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 ISSUE AND FORFEITURE OF EQUITY SHARES

Question 1

Solution
Question 2

Solution
Question 3

Question 4
Solution
Question 5

Question 6
Question 7

Solution
Question 8
Question 9

Solution
Question 10
 Question 11

Solution
 ISSUE OF DEBENTURES

Question 12
Question 13
Question 14
Question 15

Question 16
Question 17
Question 18

Question 19
Question 20
 REDEMPTION OF DEBENTURES

Requirements for DRR

Requirements for investment
Question 21
Question 22

Question 23

Question 24
Question 25

Question 26
Question 27
Question 28
Question 29
Underwriting of shares and debentures
Question 30
Question 31

Question 32

Question 33
Question 34
Question 35
 BONUS ISSUE AND RIGHT ISSUE

Section 63 of companies act

Question 36
Question 37
Question 38
Question 39

Question 40
Buy back of shares
Question 41
Question 42
Question 43

Question 44
Question 45

Question 46
Question 47
 Redemption of Prefrence share capital

Question 48
Question 49
Question 50

Question 51
Question 52
Question 53
Question 54
ESOP
Question 55

Question 56
Question 57
 RATIO ANALYSIS

Illustration 1

Illustration 2
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 Illustration 7

Illustration 8
Illustration 9
Illustration 10
 CASH FLOW STATEMENT
Illustration 1
The following are Balance Sheet and Income Statement of Om ltd.
Liabilities 1.1.06 31.12.06 Assets 1.1.06 31.12.06

Share capital 1,80,000 2,22,000 Fixed Assets:

Profit & loss A/c 75,900 81,900 Land 24,000 48,000
Creditors 1,20,000 1,17,000 Building 1,80,000 2,88,000
Outstanding Expenses 12,000 24,000 Current Assets:
Provision for tax 6,000 6,600 Cash 30,000 36,000
Prov. for Dep. on building 60,000 66,000 Debtors 84,000 93,000
Stock 1,32,000 48,000
Advances 3,900 4,500
4,53,900 5,17,500 4,53,900 5,17,500
Information: Company sold building during the year, cost price of which was Rs.
36,000.
Profit And Loss A/C
For year ended 31.3.06
Particular RS Particular RS
To Cost of sales 9,90,000 By Net sales 12,60,000
To Wages & salaries 1,20,000
To Gross profit c/d 1,50,000
12,60,000 12,60,000
To Operating Exp. 40,000 By Gross profit 1,50,000
To Depreciation 30,000 By Profit on sale of Building 6,000
To Provision for tax 44,000
To Net profit 42,000
1,56,000 1,56,000
To proposed Dividend 36,000 By Balance b/d 75,900
To balance Carried to 81,900 By Net Profit (transf.) 42,000
balance sheet
1,17,900 1,17,900
You are required to prepare a cash flow statement
Solution:

Provision for tax A/c

Particulars Rs Particulars Rs
To Bank (tax paid ) 43,400 By Balance b/d 6,000
To Balance c/d 6,600 By P & L A/c. (provision) 44,000
50,000 50,000

Building A/c
Particulars Rs Particulars Rs
To Balance b/d 1,80,000 By Dep. Provision a/c 24,000
To P & L A/c. (profit on sale) 6,000 By Bank(sale) 18,000
To Bank (purchase) 1,44,000 By Balance c/d 2,88,000
3,30,000 3,30,000

Depreciation provision on building A/c

Particulars Rs Particulars Rs
To Building a/c(dep.) 24,000 By Balance b/d 60,000
To Balance c/d 66,000 By P & L A/c. (current 30,000
year’s dep.)

90,000 90,000

Adjusted Profit and Loss Account

Particulars Rs Particulars Rs
To Provision for tax 44,000 By Balance b/d 75,900
To Prov. for dep. on building 30,000 By Profit on sale of
To Dividend paid 36,000 building 6,000
To Balance c/d 81,900 By Adj. Profit 1,10,000
1,91,900 1,91,900

