UNIT

V
Accounts Of Holding Companies/
Parent Companies

Consolidation
Q1. H Ltd. acquired 32,000 equity shares of T10 each in S Ltd. on 1.10.08 for
6,00,000. The Balance Sheets of the two companies as on 31.3.09 were as followS:
Particulars H Ltd S Ltd. (
I. Equity and Liabilities
Share Capital:
Equity shares of F10 each fully paid up 10,00,000 4,00,000
General Reserve (1-4-2008) 4,80,000 2,00,000
1,20,000 1,80,000
Surplus Account ie., Balance in Statement of Profit & Loss 2,000
Unclaimed Dividend
Bills Payable 30,000
Sundry Creditors 4,00,000 88,000
20,00,000 9,00,000
Il. Assets
Land and Buildings 4,00,000 4,40,000
Plant and Machinery 6,00,000 3,00,000
Investments 8,00,000
Stock 50,000 30,000
Debtors 40,000 50,000
Bills Receivable 10,000 20,000
Bank Balance 1,00,000 40,000
20,000
Preliminary expenses
20,00,000 9,00,000
bills discounted 20,000.
Note. Contingent liability for
Additional infomation: Loss of S Ltd. showed Surplus of
On 1.4.08 the Statement of Profit &
a
was paid on 1.11.08. The
R70,000 out of which a dividend of 10%
dividend was credited by H Ltd. to its Surplus. Ignore Corporate

dividend tax.
Creditors of S Ltd. include amount of R30,000 for purchases from H
an
(ii) Ltd. The goods are still unsold on 31-3-09. H Ltd. sells goods at cost plus

20%.
all issued in favour of H Ltd. Of these bills H
ii) Bills payable of S Ltd. areworth R20,000
Ltd. got discounted bills
of H Ltd. and its subsidiary S Ltd. as at
Prepare consolidated Balance Sheet
31-3-2009. P-161 (2009, 2017(May))
P-162 Shiv Das DELHI UNIVERSITYSERIIS
Analysis Table
Sol. H Ltd. 80% Minority
Details Interest 20%
3,20,000 80,000
1. Equity Share Capital
2. Pre-Acquisition Profft and Reserves: 1,80,000 40,000
() General Reserve 24,000 6,000
i) Surplus Account (70,000-740,000)of (T1,80,000 -
730,000) 60,000 15,000
%
(n) Profit for the first half of the year (16,000) (4,000)
(iv) Preliminary Expenses "
3. Post-Acquisition Profit: 60,000 15,000
(9 Surplus (1,80,000-71,05,000) 2,000
i) Unclaimed Dividend 5,48,000 3 154,000
Value of Acquisition (6,00,000)
Less:Cost of Investment
Add: Dividend received 32,000(5.68,000
20,000
Goodwill
H Ltd. & Subsidiary Co.
Consolidated Balance Sheet of
as on 31-3-2009
Note No.
Particulars
I.Equityand Liabilities
1. Shareholders' Funds
10,00,000
(a) Share. Capital
(b) Reserves and Surplus
2 6,23,000
2. Minority Interest
3 1,54,000
3. Non-curent liabilities
4. Current Liabilities: Trade payables 4.78,000
Total Equity &Liabilities (1+2+3+4) 22,55,00
l Assets
1. Non-current Assets
(a) Property, Plant & Equipment:
) Tangible assets 17,40,000
i) Intangible Assets 20,000
(b) Investments 2,00,000
2. Current Assets
(a) Inventories 8 75,000
(b) Trade Receivables 9 80,000

(c) Cash &Cash Equivalents 10 1,40,000

Total Assets (1+2) 22,55,000
Notes to Accounts (Balance Sheet):

