,000 shares in B Ltd. 100 --- ---
40,000 shares in C Ltd. 100 --- ---
Other Assets 1,000 800 700
1,200 800 700
Share Capital 400 100 100
Liabilities 250 280 320
1,200 800 700
(2) Profit and Loss A/c for the year ended 31.3.2012 ` in lakhs
A B C
` ` `
Profit before tax 150 180 120
Tax 50 60 40
Profit after tax 100 120 80
Extraordinary items 50 --- ---
Profit after tax 150 120 80
Reserves & Surplus-Beginning 400 300 200
Reserves & Surplus - End 550 420 280
Prepare for A Limited, group Balance Sheets as on 31.3.2011 and as on 31.3.2012 as per Schedule III of The
Companies Act, 2013. [May, 2012 & 2018; Nov. 2015 - 16 Marks]
Ans. :-
Consolidated Balance Sheet 31.3.2011 & 31.3.2012
Particulars Notes 31.3.2011 31.3.2012
(a) Share Capital 400 400
(b) Reserve and Surplus 756 1,026
(2) Minority Interest 60 ----
(3) Current Liabilities 600 530
1,816 1,956
(II) ASSETS
(1) Non-Current Assets
(a) Intangible - Fixed Assets (goodwill) 16 ----
(b) Non-current investment ---- 156
(2) Current Assets
Other Current Assets 1,800 1,800
1,816 1,956

1. For Consolidation of Balance Sheet on 31.3.2011

Particulars B Ltd. C Ltd.
Pre Post Pre Post
A Ltd. 300 80 80
Minority Interest --- 20 20
WN 2 : Minority Interest
Particulars `
Share Capital (20%) 20
Pre-acquisition Profit 20
Post-acquisition Profit 20
60
WN 3 : Cost of Control
Particulars B Ltd. C Ltd.
(a) Cost of Investment 100 200
(b) Share of Net Assets represented by
Share Capital 100 80
Pre-Profit --- 80
Total 100 160
(c) Goodwill (a - b) --- 40
Less : Amortised (40 x 3 / 5) (24)
Balance transferred to balance sheet 16
WN 4 : Calculation of Reserve and Surplus

Particulars `
Balance of A Ltd. as on 31.3.2011 400
Post-acquisition profit of B Ltd. 300
Post-acquisition profit of C Ltd. 80
Goodwill amortised (24)
756
2. For Consolidation of Balance Sheet on 31.3.2012

WN 1 : Provision of Para 24 of AS 21
 The carrying value of the investment at the date it ceases to be subsidiary is regarded as Cost
thereafter. Accordingly, if the nature of the investee changes to that of an associates, the carrying
amount of the investment in CFS of the investor, as on date it ceases to be a subsidiary, would be
considered as cost of investment in the associate.
 Goodwill or capital reserve arising on accounting of the change in the nature of the investment will be
computed as on the date of such change. Accordingly, when a part of the investment takes the form of an
investment in an associates, the results of operation of the subsidiary will be included in the consolidated
statement of P&L for the period from the beginning of the period until it ceased to be a subsidiary.
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WN 2 : Ascertainment of carrying value of investment in C Ltd. disposed off and retained
Particulars `
Net assets of C Ltd. on the date of disposal (500 - 200) 300
Less : Minority interest in C Ltd. on the date of disposal (20%) (60)
Share of A Ltd. in Net Assets 240
Add : Carrying value of Goodwill 16
Total value of investment in consolidated financial statements of A Ltd. 256
Less : Carrying value of investment disposed off (` 256 lakhs x 40,000/80,000) (128)
Carrying Value of investment retained 128
WN 3 : Goodwll arising on the Carrying Value of Unsold Portion of the Investment

Particulars `
Carrying value of retained 40% holdings in C Ltd. as on 1st April, 2011 128
Less : Share in value of equity of C Ltd., as at date of investment when
its subsidiary relationship is transformed to an associate (300 x 40%) (120)
Goodwill arising on such investment under Equity method as per AS 23 (8)
WN 4 : Consolidated Reserves and Surplus

Particulars `
Balance of reserves and surplus of A Ltd. as on 31.3.2012 550
Add : Post acquisition reserves and surplus of B Ltd. (subsidiary) 420
Profit accumulated over the years on investment of A Ltd. (128 - 100) 28
Post-acquisition reserves and surplus of C Ltd. (280 - 200) x 40%) 32
Less : Goodwill amortised for the period (4)
1,026

AS 21: Consolidated Financial Statements: Learning Outcomes

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AS 21: Consolidated Financial Statements: Learning Outcomes

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CA.

Ranjay Mishra (FCA) 1

AS 21 : Consolidated Financial Statements

2. Holding and Subsidiary under Companies Act

(ii) Meaning of Holding Company

(iii) Wholly Owned and Partially Owned Subsidiary

3. Consolidated Financial Statement - Basics, Presentation and Scope

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 Question Specific Problem

 Format of Cost of Control

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(iii) Calculation of dividend paid by subsidiary

(ii) Calculation of Net Assets on 31st March, 2012

(iii) Calculation of Purchase Consideration

(iv) Cost of Control

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Q.4. Balance Sheet as on 31.3.2012

(ii) Minority Interest

 Question Specific Problem

 Format of Minority Interest

(II) Analysis of Profit

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5. Application of AS 21 on Sigle Subsidiary Single Acquisition

WN 1 : Analysis of Profit of Sunil Ltd. (Subsidiary)

WN 3 : Calculation of Cost of Control

WN 4 : Calculation of Minority Interest

WN 5 : Calculation of Consolidated P&L / GR

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WN 1 : Analysis of Profit of Q Ltd. (Subsidiary)

WN 3 : Calculation of Minority Interest

WN 4 : Calculation of Consolidated P&L

Case II : After issue of Bonus Shares

WN 2 : Calculation of Cost of Control

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WN 3 : Calculation of Minority Interest

WN 4 : Calculation of Consolidated P&L

Liabilities X Ltd. Y Ltd. Assets X Ltd. Y Ltd.

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WN 1 : Analysis of Profit of Star Ltd. (Subsidiary)

WN 3 : Calculation of Minority Interest

WN 4 : Calculation of Consolidated Profit & Loss

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WN 1 : Analysis of Profit of B Ltd. (Subsidiaries)

WN 2 : Calculation of Cost of Control

WN 3 : Calculation of Minority Interest

WN 4 : Calculation of Consolidated Profit / Loss & Reserve

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WN 2 : Calculation of Cost of Control

WN 3 : Calculation of Minority Interest

WN 4 : Calculation of Consolidated P/L

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WN 1 : Analysis of Profit of S Ltd. (Subsidiaries)

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WN 2 : Calculation of Revaluation Profit

WN 4 : Calculation of Cost of Control

WN 5 : Calculation of Minority Interest

WN 1 : Analysis of Profit of C Ltd.