The following are the summarized Balance sheet of H Ltd and its subsidiary S Ltd as on 31.12.08.

Liabilities

H Ltd

S Ltd

Assets

H Ltd

S Ltd

Ordinary shares of Rs. 10 each

5,00,000

1,00,000

Fixed assets

2,00,000

90,000

General reserves

10,000

40,000

Stock

90,000

30,000

Creditors

20,000

30,000

Debtors

40,000

30,000

Bills payable

Nil

5,000

Bills receivable

5,000

Nil

 

 

 

Bank balance

1,15,000

25,000

 

 

 

7,500 shares in B Ltd at cost

80,000

Nil

 

5,30,000

1,75,000

 

5,30,000

1,75,000

H Ltd acquires shares in S Ltd on1.1.08 when S ltd had Rs.10,000 in general reserves. No dividend was declared by S Ltd in 2008.All bills receivable of H Ltd are drawn on S Ltd. You are required to prepare a Consolidated Balance sheet as on 31.12.2008.            

Solution

Consolidated Balance Sheet (As per Revised Schedule VI)

Equity and Liabilities

No.

Amount

1. Shareholders' Funds

 

 

Share capital

1

5,00,000

Reserves and Surplus

2

35,000

ii.Minority Interest(Ref. Note 4)

---

35,000

iii. Non Current Liabilities

 

 

Long term borrowings

3

Nil

iv. Current Liabilities

 

 

Short term borrowings

4

Nil

Trade payables

5

50,000

Short term provisions

6

Nil

Other current liabilities

7

Nil

Total (i+ii+ili+iv)

 

6,20,000

Assets

No.

Amount

i. Non-Current Assets:

 

 

Tangible assets

8

2,90,000

Intangible assets

9

Nil

Non-current investments

10

Nil

ii. Current Assets:

 

 

Trade receivables

11

70,000

Short term loans & Advances

12

Nil

Other current assets

13

Nil

Closing stock

14

1,20,000

Cash and cash equivalent

15

1,40,000

Total(i+ii)

 

6,20,000

Notes to Accounts on Balance Sheet                       

No

Particulars

Amount

1

Share Capital

 

5,00,000

2

Reserves And Surplus:

 

 

 

General reserves

 

10,000

 

Revenue profits of H Lid

 

22,500

 

Capital reserves (Trans. from Note: 5)

2,500

 

Total

35,000

3

Long Term Borrowing

 

Nil

4

Short Term Borrowing

 

Nil

5

Trade payables

 

 

 

Creditors (30000 + 20000)

 

50,000

 

Bills payable less Mutual owing (5,000-5,000)

Nil

 

 Total

50,000

6

Short term provisions

 

Nil

7

Other current liabilities

 

Nil

8

Tangible Assets: Sundry Assets(2,00,000+90,000)

2,90,000

9

Intangible Assets

 

Nil

10

Non-Current Investments

 

Nil

11

Trade Receivables

 

 

 

Debtors (40000 + 30000)

 

70,000

 

Bills receivable less mutual owing (5,000-5,000)

Nil

 

 Total

70,000

12

Short Term Loans & Advances

 

Nil

13

Other Current Assets

 

Nil

14

Closing Stock Or Inventory: Stock(90000 + 30000)

1,20,000

15

Cash and cash equivalent: Bank balance

(1, 15000 + 25000)

1,40,000

Working Note

1. Calculation of share ratio

Number of shares in S Ltd

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

 

 =1,00,000/Rs10

 = 10,000 equity shares

H Ltd: Minority Interest = 7,500 shares: 2,500 shares 3:1

 

2. Calculation of capital profits

Reserves balance given in the adjustments

 

 =10,000

Total capital profits

 =10,000

H Ltd

 = 10000 * 3/4

 = Rs 7,500

Minority interest

 = 10000 * 1/4

 = Rs 2,500

3.Calculation of Revenue profits

General Reserves and P/L A/c of S Ltd which is given in B/S liability side

 =40,000

Less: Total capital profits

 

 =10,000

Total revenue profits

 

 =30,000

H Itd (transfer to Note No: 2)

 = 30000 * 3 / 4

 = Rs 22 ,500

Minority interest

 = 30000 * 1 / 4 

 = Rs 7 ,500

4. Minority interest

 

 

 

Nominal paid up share capital amount (2,500 shares ×10)

25,000

Capital profits

2,500

Revenue profits

7,500

Total minority interest(transfer to liabilities side)

35,000

5. Cost of Control: (H Ltd) 

Nominal paid up share capital amount (7,500 x 10)

 =75,000

 

Capital profits

 =7,500

 =82,500

Less: Investment of shares in S Ltd

 

 =80,000

(+) Capital reserves (Transfer to Note No: 2)

 

 =2,500