CA.

Naresh Aggarwal’s
ACADEMY of ACCOUNTS
Accounting • Costing • Taxation • Financial Management
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org

Notes for
Corporate Accounting

Holding Company
Consolidation of Financial Statements For Eenquiries
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II ASSETS
Holding Company 1. Non-Current Assets
(a) Fixed Assets (Tangible) 7,00,000 6,20,000
Q-1: From the following extracts of the H. Ltd. and S. Ltd., prepare a consolidated
(b) Non-Current Investments , 6,00,000
balance sheet of H. Ltd. and its subsidiary S. Ltd.:
(Investment in 5,000 shares of S Ltd.)
Balance Sheet as on....
13,00,000 6,20,000
Liabilities H. Ltd. S. Ltd Assets H. Ltd. S. Ltd.
H. Ltd. purchases shares in S. Ltd. on the balance sheet date i.e., 31-03-2017.
Share Capital (10/-) 10,00,000 5,00,000 Sundry Assets 7,00,000 5,40,000
[Goodwill: Rs.30,000; Minority Interest: Rs.Nil; Balance Sheet: Rs.13,40,000]
Other Liabilities 2,00,000 40,000 Investment in
50,000 shares of
Q-4: From the following Balance Sheets of H. Ltd. and its subsidiary S. Ltd. as on
S. Ltd. at per 5,00,000
31-03-2017, prepare a consolidated balance sheet :
12,00,00 5,40,000 12,00,000 5,40,000
Particulars H Ltd. S Ltd.
[Balance Sheet Total: Rs.12,40,000]
I EQUITY AND LIABILITIES
1. Shareholder’s Funds
Q-2: From the following information prepare a consolidated balance sheet of H. Ltd.
(a) Share Capital (in shares of Rs.100 each) 10,00,000 5,00,000
and its subsidiary S. Ltd.:
(b) Reserve and Surplus
Liabilities H. Ltd. S. Ltd Assets H. Ltd. S. Ltd. Reserve 50,000 40,000
Surplus Account 1,00,000 20,000
Share Capital in Sundry Assets 8,00,000 5,40,000
2. Current Liabilities
shares of Rs.10 each 10,00,000 5,00,000 Investments in
(a) Trade Payables (Creditors) 2,50,000 60,000
Other Liabilities 2,00,000 40,000 40,000 shares
14,00,000 6,20,000
of S Ltd 4,00,000 —
II ASSETS
12,00,000 5,40,000 12,00,000 5,40,000 1. Non-Current Assets
(a) Fixed Assets (Tangible) 8,80,000 6,20,000
[Minority Interest: Rs.1,00,000; Balance Sheet: Rs.13,40,000]
(b) Non-Current Investments 5,20,000 —
(5,000 shares of S Ltd bought on 31-3-2017)
Q-3: From the following Balance Sheets of H. Ltd. and its subsidiary S.Ltd., as on
31 March 2017, prepare a consolidated balance sheet: 14,00,000 6,20,000
Particulars H Ltd. S Ltd. [Capital Reserve: Rs.40,000; Minority Interest: Rs.Nil; Balance Sheet: Rs.15,00,000]
I EQUITY AND LIABILITIES
Q-5: From the following information prepare a consolidated balance sheet as on
1. Shareholder’s Funds
31st March 2018 :
(a) Share Capital (in shares of Rs.100 each) 10,00,000 5,00,000
(b) Reserve and Surplus Liabilities H. Ltd. S. Ltd Assets H. Ltd. S. Ltd.
Reserves — 20,000
Share Capital 2,00,000 1,00,000 Sundry Assets 2,20,000 1,50,000
Surplus Account 1,00,000 50,000
(Shares of Rs. 20 each) Investment in 3,000
2. Current Liabilities
Reserves 60,000 20,000 shares of S. Ltd. 90,000
(a) Trade Payables (Creditors) 2,00,000 50,000
Surplus 20,000 10,000
13,00,000 6,20,000
Creditors 30,000 20,000
3,10,000 1,50,000 3,10,000 3,10,000
 (3) (4)