Cash flow statement of Om Ltd for the year ending on

31.3.06 (As per A. S. 3)
Particulars Amount Amount
Rs. Rs.
(1) Cash Flow from Operating Activities:
Profit before tax (after non cash items) 1,10,000
Add/Less: Changes in Working Capital
- Inc. in debtors (9,000)
- Dec. in stocks 84,000
- Inc. in advances (600)
- Dec. in creditors (3,000)
 - Inc. in Outstanding expenses 12,000
Cash flows from operating activities 1,93,400
Less: Tax Paid 43,400
NET CASH FLOW FROM OPERATING ACTIVITES (A) 1,50,000
(2) Cash Flow from Investing Activities:
- Purchase of Land (refer question assets side) (24,000)
- Purchase of Building (refer building A/c.) (1,44,000)
- Sale of building (refer building A/c.) 18,000
NET CASH FLOW FROM INVESTING ACTIVITES (B) (1,50,000)
(3) Cash Flow from Financing Activities:
- Issued Equity Shares 42,000
- Dividend paid (36,000)
NET CASH FLOW FROM FINANCING ACTIVITIES (C) 6,000
NET CASH FLOW FROM ALL ACTIVITES (A+B+C) 6,000
Add: Opening Cash and Bank Balance 30,000
Closing Cash and Bank Balance 36,000

Illustration: 2
Following are the balance sheets of a Vijay & son:
Liabilities 1 1 05 31 12 05 Assets 1 1 05 31 12 05
Creditors 36,000 41,000 Cash 4,000 3,600
Loan from Partner 20,000 Debtor 35,000 38,400
Loan from Bank 30,000 25,000 Stock 25,000 22,000
Capital 1,48,000 1,49,000 Land 20,000 30,000
Building 50,000 55,000
Machinery 80,000 86,000
2,14,000 2,35,000 2,14,000 2,35,000

During the year Rs. 26,000 paid as dividend. The provision made for depreciation against
machinery as on 1.1.05 was Rs. 27,000 and on 31.12.05 Rs 36,000.
Prepare a cash flow statement.
Solution:
Machinery Account
Particulars Rs Particulars Rs
To Balance b/d 80,000 By Prov. for depreciation 36,000
To Prov. for depreciation 27,000 By Balance c/d 86,000
To Bank (purchase) ? 15,000
1,22,000 1,22,000
 Cash flow statement for the year ended 31.12.2005

Particular Rs. Rs.

1.Cash flows from operating activities:
Net profit before tax 27,000
Adjustment for dep. 9,000

Inc. in current liabilities 36,000

Inc. in debtor 5,000
Decrease in stock (3,400)
3,000
Net cash from operating activities 40,600

2. Cash flows from investing activities

Purchase of land (10,000)
Purchase of building. (5,000)
Purchase of machinery (15,000)

Net cash from investing activities (30,000)

3. Cash flows from financing activities:
Loan 20,000
Repayment of bank loan (5,000)
Payment of Dividends (26,000)
(11,000)
Net cash from financing activities
Net Cash Flow from all activities (A +B + C) (400)
Add: opening cash balance 4,000
Closing cash balance 3,600

W. N.
Net profit before tax.
Capital (1.1.05) 1,48,000
Capital (31.12.05) 1,49,000
Diff. 1,000
Add. Dividends 26,000
27,000
 Illustration: 3
The summarized balance sheet of Bhadresh Ltd. as on 31.12.05 and 31.12.2006 are as
follows:
Liabilities 2005 2006 Assets 2005 2006

Share capital 4,50,000 4,50,000 Fixed asset 4,00,000 3,20,000

General Reserve 3,00,000 3,10,000 Investment 50,000 60,000
P & l a/c 56,000 68,000 Stock 2,40,000 2,10,000
Creditors 1,68,000 1,34,000 Debtor 2,10,000 4,55,000
Tax provision 75,000 10,000 Bank 1,49,000 1,97,000
Mortgage loan 2,70,000

10,49,000 12,42,000 10,49,000 12,42,000

Additional Details:
1. Investment costing Rs. 8,000 were sold for Rs. 8,500
2. Tax provision made during the year was Rs. 9,000
3. During the year part of fixed assets costing Rs 10,000 was sold for Rs 12,000 and
the profit was included in P & L A/c. You are required to prepare cash flow
statement for 2006.

Solution:
Cash flow statement for the year ended 31.12.2006
Particular Rs. Rs.

