UNIT (24) 2.08 CONSOLIDATED bALANCE SHEET PROBLEM

From the following Balance sheet of H Ltd and its subsidiary S ltd drawn up at 31-12-2015, prepare a
consolidated Balance sheet at that date, having regard to the following.
1. Reserves and Profit and loss account (Cr) of S ltd stood at Rs.25,000 and Rs.15,000 respectively
on the date of acquisition of its 80% shares by H ltd.
2. Machinery [book value Rs.1,00,000] and furniture [book value Rs.20,000] of S Ltd were
revalued at Rs.1,50,000 and Rs 15,000 respectively for the purpose of fixing the price of its
shares; Book value of other assets remain unchanged.
H Ltd S Ltd
1.Equity and Liabilities
1. Shareholders fund
a. Share Capital
Equity shares of Rs.10 each 5,00,000 1,00,000
b. Reserves and surplus
General Reserve 2,00,000 75,000
P/L Account 1,00,000 25,000
2. Current liabilities
Trade Creditors 1,50,000 50,000
9,50,000 2,50,000
Total Equity and Liabilities
II. Assets
1. Non- current Asset
a. Fixed Asset.
Machinery 3,00,000 90,000
Furniture 60,000 17,000
b. Investment 8,000 shares in S Ltd @

Rs.20 each 1,60,000
2. Current Assets
Other Assets 4,40,000 1,43,000
Total Assets 9,50,000 2,50,000
Prepare consolidated Balance sheet of H Ltd and S Ltd.

WORKING NOTE
1.ALCULATION OF MINORITIES SHARE
Total number of shares in S Ltd [Rs1,00,000 ÷Rs 10} = 10,000 Shares
Holding Companies Shares 80% of 10,000 Share = 8,000 Shares
Therefore Minorities Share 20% of 10,000 Shares =2,000 shares
Therefor H Ltd’s share = 8,000 / 10,000 ie = 8/10 or 4/5

Therefor Minority share = 2,000 / 10,000 ie = 2/10 or 1/5
2. DIVISION OF PRE-ACQUISITION PROFIT AND RESERVES OF S LTD AMONG HOLDING CO. &
MINORITY.
Reserve 25,000
Profit and Loss A/c 15,000
Total Pre-acquisition profit 40,000
H Ltd’s Share [40,000 x 4/5] 32,000

Minority interest [40,000 x1/5] 8,000
3. DIVISION OF POST-ACQUISITION RESERVE AMONG H LTD. & MINORITY
Post-acquisition Reserve of S Ltd [ 75,000 – 25,000] 50,000
H Ltd’s Share [50,000 x 4/5] 40,000

Minority interest [50,000 x 1/5] 10,000
4. DIVISION OF PROFIT ON REVALUATION OF ASSET OF S LTD.
Plant and Machinery [1,50,000-1,00,000] 50,000

Loss on furniture [20,000 -15,000] (5,000)
Net Profit on revaluation 45,000
H Ltd’s Share [45,000 x 4/5] 36,000

5. DIVISION OF POST ACQUISITION PROFIT OF S LTD AMONG H LTD & MINORITY
Post-Acquisition profit of S Ltd [25,000 – 15,000] 10,000

Add : Excess depreciation charged on furniture
[15% on (20,000 – 15,000) =5,000 750
Less: Under depreciation charged on Plant and machinery

[10% on [1,50,000- 1,00,000]= 50,000 5,000
Adjusted post acquisition profit 5,750
H Ltd’s Share [5,750 x 4/5] 4,600

[ Note: Calculation of rate of depreciation
Rate = [Depreciation ÷Book value ] x 100

Machinery =[10,000÷1,00,000] x 100 = 10%
Furniture =[ 20,000 – 17,000 ] x 100 = 15% ]
6. CVALCULATION OF MINORITY INTEREST
Paid up value of [10,000-8,000] =2,000 Shares 20,000

th
1/5 Share of Pre-acquisition profit and Reserve 8,000
1/5th Share of Post-acquisition Reserve 10,000
th
1/5 Share of Profit on revaluation 9,000
th
1/5 Share of Post-acquisition profit 1,150
Amount due to Minority Shareholders 48,350
7. CALCULATION OF COST OF CONTROL OR GOODWILL
Investment made by H Ltd for purchasing 8,000 share 1,60,000
Paid up value of 8,000 shares held by H Ltd 80,000