H.Ltd. acquired its shares in S.Ltd. on 1 April 2017 when S.Ltd.’s reserves stood at Surplus 4,000 1,800
Rs. 5,000 and its surplus at Rs. 6,000. 2. Current Liabilities
[Goodwill: Rs.23,400; Minority Interest: Rs.52,000; Balance Sheet: Rs.3,93,400] (a) Trade Payables (Creditors) 2,000 2,200
20,000 10,000
Q-6: From the Balance Sheets given below, prepare a consolidated balance sheet II ASSETS
of Moti Ltd. and its subsidiary Choti Ltd. : 1. Non-Current Assets
(a) Fixed Assets (Tangible) 16,000 10,000
Particulars Moti Choti
(b) Non-Current Investments (4,000 shares in S Ltd.) 4,000 —
I EQUITY AND LIABILITIES
20,000 10,000
1. Shareholder’s Funds
(a) Share Capital (shares of Rs.10 each) 1,20,000 30,000 The shares were purchased by H. Ltd. in S. Ltd. on 30 September 2016. On 1 April
(b) Reserve and Surplus 2016 the profit and loss statement of S. Ltd. showed a loss of Rs. 3,000 which was
General Reserve 25,000 6,000 written off from out of the profits earned during the year. Profits are earned uniformly
Surplus 12,000 9,000 over the year 2016-17. Prepare a consolidated balance sheet of H. Ltd. and S. Ltd.
2. Current Liabilities as on 31 March 2017 giving all workings.
(a) Trade Payables (Creditors) 15,000 5,000 [Capital Reserve: Rs.400; Minority Interest: Rs.2,600; Balance Sheet: Rs.26,400]
1,72,000 50,000
II ASSETS Q-8: H. Ltd. acquired 8,000 equity shares of S. Ltd. on 31 March 2016. The following
1. Non-Current Assets are the balance sheets of the two companies as at 31 March 2017:
(a) Fixed Assets (Tangible)
Particulars H Ltd. S Ltd.
Freehold Buildings 72,000 -
Leasehold Property - 25,000 I EQUITY AND LIABILITIES
Plant and Machinery 30,000 10,000 1. Shareholder’s Funds
(b) Non-Current Investments 25,000 - (a) Share Capital
(2,000 shares in Choti Ltd.) Equity Shares of Rs.100 each 20,00,000 10,00,000
2. Current Assets (b) Reserve and Surplus
(a) Inventories (Stock-in-trade) 18,000 3,000 General Reserve (as on 31.03.2016) 4,00,000 2,00,000
(b) Trade Receivables (Debtors) 22,000 7,000 Surplus Account (as on 31.03.2016) 1,00,000 60,000
(c) Cash and Cash Equilants (Bank) 5,000 5,000 Profit for the year 2016-17 2,00,000 80,000
1,72,000 50,000 2. Current Liabilities
At the date of acquisition by Moti Ltd., of 2,000 Shares in Choti Ltd., the latter company (a) Trade Payables
had undistributed surplus and reserves of Rs. 5,000, none of which have been Creditors 1,00,000 1,00,000
distributed since acquisition. Bills Payable 30,000 10,000
[Goodwill: Rs.Nil; Minority Interest: Rs.15,000; Balance Sheet: Rs.1,98,667] 28,30,000 14,50,000
II ASSETS
Q-7: The balance sheets of H Ltd. and its subsidiary S Ltd., as on 31 March 2017, 1. Non-Current Assets
were as follows: (a) Fixed Assets (Tangible)
Particulars H Ltd. S Ltd. Land and Building 5,00,000 3,00,000
(I) EQUITY AND LIABILITIES Plant and Machinery 5,00,000 6,00,000
1. Shareholder’s Funds (b) Non-Current Investments 10,00,000 —
(a) Share Capital (shares of Rs.1 each) 10,000 6,000 (investment in 4,000 shares of S Ltd)
(b) Reserve and Surplus 2. Current Assets
General Reserve 4,000 — (a) Inventories (stock in trade) 1,50,000 1,00,00
 (5) (6)