1.Cash flows from operating activities:

Net profit before tax (Rs. 28,500 in case Profit on sale 31,000
on Investment & Fixed Asset not considered)
Adjustment for:
Dep. 70,000
Profit on sale of investment (500)
Profit on sale of Fixed assets (2,000)
Dec. in stock 30,000
Dec. in creditor (34,000)
Inc. in debtor (2,45,000)
Income tax paid (74,000)

Net cash from operating activities (2,24,500)

2. Cash flows from investing activities:
Investment purchased (18,000)
Sale of investment 8,500
Sale of Fixed assets 12,000
Net cash from investing activities 2,500
3.Cash flows from financing activities:
Mortgage loan taken 2,70,000

Net Cash Flow from all activities (A + B + C) 48,000

Add: opening cash balance 1,49,000

Closing cash balance 1,97,000

Fixed Assets A/c

Particulars Rs Particulars Rs
To Balance b/d 4,00,000 By Bank a/c 12,000
To Profit and Loss a/c 2,000 By Dep. 70,000
By Balance c/d 3,20,000
4,02,000 4,02,000

Provision for tax A/c

Particulars Rs Particulars Rs
To Bank (tax paid ) 74,000 By Balance b/d 75,000
To Balance c/d 10,000 By P & L A/c (provision) 9,000

84,000 84,000

Investment A/c
Particulars Rs Particulars Rs
To Balance b/d 50,000 By Bank(sale) 8,500
To P & L A/c 500 By Balance c/d 60,000
To Bank (purchase) 18,000
68,500 68,500

Adjusted P & L A/c

Particulars Rs Particulars Rs
To Provision for tax 9,000 By Balance b/d 56,000
To Provision for G.R. 10,000 By Profit on sale of Inv. 500
To Balance c/d 68,000 By Profit on sale of F.A. 2,000
By Adjusted Profit 28,500
87,000 87,000
Illustration: 4
Prepare cash flow statement of Satyam ltd. From the following:
Liabilities 1.1.06 31.12.06 Assets 1.1.06 31.12.06

Share capital 1,00,000 4,00,000 Goodwill 20,000

8% debenture 2,00,000 Machinery 1,25,000 4,75,000
Retained earning 60,000 90,000 Stock 20,000 80,000
Creditors 40,000 1,00,000 Debtor 30,000 1,00,000
Bills payable 20,000 40,000 Bank 50,000 1,50,000
Tax provision 30,000 40,000 Cash 25,000 45,000
2,50000 8,70,000 2,50,000 8,70,000

Additional Details:
1. During 2006 the business of a sole trader was purchased by issuing share for Rs.
2,00,000. The assets acquired from him were:
Goodwill Rs. 20,000, machinery Rs. 1,00,000 , stock Rs. 50,000 and Debtors Rs.
30,000
2. Provision for tax charged in 2006 was Rs. 35,000
3. The debenture was issued at a premium of 5% which is included in the retained
earnings.
4. Depreciation charged on machinery was Rs.30,000.

Solution:
Cash flow statement for the year ended 31.12.2006
Particular Rs Rs

1.Cash flows from operating activities:

Net profit before tax 55,000
Adjustment for:
Dep. On machinery 30,000
Inc.. in creditor 60,000
Inc.. in bills payable 20,000
Inc.in stock (10,000)
Inc.. in debtor (40,000)
Income tax paid (25,000)
Net cash from operating activities 90,000

2. Cash flows from investing activities:

Machinery purchased (2,80,000)

Net cash from investing activities (2,80,000)

 3.Cash flows from financing activities
Issue of shares 1,00,000
Issue of debenture 2,10,000
Cash flows from financing activities 3,10,000
Net inc. in cash equivalents 1,20,000
Add: opening cash balance 75,000
Closing cash balance 1,95,000

Provision for tax A/c

Particulars Rs Particulars Rs
To Bank (tax paid ) 25,000 By Balance b/d 30,000
To Balance c/d 40000 By P & L A/c (provision) 35,000

65,000 84,000
Machinery A/c
Particulars Rs Particulars Rs
To Balance b/d 1,25,000 By Depreciation 30,000
To Bank (purchase) 2,80,000 By Balance c/d 4,75,000
To Vendor 1,00,000
5,05,000 5,05,000

Share Capital A/c

Particulars Rs Particulars Rs
By Balance b/d 1,00,000
By Vendor 2,00,000
To Balance c/d 4,00,000 By Bank 1,00,000
4,00,000 4,00,000

Illustration: 5
The summarized balance sheet of Jay Ltd as on 31.12.06 and 31.12.2007 are as follows:
Liabilities 2006 2007 Assets 2006 2007

