S Itd acquired 3,200 equity shares of W Itd on 31st December 2013. The summarized balance sheets of the two companies on that date are given below:
|
Liabilities |
H Ltd |
S Ltd |
Assets |
H. Ltd |
S Ltd |
|
Shares capital: |
10,00,000 |
4,00,000 |
Land and buildings |
3,00,000 |
3,60,000 |
|
shares of Rs.100 each fully paid |
|
|
Investments in S Ltd at cost |
6,80,000 |
Nil |
|
General reserves |
4,80,000 |
3,40,000 |
Machinery |
4,80,000 |
3,18,800 |
|
Profit and loss A/c |
1,14,400 |
72,000 |
Stocks |
2,40,000 |
72,000 |
|
Bank loan |
1,60,000 |
Nil |
Debtors |
88,000 |
80000 |
|
Bills payable |
Nil |
16,800 |
Bills receivable |
31,600 |
Nil |
|
(including
Rs.6,000 to S Ltd) |
|
|
(including Rs.6,000 from W ltd) |
|
|
|
Creditors |
94,400 |
18,000 |
Cash |
29,200 |
16,000 |
|
|
18,48,800 |
8,46,800 |
|
18,48,800 |
8,46,800 |
You are supplied with the following information:
a) S Ltd made a bonus issue on December31,2013 of one
equity share for every four shares held by the shareholders.This has not yet
been accounted for.
b) Creditors of H ltd, included Rs.24,000 due to S
Ltd.
c) The directors have decided to revalue the land and
buildings and machinery of S Ltd at Rs.4,00,000 and Rs.2,98,800 respectively.
Prepare the consolidated balance sheet as on 31.12.2013.
Solution
Consolidated Balance Sheet (As Per Revised Schedule
VI)
|
Equity and Liabilities |
No |
Amount |
|
i. Shareholders' Funds |
|
|
|
Share capital |
1 |
10,00,000 |
|
Reserves and Surplus |
2 |
5,94,400 |
|
ii. Minority Interest (Ref. Note: 4) |
1,66,400 |
|
|
iii. Non Current Liabilities |
|
|
|
Long term borrowings. |
3 |
1,60,000 |
|
iv. Current Liabilities: |
|
|
|
Short term borrowings |
4 |
Nil |
|
Trade payables |
5 |
99,200 |
|
Short term provisions |
6 |
Nil |
|
Other current liabilities |
7 |
Nil |
|
Total (i+ii+iii+iv) |
20,20,000 |
|
|
Assets |
No |
Amount |
|
i. Non- Current Assets |
|
|
|
Tangible assets |
8 |
14,78,800 |
|
Intangible assets |
9 |
14,400 |
|
Non-current investments |
10 |
Nil |
|
ii. Current Assets |
|
|
|
Trade receivables |
11 |
1,69,600 |
|
Short term loans & Advances |
12 |
Nil |
|
Other current assets |
13 |
Nil |
|
Closing stock |
14 |
3,12,000 |
|
Cash and cash equivalent |
15 |
45,200 |
|
Total (i + ii) |
20,20,000 |
|
Working Note
|
1. Calculation of share ratio |
||
|
Number of shares in S Ltd |
||
|
= Share
capital amount in S Ltd / face value of equity shares |
||
|
=Rs.4,00,000/Rs.100
= 4,000 equity shares |
||
|
H Ltd: Minority Interest; 3,200 shares: 800
shares; 4:1 |
||
|
2. Calculation of capital profits |
||
|
General Reserves and P&L A/c of S Itd given
inB/S liability side |
(3,40,000+72,000) |
4,12,000 |
|
Less: Bonus share capital amount (4000/4 = 1000
bonus shares of Rs. 100 each) |
1,00,000 |
=3,12,000 |
|
Less: Machinery value decreased
(3,18,800-2,98,800) |
20,000 |
=2,92,000 |
|
Add: Land and building value increased
(4,00,000-3,60,000) |
|
=40000 |
|
Total capital profits |
=3,32,000 |
|
|
H Ltd |
= 3
,32,000*4/5 |
=Rs,2,65,600 |
|
Minority interest |
= 2 ,52,000*1/5 |
=Rs.66,400 |
|
3. Calculation of Revenue profits |
NIL |
|
|
4. Minority interest |
||
|
Nominal paid up share capital amount (800 shares
× 100) |
=80,000 |
|
|
Capital profits |
=66,400 |
|
|
Bonus share capital amount (1,00,000 * 1 / 5) |
= 20,000 |
|
|
Total minority interest (transfer to liabilities
side) |
= 1 ,66,400 |
|
|
5. Cost of Control: (H Ltd) |
||
|
Investment of shares in S Ltd |
=6,80,000 |
|
|
Less: Nominal paid up share capital amount (3,200
Rs.100) |
=3,20,000 |
|
|
Capital profits |
=2,65,600 |
|
|
Bonus share capital amount (1,00,000 × 4/5) |
=80,000 |
=6,65,600 |
|
(+) Goodwill (Transfer to Note No: 9) |
=14,400 |
|
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