Consolidate the following Balance sheets:

Liabilities

H Ltd

S Ltd

Assets

H Ltd

S Lltd

Share capital

 

 

Sundry assets

200

1,800

Shares of Rs.1 each

1,400

1,000

Investments
of shares in S Ltd. 900 shares at cost

1,200

Nil

Creditors

Nil

500

           

 

 

Profit and loss A/c

Nil

300

 

 

 

 

 

1,400

1,800

 

1,400

1,800

 When H Ltd. acquired the shares in S Ltd, the profit and loss A/c of the latter had a credit balance of Rs.200.       

 

Solution:

Consolidated Balance Sheet (As Per Revised Schedule VI) Equity and Liabilities           

Equity and Liabilities

No.

Amount

i. Shareholders' Funds:

 

 

   Share capital

1

1,400

   Reserves and Surplus

2

90

ii. Minority Interest (Ref.Note: 4)

--

130

iii. Non-Current Liabilities:

 

 

   Long term borrowings

3

Nil

iv. Current Liabilities:

 

 

   Short term borrowings

4

Nil

   Trade payables

5

500

   Short term provisions

6

Nil

   Other current liabilities

7

Nil

Total (i + ii + iii + iv)

 

2,120

Assets

No.

Amount

i. Non-Current Assets:

 

 

   Tangible assets

8

2,000

   Intangible assets

9

120

   Non-current investments

10

Nil

ii. Current Assets:

 

 

   Trade receivables

11

Nil

   Short term loans and advances

12

Nil

   Other current assets

13

Nil

   Closing stock

14

Nil

   Cash and cash equivalent

15

Nil

Total (i + ii)

 

2,120

 

Notes to Accounts on Balance Sheet                      

No.

Particulars

Amount

1

Share Capital

1,400

2

Reserves And Surplus: Revenue profits of H Ltd

90

3

Long Term Borrowing:

Nil

4

Short Term Borrowings:

Nil

5

Trade Payables: Creditors

500

6

Short Term Provisions:

Nil

7

Other Current Liabilities

Nil

8

Tangible Assets Sundry assets (200 + 1, 800)

2,000

9

Intangible Assets: Goodwill

120

10

Non-Current Investments

Nil

 

Working Notes

Working Note 1: Calculation of share ratio:

Number of shares in S Ltd. = Share capital amount in Subsidiary co. / Face value of equity shares

                                            = Rs. 1,000/ Rs.1= 1,000 equity shares

H Ltd: Minority Interest       = 900 shares :100 shares= 9:1

Working Note 2: Calculation of capital profits

Reserves and profits & Loss account balance given in the adjustments = 200

Total capital profits                                                                                   =200

H Ltd                   =200*(9/10) = Rs. 180

Minority interest =200*(1/10) = Rs. 20

Working Note 3: Calculation of Revenue profits

Profit and loss account amount of S Ltd. which given in the balance sheet = 300

Less: Total capital profits                                                                               =200

Total revenue profits                                                                                   =100

H Ltd (Transfer to Note No: 2)      =100*(9/10) = Rs. 90

Minority interest                            =100*(1/10) = Rs. 10

Working Note 4: Minority interest

Nominal paid up share capital amount (100 shares ×1) = Rs.100

Capital profits                                                                   =Rs. 20

Revenue profits                                                               = Rs. 10

Total minority interest (transfer to liabilities side)         = Rs. 130

Working Note 5: Cost of Control: (H Ltd)

Nominal paid up share capital amount                           =Rs. 900

Capital profits                                                                 =Rs.180         =Rs.1,080

Less: Investment of shares in Subsidiary company                             =Rs.1,200

(-) Goodwill (Transfer to Note No: 9)                                                =Rs.120