Share capital 1,00,000 1,00,000 Building 46,800 45,000

General Reserve 38,400 42,000 Plant and Machinery 38,280 42,030
Creditors 9,750 6,380 Goodwill 13,000 13,000
Tax provision 19,000 21,000 Investment 10,000 11,250
Prov. for doubtful debt 1,000 1,200 Stock 30,000 28,000
Debtor 22,070 22,300
Cash 8,000 9,000
1,68,150 1,70,580 1,68,150 1,70,580
After taking the following information in to account, prepare a cash flow statement for
the year ending 31.12.2007
1. The profit for 2006 2007 was Rs.8,600 against this had been charged Dep. Rs. 3,050
and increase in provision for doubtful debt Rs.200
2. Income tax Rs.18,000 was paid during the year charged against the provision and in
addition Rs.20,000 was charged against profit and carried to the provision.
3. An interim dividend Of Rs.5,000 was paid in January 2007
4. Additional plan was purchased in September 2006 for Rs.5,000
5. Investments (cost Rs.5,000) were sold 2007 for Rs. 4800 and on 1st march 2007
another investment was made for Rs. 6,250.

Solution:
Cash flow statement for the year ended 31.12.2007
Particular Rs. Rs.

1.Cash flows from operating activities:

Net profit before tax 28,800
Adjustment for:
Depreciation 3,050
Inc. in provision for d/d 200
Dec. in stock 2,000
Dec. in creditor (3,370)
Inc. in debtor (230)
Income tax paid (18,000)
Net cash from operating activities 12,450

2. Cash flows from investing activities:

Investment purchased (6,250)
Sale of investment 4,800
Plant purchased (5,000)

Net cash from investing activities (6,450)

3.Cash flows from financing activities

Payment of interim dividend (5,000)
Net inc. in cash equivalents 1,000

Add: opening cash balance 8,000

Closing cash balance 9,000
 Adjusted profit and loss A/c
Particulars Rs Particulars Rs
To Provision for tax 20,000 By profit 28,800
To General reserve 3,600
To Loss on sale of Invest. 200
To interim dividend 5,000
28,800 28,800
Provision for tax A/c
Particulars Rs Particulars Rs
To Bank (tax paid ) 18,000 By Balance b/d 19,000
To Balance c/d 21,000 By P & L A/c. 20,000
(provision)
39,000 39,000

Illustration 6
The Balance Sheets of a firm as on 31st December 2008 and 2009 are given below:
Liabilities 2008 2009 Assets 2008 2009
Share Capital 1,00,000 1,60,000 Fixed Assets Cost 1,52,000 2,00,000
Retained Earnings Inventory 93,400 89,200
70,250 85,300
Accumulated Debtors 30,800 21,100
Depreciation 60,000 40,000
12% Debenture 50,000 Prepaid expenses 3,950 3,000
Creditors 28,000 48,000 Bank 28,100 20,000
3,08,250 3,33,300 3,08,250 3,33,300
Additional Information:
1. Net profit is Rs. 27,050.
2. Depreciation charged Rs. 10,000.
3. Cash dividend declared during the period Rs. 12,000.
4. An addition to the building was made during the year at a cost of Rs. 78,000 and fully
depreciated equipment costing Rs. 30,000 was discarded as no salvage being
realized.
Prepare a Cash Flow Statement.

Solution:
Adjusted Profit & Loss Account
Particular Amount Particular Amount
To Prov. for depreciation 10,000 By Balance b/d 70,250
To Dividend 12,000
To Balance c/d 85,300 By Adj. Profit 37,050
1,07,300 1,07,300
 Fixed Assets Account
Particular Amount Particular Amount
To Balance b/d 1,52,000 By Accumulated Dep. 30,000
To Bank 78,000 By Balance c/d 2,00,000

2,30,000 2,30,000

Accumulated Depreciation Account

Particular Amount Particular Amount
To Fixed Assets 30,000 By Balance b/d 60,000
To Balance c/f 40,000 By Profit & Loss A/c. 10,000