(b) Trade Receivables 2. Non-Current Liabilities

Debtors 1,00,000 1,20,000 (a) Long term borrowings (6% Debentures) - 1,00,000
Bills Receivable 80,000 10,000 3. Current Liabilities
(c) Cash and Cash Equivalents (Bank) 5,00,000 3,20,00 (a) Trade Payables (Creditors) 75,000 45,000
28,30,000 14,50,000 7,55000 2,45,000
II ASSETS
(i) Bills receivable of H. Ltd. include Rs. 10,000 accepted by S. Ltd.
1. Non-Current Assets
(ii) Sundry debtors of H. Ltd: include Rs. 50,000 due from S. Ltd.
(a) Fixed Assets (Tangible) 3,50,000 1,50,000
Prepare a consolidated balance sheet of H. Ltd. and its subsidiary S Ltd.
(b) Non-Current Investments 60,000 -
[Capital Reserve: Rs.8,000; Minority Interest: Rs.2,68,000; Balance Sheet: Rs.32,20,000]
(i) 6% Debentures in S Ltd acquired at cost
(ii) 1,500 Shares in S Ltd at Rs.80 each 1,20,000 —
Q-9: A Ltd., acquires all the shares in B Ltd., at cost of Rs.1,05,000 on 01.04.2016.
2. Current Assets
The extracts of balance sheets of two companies on 31 March 2017 were as follows:
(a) Inventories (stock in trade) 90,000 40,000
Liabilities A Ltd. B. Ltd Assets A Ltd. B Ltd. (b) Trade Receivables (Debtors) 60,000 30,000
(c) Cash and Cash Equivalents (Bank) 75,000 25,000
Share Capital : 3,00,000 45,000 Fixed Assets :
7,55,000 2,45,000
(Shares of Rs.10/-) Freehold Promises 1,65,000 28,000
Reserves & Surplus : Machinery 70,000 26,000 H.Ltd. acquired the shares on 01.08.2016. The profit and loss statement of S. Ltd.
General Reserve 1,00,000 2,000 Investments 1,05,000 showed a loss of Rs.1,50,000 on 01.04.2016. During June 2016, goods costing
(as on 01.04.2016) (Shares in B Ltd.) Rs.6,000 were destroyed by fire against which insurer paid only Rs.2,000. Trade
Surplus 90,000 36,000 Current Assets : creditors of S Ltd. include Rs.20,000 for goods supplied by H Ltd. on which H Ltd.
Current Liabilities : Stock 62,000 18,000 made a profit of Rs.2,000. Half of the goods were still in stock on 31.03.2017. Prepare
Creditors 10,000 14,000 Debtors 35,000 14,000 a consolidate balance sheet and show the complete working.
Cash 63,000 11,000 [Goodwill: Rs.72,000; Minority Interest: Rs.25,000
Unrealised Profit: Rs.1,000; Balance Sheet: Rs.8,71,000]
5,00,000 97,000 5,00,000 97,000
(i) The creditors of A Ltd., include Rs.5,000 due to B Ltd., for purchases on which Q-11: The following are balance sheets of R Ltd. and S. Ltd. as at 31 March 2017
the latter company made a profit of Rs.1,000.
Particulars R Ltd. S Ltd.
(ii) The stock of A Ltd., includes Rs.3,000 of the above purchases from B Ltd. Make
necessary adjustments and show a consolidated balance sheet as on I EQUITY AND LIABILITIES
31.03.2017. 1. Shareholder’s Funds
[Capital Reserve: Rs.58,000; Minority Interest: Rs.Nil (a) Share Capital :
Unrealised Profit: Rs.600; Balance Sheet: Rs.5,44,400] Equity Shares of Rs.10 each 4,00,000 1,50,000
13% Preference shares of Rs.100 each 1,00,000
Q-10: The following balance sheets as on 31-3-2017 are presented to you: (b) Reserve and Surplus :
General Reserve 50,000 40,000
Particulars H Ltd. S Ltd.
Surplus Account (before appropriation) 30,000 25,000
I EQUITY AND LIABILITIES 2. Non-Current Liabilities
1. Shareholder’s Funds (a) Long term borrowings (12% Debentures)2,00,000 —
(a) Share Capital (shares of Rs. 100 each) 5,00,000 2,00,000 3. Current Liabilities
(b) Reserve and Surplus (a) Trade Payables (Creditors) 3,20,000 1,85,000
General Reserve 1,00,000 - 10,00,000 5,00,000
Surplus Account 80,000 (1,00,000)
 (7) (8)