1. Share Capital (H Ltd)

Issued, subscribed and fully paid up
1,00,000 Equity Shares of 310 each 10,00,000
2. Reserves and Surpus
General Reserve (H Lid. 4,80,000
Surplus Account (ie., Balance in Statement of Profit &Loss (H Ltd.))
Share in S Lid. (See Analysis table)
1,20,000
60,000
Less: Wrongly Credited (Dividend recelved) 180,000
Unrealised Profit (30,000x 20/120)
32,000 143,000
5,000 (37,000) 6,23,000
 UNIT V: ACCOUNTS OF HOLDING COMPANIES/PARENT COMPANIES P-163
3. Minority Interest: Paid-up Value of Shares held 80,000
Add: Share in pre-acqulsition Profits & Reserves:
General Reserve 40,000
Profit (1.4.2008) 6,000
Profit for the first half of the year 15,000
Preliminary expenses (4,000) 57,000
Share in Post Acquisition Profit: Surplus Ac 15,000
Unclaimed Dividend 2,000 17,000
1,54,000
4. Trade Peyables
) Sundary Creditors: H Ltd. 4,00,000
S Ltd. 88,000
4,88,000
Less: Inter-Company owings (30,000) 4,58,000
(i) Bills Payable: S Ltd. 30,00020h3
4,78,000
Less: Inter Company owings (10,000) 20,000
5. Property, Plant&Equipment Tangible Assets
) Land & Building: H Ltd. 4,00,000
S Ltd. 4,40,000 8,40,000
(i) Plant &Machinery:H'Ltd 6,00,000
S Ltd 3,00,000 9.00,000 17,40,000
6. Intangible Assets: Goodwill (See Analysis table) 20,000
7. Investments:8,00,000 76,00,000(S.Lid.) 2,00,000
8. Inventories (Stock) HLtd. 50,000
SLtd. 30,000 80,000
Less: Unrealised Profit (5,000) 75,000
9. Trade Receivables
) Debtors: H Ltd. 40,000
S Ltd. 50,000 90,000
(30,000) 60,000
Less: Inter-company Owings
(i) Bills Receivable: HLtd 10,000
SLtd. 20,000 30,000
(10,000) 20,000
Less: Inter-company Owings 80,000
10. Cash and Cash Equlvalents: Bank Balance 1,00,000
H Ltd.
S Ltd. 40,000 1,40,000
shares in S Ltd. for 1,55,000 on 1st July, 2012.
Q.2. H Ltd. acquired 15,000 on 31st March, 2012 were as follows:
The Balance Sheets of the two companies
Notes H Ltd. ) S Ltd (
Particulars
L Equity and Liabilities
1. Shareholders' Funds 9,00,000 2,50,000
(a) Share Capital 240,000 65,000
(b) Reserves& Surplus 90,000 50,000
Current Llabilities: Trade Payables
2. 12,30,000 3,65,000
Total Equity&
Liabilities
II. Assets
1. Non-current Assets: (a) Property, Plant & Equipment 8,00,000 2,20,000
Tangible 1,55,000
Investments 85,000 55,000
2. Current Assets: Trade Receivables 1,00,000 50,000
Inventories (Stock) 40,000
90,000
Cash at Bank
12,30,000 3,65,000
Total Assets
 P-164Shiv Das DELHN UNIVI:RSITY SERIS

Notes to Accounts (Balance Sheet):