70,000 70,000

Cash flow statement for the year ending on 31.12.09 (As per A. S. 3)
Particulars Amount Amount
Rs. Rs.
(1) Cash Flow from Operating Activities:
37,050
Profit before tax (after non cash & extraordinary items)
Add/Less: Changes in Working Capital
- Dec. in Inventory 4,200
- Decrease in Debtors 9,700
- Increase in Creditors 20,000
- Decrease in pre paid expenses 950 34,850
Cash flows from operating activities 71,900
Less: Tax Paid Nil
NET CASH FLOW FROM OPERATING ACTIVITES (A) 71,900
(2) Cash Flow from Investing Activities:
- Purchase of Building (78,000)
NET CASH FLOW FROM INVESTING ACTIVITES (B) (78,000)
(3) Cash Flow from Financing Activities:
- Issued Equity Shares 60,000
- Dividend paid (12,000)
- Redemption of debenture (50,000)
NET CASH FLOW FROM FINANCING ACTIVITIES (C) (2,000)
NET CASH FLOW FROM ALL ACTIVITES (A+B+C) (8,100)
Add: Opening Cash and Bank Balance 28,100
Closing Cash and Bank Balance 20,000
Illustration 7
From the following information, prepare cash flow statement:
Balance Sheet
Liabilities 1 1 2012 31 12 2012 Assets 1 1 2012 31 12 2012
Share Capital 2,00,000 2,00,000 Cash 8,000 10,000
Profit & Loss 50,000 90,000 Bank 22,000 20,000
Bank Loan 10,000 Debtors 10,000 20,000
Outstanding 5,000 1,000 Stock 25,000 15,000
Expenses
Creditors 15,000 20,000 Non current 2,35,000 2,75,000
asset
Provision for tax 20,000 25,000
Unclaimed Dividend 4,000
3,00,000 3,40,000 3,00,000 3,40,000
Net profit for the year 2012 after providing Rs.20,000 as depreciation was Rs. 60,000.
During 2012, company declared equity dividend @ 10% and paid Rs. 15,000 as Income
tax.

Solution:
Cash flow statement for the year ended on December 2012
Particulars Amount Amount
Rs. Rs.
(1) Cash Flow from Operating Activities:
Increase in Profit & Loss account 40,000
Add: Proposed dividend (10% of 2,00,000) 20,000
Net Profit 60,000
Add: Depreciation 20,000
Provision of Income tax 20,000
Funds from operations 1,00,000
Add: Increase in creditors 5,000
Decrease in stock 10,000
Less: Increase in debtors (10,000)
 Decrease in outstanding expenses (4,000)
Cash generated from operations 1,01,000
Less: Tax paid (15,000)
NET CASH PROVIDED BY OPERATING ACTIVITIES (A) 126000 86,000
40000
26000
(2)Cash Flow From Investing Activities:
Purchase of Non current Asset (2,95,000 – 2,35,000) (60,000)
NET CASH PROVIDED BY INVESTING ACTIVITIES (B) (60,000)
(3)Cash Flow From Financing Activities :
Repayment of loan (10,000)
Repayment of dividend (20,000 – 4,000) (16,000)
NET CASH PROVIDED BY FINANCING ACTIVITIES (C) (26,000)
NET CASH FLOW FROM ALL ACTIVITES (A+B+C) Nil
Add: Opening balance of cash & bank 30,000
Closing balance of cash & bank 30,000
Illustration 8
From the following Balance Sheet prepare cash flow statement for the year
2012.
Liabilities 1 1 2012 31 12 2012 Assets 1 1 2012 31 12 2012
Share Capital 1,25,000 1,53,000 Cash 10,000 7,000
Creditors 40,000 44,000 Debtors 30,000 50,000
Loan from X 25,000 Stock 40,000 25,000
Loan from bank 40,000 50,000 Machinery 80,000 55,000
Land 35,000 50,000
Building 35,000 60,000
2,30,000 2,47,000 2,30,000 2,47,000
During the year a machine costing Rs. 10,000 with accumulated depreciation Rs. 3,000
was sold for Rs. 5,000.
Solution:
Cash flow statement for the year ended on December 2012
Particulars Amount Amount
Rs. Rs.
(1) Cash Flow from Operating Activities:
Capital at the end of the year 1,53,000
Less: Capital at the beginning of the year (1,25,000)
Profit for the year 28,000
Add: Loss on sale of machinery 2,000
Depreciation 18,000
Profit before changes in working capital 48,000
Add: Increase in creditors 4,000
Decrease in stock 15,000
Less: Increase in debtors (20,000)
NET CASH PROVIDED BY OPERATING ACTIVITIES (A) 47,000
(2)Cash Flow From Investing Activities:
Sale of Machinery 5,000
Purchase of land (15,000)
Purchase of Building (25,000)
NET CASH PROVIDED BY INVESTING ACTIVITIES (B) (35,000)
(3)Cash Flow From Financing Activities:
Loan from bank 10,000
Repayment of loan from X (25,000)
NET CASH PROVIDED BY FINANCING ACTIVITIES (C) (15,000)
NET CASH FLOW FROM ALL ACTIVITES (A+B+C) (3,000)
Add: Opening balance of cash & bank 10,000
Closing balance of cash & bank 7,000
Working Note:
Machinery Account
Particular Amount Particular Amount
To Balance b/d 80,000 By Bank a/c 5,000
By Loss on sale 2,000
By Depreciation 18,000
By Balance c/f 55,000
80,000 80,000