4/5th Share of Pre-acquisition profit and Reserve 32,000
1/5th Share of Profit on revaluation 36,000 1,48,000
Cost of Control / Goodwill 12,000

CONSOLIDATED BALANCE SHEET OF H LTD AND ITS SUBSIDIARY S LTD
1.Equity and Liabilities

1. Shareholders fund
a. Share Capital
Equity shares of Rs.10 each 5,00,000
b. Reserves and surplus
H Ltd 2,00,000
4/5th Part of Post-Acquisition Reserve of S Ltd 40,000 2,40,000
P/L Account : H Ltd 1,00,000

th
4/5 Part of Post-Acquisition Reserve of S Ltd 4,600 1,0,4600
Minority interest 48,150
3. Current liabilities
Trade Creditors H Ltd 1,50,000
S Ltd 50,000 2,00,000
Total Equity and Liabilities 10,92,750
II. Assets
8. Non- current Asset
c. Fixed Asset.
1.Tangible Fixed Asset
Machinery : H Ltd 3,00,000
: S Ltd 1,00,000
Add: Appreciation 50,000
1,50,000
Less: Depreciation 10% 15,000 1,35,000 4,35,000
Furniture 50,000
S Ltd 20,000
Decreases in value 5,000
15,000
Less: Depreciation 15% 2,250 12,750 62,750
2.Intangible fixed asset 12,000
9. Current Assets H Ltd : 4,40,000

S Ltd : 1,42,000 5,83,000
Total Assets 10,92,750

UNIT (24) 2.08 CONSOLIDATED bALANCE SHEET PROBLEM

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UNIT (24) 2.08 CONSOLIDATED bALANCE SHEET PROBLEM

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From the following Balance sheet of H Ltd and its subsidiary S ltd drawn up at 31-12-2015, prepare a

consolidated Balance sheet at that date, having regard to the following.

b. Investment 8,000 shares in S Ltd @

Total Assets 9,50,000 2,50,000

Prepare consolidated Balance sheet of H Ltd and S Ltd.

Total number of shares in S Ltd [Rs1,00,000 ÷Rs 10} = 10,000 Shares

Holding Companies Shares 80% of 10,000 Share = 8,000 Shares

Therefore Minorities Share 20% of 10,000 Shares =2,000 shares

Therefor H Ltd’s share = 8,000 / 10,000 ie = 8/10 or 4/5

Total Pre-acquisition profit 40,000

H Ltd’s Share [40,000 x 4/5] 32,000

3. DIVISION OF POST-ACQUISITION RESERVE AMONG H LTD. & MINORITY

Post-acquisition Reserve of S Ltd [ 75,000 – 25,000] 50,000

H Ltd’s Share [50,000 x 4/5] 40,000

4. DIVISION OF PROFIT ON REVALUATION OF ASSET OF S LTD.

Plant and Machinery [1,50,000-1,00,000] 50,000

H Ltd’s Share [45,000 x 4/5] 36,000

Post-Acquisition profit of S Ltd [25,000 – 15,000] 10,000

Less: Under depreciation charged on Plant and machinery

Adjusted post acquisition profit 5,750

H Ltd’s Share [5,750 x 4/5] 4,600

[ Note: Calculation of rate of depreciation

Rate = [Depreciation ÷Book value ] x 100

6. CVALCULATION OF MINORITY INTEREST

Paid up value of [10,000-8,000] =2,000 Shares 20,000

Amount due to Minority Shareholders 48,350

7. CALCULATION OF COST OF CONTROL OR GOODWILL

Investment made by H Ltd for purchasing 8,000 share 1,60,000

Paid up value of 8,000 shares held by H Ltd 80,000

Cost of Control / Goodwill 12,000

1.Equity and Liabilities

P/L Account : H Ltd 1,00,000

Minority interest 48,150

Total Equity and Liabilities 10,92,750

2.Intangible fixed asset 12,000

9. Current Assets H Ltd : 4,40,000

Total Assets 10,92,750

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