II ASSETS Prepare the consolidated balance sheet as at 31 March 2017 assuming that N. Ltd.
1. Non-Current Assets has earned uniformly in 2016-17 and its profit and loss statement showed a loss of
(a) Fixed Assets (Tangible) 5,00,000 2,40,000 Rs.20,000 on 01.04.2016. Show the working also.
(b) Non-Current Investments [Goodwill: Rs.20,000; Minority Interest: Rs.67,500; Balance Sheet: Rs.11,93,500]
(15,000 Equity Shares in S. Ltd. on 1-4-2016) 2,00,000
2. Current Assets 3,00,000 2,60,000 Q-13: The balance sheets of H. Ltd. and S. Ltd. on 31 March 2017 were as under:
(including Rs.10,000 of stock purchased from R Ltd) . .
Particulars H Ltd. S Ltd.
10,00,000 5,00,000
I EQUITY AND LIABILITIES
Prepare the consolidate balance sheet as at 31 March 2017 assuming that
1. Shareholder’s Funds
(a) S Ltd’s general reserve and profit and loss account (after appropriation for
(a) Share Capital
dividends) stood at Rs.25,000 and Rs.10,000 respectively on 31.03.2016.
Equity Shares of Rs.100 each 5,00,000 3,00,000
(b) R Ltd. Sells goods at a profit of 25% on cost.
(b) Reserve and Surplus
[Goodwill: Rs.15,000; Minority Interest: Rs.1,13,000
General Reserve (as on 31.03.2016) 90,000 51,000
Unrealised Profit: Rs.2,000; Balance Sheet: Rs.13,13,000]
Surplus on (as on 31.03.2016) 60,000 24,000
Profit for the year 2016-17 1,10,000 84,000
Q-12: The following are the balance sheet of M Ltd, and its subsidiary N. Ltd, as at
2. Non-Current Liabilities
31.03.2017 :
(a) Long term borrowings — —
Particulars M Ltd. N Ltd. 3. Current Liabilities
(a) Trade Payables :
I EQUITY AND LIABILITIES
Creditors 1,40,000 71,000
1. Shareholder’s Funds
Bills Payable — 20,000
(a) Share Capital
9,00,000 5,50,000
Equity Shares of Rs.10 each, fully paid 3,00,000 2,00,000
II ASSETS
(b) Reserve and Surplus
1. Non-Current Assets
Capital Redemption Reserve 1,20,000 —
(a) Fixed Assets (Tangible)
General Reserve 1,00,000 30,000
Land and Buildings 2,50,000 2,00,000
Surplus Account (before appropriation) 60,000 40,000
Plant and Machinery 1,25,000 1,60,000
2. Non-Current Liabilities
(b) Non-Current Investments 2,95,000 —
(a) Long term borrowings (Debentures) 2,00,000 1,00,000
(2,000 shares in S Ltd.)
3. Current Liabilities
2. Current Assets
(a) Trade Payables (Creditors) 1,90,000 1,15,000
(a) Inventories (stock-in-trade) 70,000 80,000
(b) Other Current Liabilities 30,000 15,000
(b) Trade Receivables :
(Interest due on debenture for one year) . .
Debtors 1,20,000 1,05,000
10,00,000 5,00,000
Bills Receivable 30,000 —
II ASSETS
(c) Cash and Cash Equivalents (cash) 10,000 5,000
1. Non-Current Assets
9,00,000 5,50,000
(a) Fixed Assets (Tangible) 6,00,000 3,40,000
(b) Non-Current Investments H Ltd. acquired shares in S Ltd. on 01.01. 2017. S Ltd. issued all bills payable to H
(i) 15,000 shares in N Ltd. on 30.09.2016 2,00,000 — Ltd. Bills receivable of H Ltd. include bills of S Ltd. for Rs.12,000. Sundry debtors of
(ii) Debentures of N Ltd. at par 50,000 — S Ltd. include Rs.10,000 owing by H Ltd. Stock of H Ltd. includes goods worth
(iii) Debentures of M Ltd. at par — 60,000 Rs.15,000 purchased from S Ltd. for which the latter company has charged profit at
2. Current Assets 1,50,000 1,00,000 25% on cost. Contingent liability for bills discounted by H Ltd. is Rs.25,000. Prepare
10,00,000 5,00,000 a consolidated balance sheet.
 (9) (10)