Illustration 9
The following are the summarized financial statements of Ambuja Co. Ltd. for
2012 and 2013:
Statement of Financial Position
Particulars 2013 2012
Assets:
Cash 9,000 15,000
Debtors 25,000 31,000
Stock 60,000 45,000
Fixed asset at cost 1,20,000 1,05,000
2,14,000 1,96,000
Liabilities:
Share Capital 32,500 31,500
6% Debentures due on 31 12 2015 50,000 70,000
Retained Earnings 38,500 27,500
Creditors 20,000 12,500
Income tax Payable 36,000 27,500
Accumulated Depreciation 37,000 27,000
2,14,000 1,96,000
 Income Statement
(For The Year Ending 31st December)
Particulars Amount Amount
Sales 4,25,000 4,50,000
Operating Expenses(including depreciation Rs. 3,40,000 3,80,800
10,000)
Interest on Debentures 3,000 4,200
Net Profit Before Tax 82,000 65,000
Income Statement 36,000 27,500
46,000 37,500

Statement of Retained Earnings

Particulars Amount Amount
Retained Earnings – Beginning 27,500 25,000
Net Profit for the year 46,000 37,500
73,500 62,500
Dividends 35,000 35,000
Retained Earnings – End 38,500 27,500

Solution:
Cash Flow Statement
Particulars Amount Amount
(1) Cash Flow from Operating Activities:
Net Profit 82,000
(Changes in working capital)
Decrease in Debtors 6,000
Increase in Creditors 7,500
Depreciation 10,000
23,500
Increase in Stock (15,000) 8,500
CASH PROVIDED BY OPERATING ACTIVITIES 90,500
Less: Tax Paid (27,500)
NETCASH PROVIDED BY OPERATING ACTIVITIES(A) 63,000
(2)Cash Flow From Investing Activities:
Purchase of fixed assets (15,000)
NET CASH PROVIDED BY INVESTING ACTIVITIES (B) (15,000)
(3)Cash Flow From Financing Activities:
Issue of shares 1,000
Redemption of Debentures (20,000)
Dividend Paid (35,000)
NET CASH PROVIDED BY FINANCING ACTIVITIES (C) (54,000)
NET CASH FLOW FROM ALL ACTIVITES (A+B+C) (6,000)
Add: Opening balance of cash 15,000
Closing balance of bank 9,000
CONSOLIDATION
OF ACCOUNTS
 CONSOLIDATION OF ACCOUNTS

PRACTICE PROBLEMS

Illustration 1 (Wholly-Owned Subsidiary Company)

From the following extracts of the H Ltd. ad S Ltd., prepare a consolidated balance sheet of H Ltd.
and its subsidiary S Ltd.:
Balance Sheet as on ......... (an extract)
Liabilities H Ltd. S Ltd. Assets H Ltd. S Ltd
Rs. Rs. Rs. Rs.
Share Capital in shares of
Rs 10 each 10,00,000 5,00,000 Sundry Assets 7,00,000 5,40,000
Investment in 50,000
shares of
Other Liabilities 2,00,000 40,000 S Ltd. At par 5,00,000
12,00,000 5,40,000 12,00,000 5,40,000

Solution
Consolidated Balance Sheet of H Ltd.
and its Subsidiary S Ltd. as on ...........
Particulars Note Rs.
I EQUITY AND LIABILITIES
1. Shareholder' Funds
(a) Share capital 1 10,00,000
2. Other Liaiblities 2 2,40,000
Total Equity and Liabilities 12,40,000
II ASSETS
Sundry Assets 3 12,40,000
Total Assets 12,40,000

Notes to Account
Particulars Rs
1 Share capital
Issued, subscribed and Fully Paid up
1,00,000 Equity shares of
Rs. 10 each (H Ltd.) 10,00,000
2 Other Liabilities
H Ltd. 2,00,000
S Ltd. 40,000
2,40,000
3 Other Assets
H Ltd. 7,00,000
S Ltd. 5,40,000
12,40,000

