Sums -2 Prepare a consolidated balance sheet from the following balance sheets

Prepare a consolidated balance sheet from the following balance sheets:

Liabilities	H Ltd	S Ltd	Assets	H Ltd	S Ltd
Share capital			Sundry assets	885	1,510
Shares of Rs.1 each	1,400	1,000	Investments of shares in S	1,125	Nil
Creditors	350	190	Ltd. 900 shares at cost
Profit and loss A/c	260	320
	2,010	1,510		2,010	1,510

On the date of acquisition of shares by H Ltd in S Ltd the credit balance on latter's profit and loss account was Rs.220. No dividends have been declared since that date.                               

Solution:                       

Working Notes

1. Calculation of share ratio
Number of shares in Subs. So. Share cap. amt. in the subsidiary company / Face value of equity shares
= Rs.1,000/Rs.1 = 1,000 equity shares
HLtd: Minority Interest = 900 shares: 100 shares = 9:1
2. Calculation of capital profits:
Reserves and profits & Loss account balance given in the adjustments = 220
Total capital profits                                                                                            =220
H Ltd                                                                                                                      =220 x 9/10 = Rs.198
Minority interest                                                                                                 =220 x 1/10 = Rs.22
3. Calculation of Revenue profits
Profit and loss account amount of S ltd which given in the balance sheet   =320
Less: Total capital profits                                                                                         =220
Total revenue profits                                                                                                =100
H Ltd (transfer to Note No: 2)                                                                                 =100 x 9/10 =90
Minority interest                                                                                                        =100 x 1/10 =10
4. Minority interest
Nominal paid up share capital amount (100 shares ×1) = 100
Capital profits                                                                          =22
Revenue profits                                                                       =10
Total minority interest (transfer to liabilities side)           =132
5. Cost of Control: (H Ltd)
Nominal paid up share capital amount                              =900
Capital profits                                                                     =198                 =1,098
Less: Investment of shares in Subsidiary company                             =1,125
(-)Goodwill (transfer to Note No:9)                                                     =    27

Consolidated Balance Sheet (As Per Revised Schedule VI)

Equity and Liabilities	Note No.	Amount
i. SHAREHOLDERS' FUNDS
Share capital	1	1,400
Reserves and Surplus	2	350
ii. MINORITY INTEREST     (Refer  Working Note:4)	Nil	132
iii. NON CURRENT LIABILITIES:
Long term borrowings	3	Nil
iv. CURRENT LIABILITIES
Short term borrowings	4	Nil
Trade payables	5	540
Short term provisions	6	Nil
Other current liabilities	7	Nil
Total(i+ii+iii+iv)		2,422
ASSETS	Note No.	Amount
i. Non-current assets
Tangible assets	8	2,395
Intangible assets	9	27
Non-current investments	10	Nil
ii.Current Assets		Nil
Total(i+ii)		2,422

Notes to Accounts on Balance Sheet

1	Particulars	Amount
1	Share capital	1,400
2	Reserves And surplus:
	Profit and loss account	260
	Revenue profits of H Ltd	90
	Total	350
3	Long term borrowing:	Nil
4	Short Term Borrowings:	Nil
5	Trade Payable:  Creditors(350+190)	540
6	Short Term Provisions:	Nil
7	Other Current Liabilities	Nil
8	Tangible Assete : Sundry assete (885+1,510)	2,395
9	Intangible Assets: Goodwill	27
10	Non-Current Investments	Nil