[Goodwill: Rs.3,000; Minority Interest: Rs.1,53,000 II ASSETS

Unrealised Profit: Rs.3,000; Balance Sheet: Rs.11,33,000] 1. Non-Current Assets
(a) Fixed Assets. (Tangible) 3,32,500 1,42,000
Q-14: The following are the balance sheets of X Ltd. and its subsidiary Y Ltd. as at (b) Non-Current Investments 2,30,000 —
31 March 2017: 2. Current Assets 2,87,500 1,17,500
8,50,000 2,60,000
Particulars X Ltd. Y Ltd.
(i) About M Ltd. : M Ltd. purchased goods worth Rs.30,000 from S. Ltd. which
I EQUITY AND LIABILITIES
were sold at cost + 33 1/3%. Of these, 50% remains unsold. This purchase has
1. Shareholder’s Funds remained unpaid and included in current liabilities. Surplus includes dividend at
(a) Share Capital (Equity Shares of Rs.10) 4,00,000 1,00,000 16% received from S. Ltd. for the year 2015-16.
(b) Reserve and Surplus : (ii) About S Ltd. : The balance in surplus on 01.04.2016 was Rs.70,000 whereas
Surplus Account 50,000 20,000 general reserve was remained unchanged. An item of plant which (included in
2. Current Liabilities 7,50,000 4,80,000 fixed assets) had book value of Rs.12,500 was to be valued at Rs.20,000 on
12,00,000 6,00,000 01.04.2016. Depreciation at 20% is provided on this item.
II ASSETS Prepare consolidated balance sheet from the above informations.
1. Non-Current Assets [Goodwill: Rs.48,600; Minority Interest: Rs.45,200
(a) Fixed Assets (Tangible) Unrealised Profit: Rs.3,750; Balance Sheet: Rs.9,00,850]
Equipments 2,50,000 95,000
(b) Non-Current Investments 1,40,000 Q-16: H. Ltd. acquired 8,000 shares of Rs. 10 each in S. Ltd. on 31 March 2017.
(9,000 Shares in Y Ltd.on 01.04.2016) The summarised list of assets and liabilities of the two companies as on that are
2. Current Assets 8,10,000 5,05,000 given below :
12,00,000 6,00,000
Particulars H Ltd. S Ltd.
On 01.04.2016, Profit and Loss Statement of Y Ltd. showed a profit of Rs.8,000 and
equipment of Y Ltd. was revalued by X Ltd. at 20% above its book value of Rs.1,00,000 I EQUITY AND LIABILITIES
(but no such adjustment effected in the books of Y Ltd.). Prepare the consolidated Share Capital :
Balance Sheet as at 31 March 2017. (i) 30,000 Shares of Rs.10 each 3,00,000 —
[Goodwill: Rs.24,800; Minority Interest: Rs.13,900; Balance Sheet: Rs.17,03,800] (ii) 10,000 Shares of Rs. 10 each — 1,00,000
Capital Reserve — 52,000
Q-15: M. Ltd. acquired 80% shares of S. Ltd. as on 1 October 2016 at a cost of General Reserve 25,000 5,000
Rs.2,30,000. The summarised balance sheet as on 31.03.2017 was as under: Surplus 38,200 18,000
Loan from S. Ltd. 2,100 —
Particulars M Ltd. S Ltd. Bills Payable (including Rs.500 to H Ltd.) — 1,700
I EQUITY AND LIABILITIES Creditors 17,900 5,000
1. Shareholder’s Funds 3,83,200 1,81,700
(a) Share Capital II Assets
Equity Shares of Rs.50 each 3,75,000 — Fixed Assets 1,50,000 1,44,700
Equity Shares of Rs.10 each — 1,25,000 Shares in S Ltd. (at cost) 1,70,000 —
(b) Reserve and Surplus Stock in hand 40,000 20,000
General Reserve 2,37,500 5,000 Loan to H Ltd. — 2,000
Surplus 2,00,000 90,000 Bills Receivable (including Rs. 200 from S Ltd.) 1,200 —
2. Current Liabilities Debtor 20,000 10,000
(a) Trade Payables (creditors) 37,500 40,000 Bank 2,000 5,000
8,50,000 2,60,000 3,83,200 1,81,700
 (11) (12)