H Ltd. ( SLtd. (
1. Share Capital: Equilty Share Capital (10 each) 9,00,000
2. Reserves and Surplus: General Reserve
1,80,000 2,50,000
Surplus A'c (ie, Balance in Statement of Profit &Loss) 80,000 40,00
2,40,000 25,000
3. Trade Payables: Bills Payable 40,000 65,00
Creditors
50,000 20,000
90,000 30,000
4. Tangible Assets: Machinery 7,00,000
50,000
Furniture
1,00,000 1,50,000
8,00,000 70,000
5. Trade Receivables: Debtors
60,000
2,20,000
Bills Receivable
25,000 35,000
85,000 20,000
The following additional information is provided to you: 55,000
) General Reserve appearing in the Balance (2011, 2015
unchanged since 31st March, 2012. Sheet of S Ltd. has remaine
i) Profit earned by S Ltd. for the year ended 31.3.2013 amounted
to R20,0o
(ii) H Ltd. sold goods to S Ltd. costing 78,000 for F10,000. 25%
remained unsold with S Ltd on 31st of these goods
include 4,000 due to H Ltd. on account of
March, 2013. Creditors of S
Ltd
these goods.
Swblus (iv) Out of Bills payable issued
by S Ltd. F15,000 are those which have been
accepted in favour of H Ltd. Out of these, H Ltd. had
March, 2013, T8,000 worth of bills receivable in favour endorsed by. 31st
You are of its creditors.
required to draw a Consolidated Balance Sheet as at 31.3.2013.
Sol. Working notes:
1. Total number of
2. Shares shares in S Ltd. R2,50,000R10 25,000
=

3. Minority
acquired by H Ltd. =15,000
4. Date of
interest = (25,000-15,000)/25,000x 100= 40%
acquisition 01-07-2012
() Pre-acquisition period: 01-04-2012 to
(i) Post-acquisition period: 01-07-2012 30-06-2012, i.e., 3 months
5. Unrealised to 31-03-2013, i.e., 9 months
Profit in Stock
( Profit % on Sale 2,000/8,000 100 25%
(i) Goods in Stock with S Ltd.
(i) Unrealised Profit on Goods (Value) (1/4* =

in Stock {2,50010,000)=72,500 =
x
25/125 =
T500
Allocation Table
Details
H Ltd. 75% Minority Total
Share Capital Interest 25%
Pre-acquisition Profits: 1,50,000 1,00,000 2.50,000
) General Reserve
(i) Opening Profit (R25,000- 720,000) 24,000 16,000 40,000
(il) Profit for the pre-acquisition period 3,000 2,000 5,000
(20,000x 3/12 1e, 75,000) 3,000 2,000 5,000
Post-acquisition Revenue Profit (20,000-75,000)
Value of Acqulsition 9.000 6,000 15,000
Less: Cost of Acquistion 1,80,000 1,26,000 3,15,000
Capital Reserve (1,55,000) 1,80,000
25,000 1,26,000
9.000
 UNIT V: ACCOUNTS OF HOLDING COMPANIES/PARENT COMPANIES P-165

Consolidated Balance Sheet of H Ltd. and its Subsidiary S Ltd.

as on 31-03-2013
Particulars Note No.
1. Equity and Liabilities
1. Shareholders' Funds
(a) Share Capital 9,00,000
(b) Reserves & Surplus 2 2,73,500
2. Minority Interest 3 1,26,000
4 1,29,000
Current Liabilities: Trade Payables
Total Equity& Liabilities 14,28,500
Il. Assets
1. Non-curent Asset
Property, Plant & Equipment
10,20,000
Tangible Assets
2. Current Assets
a) Inventories 1,49,500
(b) Trade Receivables 7 1,29,000
8 1,30,000
(c) Cash and Cash Equivalents
Total Assets 14,28,500
Notes to Accounts (Balance Sheet):

1. Share Capital
Authorised Capital
Issued, Subscribed and fully paid
90,000 Equity Shares of 10 each 9,00,000
2. Reserves and Surplus
Capital Reserve (See Allocation table: Excess of H Ltd's share in
the equity of s Ltd. as on the date of acquisition and cost of Investment 25,000
General Reserve 1,60,000
Surplus ie. Balance in Statementof Proft &Loss 80,000
Add: Share in S Ltd. 9,000
89,000
Less: Unrealised Profit 500) 88.500
2,73,500
3. Minority Interest
Paid-upEquity Share Capital 1,00,000
Add: Share in pre and post-acquisition profit 26,000 1,26,000
4. Trade Payables Trade Blls
Creditors Payable
H Ltd. 50,000 40,000
S Ltd. 30,000 20,000
80,000 60,000
Les: Inter-group balances (4,000) (7.000)
76,000 53,000 1,29,000 1,29,000
5. Tangible Assets Machinery Furniture
HLtd 7,00,000 1,00,000
SLtd. 1,50,000 70,000
6. Inventorles (Stock)
8,50,000+1,70,000 10,20,000 10,20,000
Stock in-trade H Ltd 1,00,000
Stock in-trade S Ltd. 50,000 1.50,000
Less: Unrealised Profit (500) 1,49, 500
aSat

