From the balance sheet given below prepare a consolidated balance sheet of A ltd and its subsidiary company B ltd. Balance sheet as at 30th June 2014:

Liabilities

A Ltd

B Ltd

Assets

A Ltd

B Ltd

Share capital

 

 

Land and buildings

6,40,000

2,00,000

Shares of Rs. 10 each

25,00,000

6,00,000

Machinery

12,60,000

3,40,000

General reserves

3,60,000

1,20,000

Furniture

1,40,000

60,000

Profit and loss A/c

2,40,000

1,80,000

40,000 shares in B Ltd.

5,00,000

Nil

Trade creditors

3,50,000

1,00,000

Stock

4,10,000

2,50,000

 

 

 

Debtors

3,80,000

1,00,000

 

 

 

Bank balance

1,20,000

50,000

 

34,50,000

10,00,000

 

34,50,000

10,00,000

At the date of acquisition by A Ltd of its holding of 40,000 shares in B Ltd, the latter company had undistributed profits and reserves amounting to Rs. 1,00,000 none of which had been distributed since then.

 Solution:

Consolidated Balance Sheet (As Per Revised Schedule VI)

Equity and Liabilities

No.

Amount

i. Shareholders' Funds:

 

 

   Share capital

1

25,00,000

   Reserves and Surplus

2

7,33,333

ii. Minority Interest (Refer Note: 4)

--

3,00,000

iii. Non Current Liabilities:

 

 

  Long term borrowings

3

Nil

iv. Current Liabilities

 

 

   Short term borrowings

4

Nil

   Trade payables

5

4,50,000

   Short term provisions

6

Nil

   Other current liabilities

7

Nil

Total (i+iiiii + iv)

 

39,83,333

Assets

No.

Amount

Non-Current Assets

 

 

   Tangible assets

8

26,40,000

   Intangible assets

9

33,333

   Non-current investments

10

Nil

Current Assets

 

 

   Trade receivables

11

4,80,000

   Short term loans and advances

12

Nil

   Other current assets

13

Nil

   Closing stock

14

6,60,000

   Cash and cash equivalent

15

1,70,000

Total (i + ii)

 

39,83,333

Notes To Accounts On Balance Sheet:

No.

Particulars

Amount

1

Share Capital

25,00,000

2

Reserves and Surplus:

 

 

   General reserves

3,60,000

 

   Profit and loss account

2,40,000

 

   Revenue profits of A Ltd

1,33,333

 

Total

7,33,333

3

Long Term Borrowing

Nil

4

Short Term Borrowing

Nil

5

Trade Payables: Creditors (3,50,000+ 1,00,000)

4,50,000

6

Short Term Provisions:

Nil

7

Other Current Liabilities

Nil

8

Tangible Assets

 

 

   Land and buildings (6,40,000 +2,00,000)

8,40,000

 

   Machinery              (12,60,000+3,40,000)

16,00,000

 

   Furniture                (1,40,000+60,000)

2,00,000

 

Total

26,40,000

9

Intangible Assets: Goodwill

33,333

10

Non-Current Investments

Nil

11

Current Assets: Trade Receivables: Debtors(3,80,000 + 1,00,000)

4,80,000

12

Short Term Loans & Advances

Nil

13

Other Current Assets

Nil

14

Closing Stock or Inventory: Stock (4,10,000 +2,50,000)

 

 

 

6,60,000

15

Cash and cash equivalent: Bank balance (1,20,000 + 50,000)

 

 

 

1,70,000

 

Working Note

1. Calculation of share ratio

   Number of shares in B Ltd.      = Share capital amount in B Ltd. / face value of equity shares

        = Rs. 6,00,000 / Rs. 10= 60,000 equity shares

   ALtd: Minority Interest              = 40,000 shares : 20,000 shares = 2 : 1

2. Calculation of capital profits

   Reserves and Profits & Loss account balance given in adjustments      = 1, 00,000

   Total capital profits                                                                                   = 1, 00,000

A Ltd                                                                                      = 1 ,00,000*2/3=Rs.66, 667

Minority interest                                                                     = 1 ,00,000*1/3=Rs.33,333

3. Calculation of Revenue profits:

Reserves and Profit & loss account amount of B Ltd which given in B/S(1, 20000 + 1, 80,000) =3, 00,000

Less: Total capital profits                                                                                                              =1, 00,000

Total revenue profits                                                                                                                  =2, 00,000

A ltd (transfer to Note No: 2)     = 2 ,00,000*2/3   =Rs.1,33,333

Minority interest                         = 2 ,00,000*1/3   =Rs.66, 667

4. Minority interest

   Nominal paid up share capital amount (20,000 shares × 10) =2, 00,000

   Capital profits                                                                          =33, 333

   Revenue profits                                                                       =66, 667

   Total minority interest (Transfer to liabilities side)            =3, 00,000

5. Cost of Control: (A Ltd)

   Nominal paid up share capital amount   =4, 00,000

   Capital profits                                         = 66,667             =4, 66,667

       Less: Investment of shares in Subsidiary company      =5, 00,000

   (-) Goodwill (Transfer to Note No: 9)                             = 33,333