Note to the balance sheet of H. Ltd. : General Reserve 3,40,000 6,000

There is a contingent liability of Rs.1,000 for bills discounted. Surplus 3,60,000 1,08,000
The following additional information is given to you : Creditors 1,00,000 44,150
(a) Interest receivable Rs. 100 in respect of loan due by H. Ltd. to S Ltd. has not Bills Payable — 24,150
been credited in the accounts of S. Ltd. 14,00,000 3,32,300
(b) On 31 March 2017, the directors of H. Ltd. decide that the fixed assets of S Ltd. Assets
are overvalued and should be written down by Rs.5,000.
Land 3,56,000 70,000
Prepare the consolidated Balance Sheet as on 31 March 2017.
Properties 3,76,000 40,000
[Goodwill: Rs.33,920; Minority Interest: Rs.34,020; Balance Sheet: Rs.4,21,620]
Plant and Machinery 1,40,000 91,300
Investments in S. Ltd. 1,80,000 —
Q-17: Strong Ltd. acquired 3,200 equity shares of Weak Ltd. on 31.03.2017. The
Stock 1,36,000 50,600
summarised figures of the two companies as on that date are given below:
Debtors and Cash 2,12,000 80,400
Credit Strong Ltd. Weak Ltd. Debit Strong Ltd. Weak Ltd. 14,00,000 3,32,300
The other information given are :
Share Capital 10,00,000 4,00,000 Land & Buildings 3,00,000 3,60,000
(a) On 1.4.2016, Surplus of S Ltd., stood at Rs. 77,500 and General Reserve at
(Rs.100 each fully paid) Plant & Machinery 4,80,000 3,18,800
Rs.3,000. Also H. Ltd. revalued Plant and Machinery of S Ltd., at the time of
General Reserves 4,80,000 3,40,000 Investments in
purchase of shares by Rs.20,000 more than its book value (Ignore Depreciation).
Profit & Loss Account 1,14,400 72,000 Weak Ltd. at cost 6,80,000 —
(b) Stock of H Ltd., includes Rs.8,000 of stock purchased from S Ltd. Further, debtors
Bank Loan 1,60,000 — Stocks 2,40,000 72,000
of S Ltd., include Rs.24,000 for sales to H Ltd., on which S Ltd., made a profit of
Bills Payable (including Sundry Debtors 88,000 80,000
Rs.6,000.
Rs.8,000 to Strong Ltd.) — 16,800 Bills Receivable (including
(c) S Ltd. made a Bonus issue during the year out of pre-acquisition profits for
Sundry Creditors 94,400 18,000 Rs.6,000 from Weak Ltd.) 31,600 —
Rs.60,000 not recorded in the books.
. . Cash at Bank 29,200 16,000
You are required to prepare the Consolidated Balance Sheet of H Ltd. and its
18,48,800 8,46,800 18,48,800 8,46,800
subsidiary S Ltd. as on 31.03.2016.
You are supplied with the following information: [Capital Reserve: Rs.20,400; Minority Interest: Rs.56,800
(a) Weak Ltd., made a bonus issue on 31.03.2017 of one equity share for every four Unrealised Profit: Rs.2,000; Balance Sheet: Rs.15,46,300]
shares held by its shareholders. Effect has not yet been given in the accounts
for this. Q-19: A Ltd. acquired 2,000 equity shares of Rs.100 each in B Ltd. on 31st March
(b) The directors have decided to revalue the land and buildings and Plant & 2016. The Balance Sheets of the two companies as on 31.03.2017 were as follows:
machinery of Weak Ltd. at Rs. 4,00,000 and Rs. 2,98,800 respectively.
Particulars A Ltd. B Ltd.
(c) Sundry creditors of Strong Ltd. included Rs. 24,000 due to Weak Ltd. Prepare
the consolidated balance sheet as at 31 March 2017 in the books of Strong Ltd. I EQUITY AND LIABILITIES
Show your working clearly. Also calculate cost of control when bonus shares are 1. Shareholder’s Funds
not issued. (a) Share Capital
[Goodwill: Rs.14,400; Minority Interest: Rs.1,66,400; Balance Sheet: Rs.20,20,000] Equity Share Capital (Rs. 100 each) 8,00,000 2,50,000
(b) Reserve and Surplus
Q-18: H. Ltd., acquired 1,200 equity shares in S. Ltd., on 1.4.2016. The Summarised Reserves 3,00,000 50,000
financial information of H. Ltd. and its subsidiary S. Ltd. as on 31 March, 2017 are as Surplus 1,00,000 1,00,000
follows : 2. Current Liabilities
Trade Payables (Creditors) 2,00,000 50,000
Liabilities H Ltd. S Ltd.
14,00,000 4,50,000
Preference Share Capital. 1,00,000 —
Equity Share Capital (Rs. 100 fully paid) 5,00,000 1,50,000
 (13) (14)

