Other Information:
(i) Profit and Loss A/c of S Ltd. showed a debit balance of Rs. 2, 400 on 1st
April, 2004.
(ii) Debtors of H Ltd. include Rs. 5,000 due from S Ltd., while creditors of S
Ltd. Include Rs. 4,000 due to H Ltd. as a draft of Rs. 1,000 sent by S Ltd, on
28th March, 2005 was not received by H Ltd.
(iii) The stock of S Ltd. includes goods valued Rs. 1,200 purchased from H Ltd.
Which was sold by the latter company at a 33.33% profit of on cost.
Prepare the Consolidated Balance Sheet as on 31st March, 2005.
Solution :
(a) Ratio of Interest
40000/10= 4000 shares
H’s Share = (2400/ 4000)X100 = 60%
S’s Share = 40%
(b) Current Year’s Profit of S Ltd.
P/L A/c as per Balance Sheet. 4000
+ Loss 2400
6400
(c ) Revenue (Post-acquisition Profit)
Post(July 1st 2004 – March 31st 2005)
6400x 9/ 12 = 4800
(d) Capital (Pre-acquisition) Profits:
Pre acquisition profit 6400x 3/12. 1600
+ Reserve (1.4.2004) 6000
7600
- Pre acquisition loss 2400
Pre-acquisitionProfit 5200
(e) Unrealised Profit in Stock
(1200/133.33)X33.33=300x60/100 = 180
f) Consolidated Profits:
Profit of H Ltd. 8,000
- Unrealised profit 180
7820
+ Post Acquisition profit 4800x60/100 2880
10700
(g) Goodwill or Capital Reserve
Cost of Investment in Shares. 28000
- Face value of shares. 24000
- Capital profit 5200x60/100 3120
Good will 880
(h) Minority Interest(S’s Ltd.)
40% of Share Capital. 16000
40% Revenue profit 5200x0.4. 2080
40% capital profit. 4800x0.4. 1920
Minority Interest 20000
(i) Stock of S Ltd.:
Stock (given) 6,000
–Unrealized Profits 180
5820
Consolidated Balance sheet of H’s Ltd and S’s Ltd as on 31/03/2005
Liabilities H Ltd Assets H Ltd
Equity Share Capital 100000 Fixed assets
Reserves & Surplus H Ltd. 60000
General reserve 10000 S ltd. 40000 100000
Consolidated profit 10700 Good will 880
Current liabilities Investment 4000
Creditors Debtors
H ltd. 13000 H ltd 16000 – 4000. =. 12000
S ltd. 9000-4000=5000 18000 S ltd. 10000
B/P 3000 22000
Minority interest 20000 -Cash in transit 1000 21000
Stock.
H ltd 21000
S ltd 5820 26820
Cash balance (6000+2000) 8000
Accrued cash 1000
161700 161700
From the following Balance Sheets and information, prepare a Consolidated
Balance Sheet as on 31st December
440000. 128000 440000. 128000
H Ltd. acquired 6,400 shares in S Ltd. at Rs. 15 per share when the Profit and
Loss Account of the latter stood at Rs. 17,600 and sold 1,600 shares of them on
30th June, 2005 at Rs. 22.50 per share, crediting the profits on sale to
investment reserve account.
a) Calculation ratio of interest
Total shares of S Ltd. = 80000/10 = 8000 shares
Total Acquired shares by H ltd = 6400
H Ltd = (6400-1600/8000) x100 = 60%
S’ Ltd = 40%
b) Profit on sale of 1600 shares
Sale price 1600x 22.50 36000
- Cost of 1600 shares 1600x15 24000
Profit on sale of shares transferred to Investment
Reserve A/c which is already given in B/S. 12000
(c) Current Year’s Profit of S Ltd
Rs. 19200
(c) Post-acquisition Profits
=19200x1/2 = 9600
(d) Capital (Pre-acquisition) Profits:
Pre acquisition profit 9600
+ Reserve (1.4.2004) 28800
Pre-acquisition Profit 38800
(c) Goodwill or Capital Reserve:
Cost 6400-1600=4800 x 15 72000
- Face value share 4800x10 48000