CA ARUN SETIA 208

 CONSOLIDATION OF ACCOUNTS

Illustration 2 (Minority Interest)

From the following information prepare a consolidated balance sheet of H Ltd. and its subsidiary S
Ltd.
Credit Balances H Ltd. S Ltd. Debit balances H Ltd. S Ltd.
Rs. Rs. Rs. Rs.
Share Capital in Sundry Assets 8,00,000 5,40,000
shares of Rs. 10
each 10,00,000 5,00,000 Investments in
Other Liabilities 2,00,000 40,000 the shares of
S Ltd.: 40,000
shares
of Rs. 10 each 4,00,000
12,00,000 5,40,000 12,00,000 5,40,000

Solution
Consolidated Balance Sheet of H Ltd. and
Its Subsidiary S Ltd. As on ............
Particulars Note Rs.
I EQUITY AND LIABILITIES
1. Shareholder's Funds
Share Capital (H Ltd.) 1 10,00,000
2. Minority Interest 2 1,00,000
3. Other Liabilities 3 2,40,000
Total Equity and Liabilities 13,40,000
II ASSETS
Sundry Assets 4 13,40,000
Total Assets 13,40,000

Notes to Accounts
Particulars Rs.
1 Share capital
Issued, subscribed and Fully Paid
1,00,000 Equity shares of
Rs. 10 each (H Ltd.) 10,00,000
2 Minority Interest
1/5 share in the share capital of S Ltd. 1,00,000
3 Other Liabilities
H Ltd. 2,00,000
S Ltd. 40,000
2,40,000
4 Other Assets

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H Ltd. 8,00,000
S Ltd. 5,40,000
13,40,000
Illustration 3 (Cost of Control)
From the following Balance Sheets of H Ltd. and its subsidiary of S Ltd., as on 31 March 2017,
prepare a consolidated balance sheet:
Particulars Note No. H Ltd. S Ltd.
I EQUITY AND LIABILITIES
1. Shareholder's Funds
(a) Share Capital (in shares of Rs. 100
each) 10,00,000 5,00,000
(b) Reserve and Surplus
Reserves 20,000
Surplus Account 1,00,000 50,000
2. Current Liabilities
(a) Trade Payables (Creditors) 2,00,000 50,000
Total 13,00,000 6,20,000
II ASSETS
1. Non-Current Assets
(a) Fixed Assets (Tangible) 7,00,000 6,20,000
(b) Non-Current Investments 6,00,000
(Investment in the shares of S Ltd.)
5,000 shares at cost
Total 13,00,000 6,20,000

H Ltd. purchases shares in S Ltd. on the balance sheet date i.e., 31-03-2017.

Solution
Calculation of Cost of Control or Goodwill
Rs.
Cost (or Acquisition) price of the investment in the shares of S Ltd. 6,00,000
Less: the nominal value of the shares acquired 5,00,000
1,00,000
Less: Shares in pre-acquisition reserves 20,000
Shares in pre-acquisition surplus 50,000 70,000
Cost of Control or Goodwill 30,000
Alternatively
Share Capital 5,00,000
Reserves 20,000
Profits 50,000
5,70,000
Cost of control or Goodwill (6,00,000 - 5,70,000) 30,000
Price paid for investment in shares of S Ltd. 6,00,000

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The consolidated balance sheet is compiled in the same manner as before, but with the addition of
goodwill to show the cost of acquiring control in S Ltd. as below:

Consolidated Balance Sheet of H Ltd. And

Its Subsidiary S Ltd. As on 31 March 2017
Particulars Note Rs.
I EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 1 10,00,000
(b) Reserves and Surplus 2 1,00,000
Sub Total: Shareholders' Funds 11,00,000
2. Minority Interest
3. Current Liabilities
Trade Payable 3 2,50,000
Total Equity and Liabilities 13,50,000
II ASSETS
1. Non-Current Assets
(a) Fixed Assets
(i) Tangible (Assumed) 4 13,20,000
(ii) Intangible 5 30,000
Total Assets 13,50,000