II ASSETS from S Ltd, which was transferred to profit and Loss statement. Debtors of H Ltd.
1. Non-Current Assets Include Rs.20,000 due from S. Ltd. whereas creditors of S Ltd include Rs.15,000
(a) Fixed Assets (Tangible) 7,00,000 2,50,000 due to H Ltd., the difference being accounted for by a cheque-in transit.
(b) Non-Current Investments 3,00,000 — [Goodwill: Rs.14,000; Minority Interest: Rs.66,000; Balance Sheet: Rs.8,89,000]
(2,000 shares in B Ltd. at cost)
2. Current Assets 4,00,000 2,00,000 Q-21: (Dividend from Preacquisition Surplus)
14,00,000 4,50,000 The statement affair of H. Ltd. and its subsidiary S. Ltd. as on 31 March, 2017 are as
of follows :
B Ltd. had a credit balance of Rs.50,000 in the reserves and Rs.20,000 when A Ltd.
Liabilities H Ltd. S Ltd.
acquired shares in B Ltd. B Ltd. issued bonus shares in ratio of one for every five
Equity Shares of Rs. 100 each, fully paid up 10,00,000 5,00,000
shares held out of the profits earned during 2016-17. This is not shown in the above
General Reserve 1,00,000 1,70,000
balance sheet of B Ltd. Prepare a consolidated balance sheet of A Ltd. and its
subsidiary on 31.03.2017. Show all necessary workings. Surplus 1,60,000 1,30,000
[Goodwill: Rs.4,000; Minority Interest: Rs.80,000; Balance Sheet: Rs.15,54,000] Current Liabilities 4,40,000 2,00,000
17,00,000 10,00,000
Q-20: From the following balance sheets of a holding company and its subsidiary on Assets
31.03.2017, prepare a consolidated balance sheet: Fixed Assets 4,80,000 2,50,000
Investment in Shares of S. Ltd. 5,00,000 —
Particulars H Ltd. S Ltd. Current Assets 7,20,000 7,50,000
I EQUITY AND LIABILITIES 17,00,000 10,00,000
1. Shareholder’s Funds The following additional information is provided :
(a) Share Capital (Rs. 10 each) 5,00,000 2,00,000 (a) H. Ltd. acquired 3,000 shares in S Ltd. on 01.07.2016. The Reserves and Surplus
(b) Reserve and Surplus position of S Ltd. as on 01.04.2016 was as under :
General Reserves 80,000 60,000 General Reserve : Rs. 2,50,000
Surplus Account 90,000 70,000 Surplus : Rs. 1,20,000
2. Current Liabilities (b) On 01.10.2016, S Ltd. issued one equity share for every four shares held has
(a) Trade Payables (Creditors) 50,000 40,000 been made in the as Bonus shares out of the General Reserve. No entry books
(b) Other Current Liabilities of H Ltd., for the receipt of these bonus shares. However, entry has been made
(Outstanding Expeneses) 20,000 10,000 in the books of S Ltd. for the issue of bonus shares.
7,40,000 3,80,000 (c) On 30.09.2016, S Ltd. declared a dividend out of pre-acquisition profits @ 25%
II ASSETS on Rs.4,00,000; its capital on that date. H Ltd., transferred the dividend to its
1. Non-Current Assets Profit and Loss Statement.
(a) Fixed Assets (d) S Ltd. owed H Ltd., Rs.50,000 for purchase of stock from H Ltd. The entire stock
(i) Tangible (Machinery) 3,00,000 1,50,000 is held by S Ltd. on 31.03.2017. H Ltd. made a profit of 25% on cost.
(ii) Intangible (Goodwill) 30,000 10,000 Prepare a Consolidated Balance Sheet of H Ltd. and its subsidiary S Ltd. as on
(b) Non-Current Investments 1,90,000 — 31.03.2017.
(16,000 shares in S Ltd) [Minority Interest: Rs.2,00,000; Unrealised Profit: Rs.10,000; Balance Sheet: Rs.14,10,000]
2. Current Assets
(a) Inventories (stock-in-trade) 80,000 50,000
(b) Trade Receivables (Debtors) 1,20,000 1,60,000
(c) Cash and Cash Equivalents (Bank) 20,000 10,000
7,40,000 3,80,000
When control was acquired, S Ltd had Rs.40,000 in general reserve and surplus of
Rs.30,000. Immediately on purchases of shares H Ltd received Rs.16,000 as dividend
 (15) (16)