Das DELHI UNIVERSITY SERIES

P-166Shiv
BIlls
Trade
7. Trade Roecelvables Recelvable
Debtors
60,000 25,000
HLLtd.
36,000 20,000
SLtd. 95,000 45,000
(4,000) (7,000)
Less: Inter-yroup Balances
91,000+ 38,000 1,29,000 1,29,000
8. Cash and Cash Equlvalents 90,000
HL 40,00
S Ltd.
1,30,000
Ltd. and S Ltd. on 31st March, 2012 is as follow.
ows
Q3. The Balance Sheet of H
Notes H Ltd. () S Ltd.()
Particulars
I. Equity and Liabilitles
1. Shareholders' Funds
Share Capital: (Equity Shares of 710 each) 20,00,000 12,00,000
Reserves& Surplus 10,40,000 6,36,000
2. Current Liabilities
Trade Payables: Bills Payable 80,000
Creditors 5,60,000 2,84,000
Total Equity &Liabilities 36,00,000 22,00,000
l. Assets
1. Non-curent Assets
Property, Plant & Equipment
Tangible 2 15,00,000 14,40,000
Investments: 80,000 shares in S Ltd. 11,80,000
2. Current Assets.
Trade Receivables 3 6,00,000 4,20,000
Inventories (Stock) 2,80,000 3,20,000
Cash and Cash Equivalents 40,000 20,000
Total Assets 36,00,000 22,00,000
Notes to Accounts (Balance Sheet):

H Ltd.( SLtd
1. Reserves and Surplus
General Reserve (on 1-4-2011) 3,60,000 2,04,000
Surplus, ie., Balance in Statement of Profit & Loss (on 1-4-2011) 2,40,000 96,000
Surplus during the year 3,36,000
4,40,000
10,40,000 6,36,000
2. Tangible Assets
Land and Building 8,00,000
10,00,000
Plant and Machinery 6,40,000
5,00,000
15,00,000 14,40,000
3. Trade Recelvables
Debtors 4,80,000 4,20,000
Bills Receivables
1.20,000
4,20,00 6,00,000
) H Ltd. acquired shares in S Ltd. on 1-1-2012.
(ii) S Ltd. issued all bills payable to H Ltd. Bills receivable ofH Ltd. incluae
bills of S Ltd. for R 48,000.
(ii) Sundry Debtors of S Ltd. include 40,000 owing by H Ltd.
 UNIT V: ACUNTSOF oDINGOMPANII:S/*'ARENTC(MP'ANITES P-167
(i) Stock of H Ltd. inchudes 60,000 purchased from S Ltd. for
goods worth
which the latter company has charged profit at 25% on cost.
() Contingent liability for bills diseounted by H Ltd. is R1,00,000
Prepare a Consolidated Balance Sheet. (2012)
Sol. Working notes:

HLd.s Shere in Pre-acquisition General Reserve

Balance of General Reseve on 1.4.2011 2,04,000
H Ltd.s share 2, of 2,04,000 1,36,000
)H Ltd.s Share in Capital Profits
Surplus on 1.4.2011 96,000
Profit for the year: R3,36,000 (given)
Profit from 1.4.201 to 1.1.2012 ie., * 3,36,000 2,52,000
Total Capital Profits 3,48,000
H Ltd.'s share: d of 3,48,000 2,32,000
(i) Cost of Control
Cost of investmentin shares of S Ltd 11,80,000
Less. Paid up value ofthe shares held (80,000x10) 8,00,000
Pre-acquisition General Reserve () 1,36,000
Capital Profits (i)
Goodwill (ultimately to be shown in the Balance
2,32,000 (11,68,000)
Sheet) 12,000
(iv) Minority Interest
Paid up value of shares held by outsiders
4,00,000
General Reserves (1.4.2011) d of 2,04,000 68,000
Profits (1.4 ) ,000 32,000
Profits (2011-12) of 3,36,000 1,12,000
(v) Share of H Ltd. in Revenue Profits
6,12,000
Profts for 3 months (1.1.2012 to 31.3.2012)- of 3,36,000 84,000
H Ltd.s share share of
T84,000 56,000
Consolidated Balance Sheet of H Ltd. and its subsidiary S Ltd.
as on 31st March, 2012
Particulars
L Equity and Liabilities
Note No.
1. Shareholders' Funds
Share Capital
Reserves & Surplus 20,00,000
2 10,84,000
Minority Interest (See (iv)
Current Liabilites: Trade Payables 6,12,000
Total Equity &Liabilties 8,36,000
Assets 45,32,000
1, Non-current Assets
Property, Plant &Equipment: Tangible
Intangible 29,40,000
2 Current Assets 5 12,000
Inventories (Stock)
Trade Receivables 6 5,88,000
Cash and Cash 7 9,32,000
Equivalents
Total Assets 8 60,000
45,32,000
 P-168Shiv Das DFLUI UNIVERSIIY SRIES

Notes to Accounts (Balance Sheet):

1 Share Capital
Authorised Capia Equity Shares of 10 each
.
XXX
ssued, Subsonbed & Fuly pakdt: 2.00.000 Equity
Shares of R10 each 20,00,000
2 Reserves and Surps 3,60,000
General Reserve 6,80,000
Surnlus (Statement ofProt &Loss) (240,000 4,40,000] 56,000
Share of S Ltd See (v)] 7,36,000
Less Unrealised Profit on Stock
L(12,000)7,24,000
10,84,000
3Trde Payables: Creditors 5,60,000
H Ltd 2,84,000
S Ltd 8,44,000
(40,000) 8,04,000
Less: Inter-company owings 80,000
Bils Payable (48,000) 32,000
Less: Inter-company debt
8,36,000
4 Tangible Assests
Land&Building 10,00,000
Ltd 8,00,000 18,00,000
SLtd
Plant&Machinery 5,00,000
H Ltd. 6,40,000l 11,40,000
S Ltd. 29,40,000
12000

5. intangible Assets: Goodwill ()

6 Iventories (Stock) 2,80,000
H Lid. 3,20,000
S Ltd 6,00,000
(12,000)5,88,000
Less: Unrealised Profit
7. Trade Receivables: Debtors
4,80,000
H Lid. 4,20,000
S iid. 9,00,000
(40,000) 8,60,000
Less Inter-company debt
Bills Receivable
1,20,000
H Ltd. (48,000) 72,000
Less: Inter-company debt 9,32,000

8. Cash& Cash Equivalents: Cash 40,000

H LId 20,000 60,000
SLtd.
There is a contingent liability of T68,000.
Working notes: shows only
are in favour of H Ltd.
but H Ltd.'s Balance Sheet
of 80,000
SLtd.'s Bills Payable Receivable of 32,000 have been
from S Ltd. Hence Bills total
48,000 as Bills Receivable should be deducted from the
and
discounted. This is an internal contingent liability
a balance of 768,000
for external contingent lability.
contingent liability of 1,00,000 leaving as under:
Urealised profit on Stock been calculated
S Ltd. R60,000
Stock of H Ltd. supplied by
=

Profit 25% on cost or 20% on sale 1/,th share of T60,000 12,000

of S Ltd, while calcuaus
also be deducted from the revenue profits
Unrealised profit may
the share of H Ltd. in the revenue profits of S Ltd.