Q-22: On 01.04.2016 S Ltd. issued 10% Preference Shares of Rs.1,00,000 at par. (b) H Ltd. remitted a cheque of 10,000 to S Ltd. on 27 March, 2017 for repayment of
On this date, S Ltd.’s General Reserve and Statement of Profit and Loss Account loan, which was received by S Ltd. in April 2017.
showed balances of Rs.80,000 and Rs.50,000 respectively. On 05.07.2016 S Ltd. (c) No part of preliminary expenses was written off during the year.
paid a final dividend of 12% on equity shares for the year ended 31.03.2016. On Prepare consolidated Balance Sheet of H Ltd. and S Ltd. as at 31 March, 2017.
01.04.2016, H Ltd. acquired 80% equity shares in S Ltd. for Rs.3,00,000. On this [Goodwill: Rs.44,000; Minority Interest: Rs.2,05,000; Balance Sheet: Rs.20,49,000]
date, machinery of S Ltd. was revalued at Rs.2,50,000. No entry for this was made
in the books of S Ltd. On 31.03.2017 the summarised balance sheets of H Ltd. and Q-23: The following are the summarised account balance of H Ltd,, and S Ltd. at
its subsidiary S Ltd. stood as follows: 31st March, 2017 :
Balance Sheet (As on 31.03.2017)
Liabilities H Ltd. S Ltd. Assets H Ltd. S Ltd.
Particulars H Ltd. S Ltd.
Share Capital 3,00,000 1,50,000 Freehold
I EQUITY AND LIABILITIES (Rs.10/- fully paid) Premises 2,56,000 90,000
1. Shareholder’s Funds General Reserve 1,90,000 6,000 Machinery 60,000 81,300
(a) Share Capital : Surplus 1,60,000 1,08,000 Stock 68,000 60,600
Equity Share Capital 8,00,000 3,00,000 Sundry Creditors 30,000 48,300 Sundry Debtors 56,000 47,400
10% Preference Share Capital — 1,00,000 Cash 60,000 33,000
(b) Reserve and Surplus : Investment in
General Reserve 4,00,000 1,50,000 . . Shares of S Ltd 1,80,000 -
Surplus 2,00,000 90,000 6,80,000 3,12,300 6,80,000 3,12,300
2. Non-Current Liabilities
H Ltd., acquired 12,000 shares of S Ltd., on 01.04.2016 at the total cost of Rs.1,80,000.
(a) Long term borrowings (loans) 1,10,000 —
On scrutiny of the balance sheet of H Ltd., as at 31.3.2017, the following details are
3. Current Liabilities
obtained :
(a) Trade Payables :
(a) Surplus includes the interim dividend at the rate of 10% p.a. free of tax from S
Creditors 1,70,000 76,000
Ltd.
Bills Payable — 4,000
(b) Stock includes Rs.6,000 of stock at cost purchased from S Ltd.
16,80,000 7,20,000
(c) Sundry creditors include Rs.18,000 for purchases from S Ltd., on which the
II ASSETS
latter company made a profit of Rs.4,500.
1. Non-Current Assets
(d) On 01.11.2016 the surplus of S Ltd., stood. at Rs.76,000 and the general reserve
(a) Fixed Assets (Tangible)
at Rs.4,500. No final dividends are yet proposed to be declared by S Ltd.
Machinery 6,25,000 2,70,000
Prepare consolidated Balance Sheet of H Ltd. and S Ltd. as at 31 March, 2017.
Furnitue 85,000 50,000
[Capital Reserve: Rs.1,80,000; Minority Interest: Rs.52,800; Balance Sheet: Rs.7,92,800]
(b) Non-Current Investments (Shares in S Ltd) 3,00,000 —
Q-24: (Preliminary Expenses and Unclaimed Dividend)
(c) Long term loans & Advances (Loan to H Ltd.) — 10,000
The following are the balance sheet of H. Ltd. and its subsidiary S Ltd. as at 31st
2. Current Assets
March 2017:
(a) Inventories (stock-in-trade) 4,00,000 1,90,000
(b) Trade Receivables (Debtors) 1,50,000 80,000 Liabilities H Ltd. S Ltd Assets H Ltd. S Ltd.
(c) Cash and Cash Equivalents (Bank) 1,20,000 1,10,000
(d) Other Current Assets (Preliminary Expenses) — 10,000
Share Capital (Rs.10) 6,00,000 7,00,000 Machinery 3,00,000 1,00,000
16,80,000 7,20,000
General Reserve 1,50,000 70,000 Furniture 70,000 45,000
The following further information is furnished : Surplus 70,000 50,000 Investment 2,60,000 -
(a) S Ltd. provides depreciation on Machinery @ 10% on written down value. No Creditors 90,000 55,000 (70% Shares of
Machine was sold or purchased during the year. Unclaimed Dividends - 5,000 S Ltd at cost)
Stock 1,75,000 1,89,000
 (17)

Debtors 55,000 30,000

Bank 40,000 5,000
Preliminary Expenses - 6,000
. . Bills Receivable 10,000 5,000
9,10,000 3,80,000 9,10,000 3,80,000
H Ltd. acquired the shares of S Ltd. on 30 June 2016. On 1 April 2016, S Ltd. general
reserve and profit and loss account stood at Rs.60,000 and Rs.20,000 respectively.
No part of the preliminary expenses was written off during the year ended 31 March
2017. Prepare a consolidated balance sheet of H Ltd. and its subsidiary S Ltd. as at
31 March 2017.
[Goodwill: Rs.61,200; Minority Interest: Rs.99,200; Balance Sheet: Rs.10,85,200]