Notes to Account
Particulars Rs.
1 Share capital
Issued, subscribed and Fully Paid
10,000 Equity shares of
Rs. 100 each (H Ltd.) 10,00,000
2 Reserves and Surplus
Surplus (H Ltd.) 1,00,000
3 Trade Payable
Sundry Creditors
H Ltd. 2,00,000
S Ltd. 50,000
2,50,000
4 Tangible Fixed Assets (Assumed)
H Ltd. 7,00,000
S Ltd. 6,20,000
13,20,000
5 Intangible Fixed Assets
Goodwill 30,000

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Illustration 4 (Capital Reserve)

From the following Balance Sheets of H Ltd. and its subsidiary S Ltd. as on 31-03-2017, prepare a
consolidated balance sheet :
Particulars Note No. H Ltd. S Ltd.
(Rs.) (Rs.)
I EQUITY AND LIABILITIES
1. Shareholder's Funds
(a) Share Capital (in shares of Rs. 100
each) 10,00,000 5,00,000
(b) Reserve and Surplus
Reserve 50,000 40,000
Surplus Account 1,00,000 20,000
2. Current Liabilities
(a) Trade Payables (Creditors) 2,50,000 60,000
Total 14,00,000 6,20,000
II ASSETS
1. Non-Current Assets
(a) Fixed Assets (Tangible) 8,80,000 6,20,000
(b) Non-Current Investments 5,20,000
(Investment in 5,000 shares of S Ltd.,
bought on 31-3-2017)
Total 14,00,000 6,20,000

Solution :
Consolidated Balance Sheet of H Ltd. and
its Subsidiary S Ltd. as on 31 March 2017
Particulars Note Rs.
I EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 1 10,00,000
(b) Reserves and Surplus 2 1,90,000
Sub Total 11,90,000
2. Minority Interest
3. Current Liabilities
Trade Payable 3 3,10,000
Total Equity and Liabilities 15,00,000
II ASSETS
1. Non-Current Assets
(a) Fixed Assets
(i) Tangible (Assumed) 4 15,00,000

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Total Assets 15,00,000

Notes to Accounts
Particulars Rs.
1 Share capital
Issued, subscribed and Fully Paid
10,000 Equity shares of
Rs. 100 each 10,00,000
2 Reserves and Surplus
(i) Capital Reserve (on consolidation) 40,000
(ii) General Reserves (H Ltd.) 50,000
(iii) Surplus (H Ltd.) 1,00,000
1,90,000
3 Trade Payables
Sundry Creditors :
H Ltd. 2,50,000
S Ltd. 60,000
3,10,000
4 Tangible Assets
Sundry Assets (Assumed to be fixed):
H Ltd. 8,80,000
S Ltd. 6,20,000
15,00,000

Illustration 5: (Pre-Acquisition Surplus or Profit and Reserves)

From the following information prepare a consolidated balance sheet as on 31 March 2017 :
Credit Balances H Ltd. S Ltd. Debit balances H Ltd. S Ltd.
Rs. Rs. Rs. Rs.
Share Capital in Sundry Assets 2,20,000 1,50,000
shares of Rs. 20 each 2,00,000 1,00,000 Investments in
Reserves 60,000 20,000 3,000 shares of
Surplus 20,000 10,000 S Ltd. 90,000
Creditors 30,000 20,000
3,10,000 1,50,000 3,10,000 1,50,000

H Ltd. acquired its shares in S Ltd. on 1 April 2017 when S Ltd.’s reserves stood at Rs. 5,000 and its
surplus at Rs. 6,000

Solution
Consolidated Balance Sheet of H Ltd. And
Its Subsidiary S Ltd. As on 1 April 2017
Particulars Note Rs.

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I EQUITY AND LIABILITIES

1. Shareholders' Funds
(a) Share Capital 1 2,00,000
(b) Reserves and Surplus 2 91,400
Sub Total 2,91,400
2. Minority Interest 52,000
3. Current Liabilities
Trade Payable 3 50,000
Total Equity and Liabilities 3,93,400
II ASSETS
1. Non-Current Assets
(a) Fixed Assets
(i) Tangible (Assumed) 4 3,70,000
(ii) Intangible 5 23,400
Total 3,93,400

Notes to Accounts
Particulars Rs. Rs.
1 Share Capital (H Ltd.)
Issued, subscribed and Fully Paid up
10,000 Equity shares of Rs. 20 each 2,00,000
2 Reserves and Surplus
(i) Reserves (General)
H Ltd. 60,000
S Ltd. 9,000 69,000
(ii) Surplus: H Ltd. 20,000
Share in S Ltd. 2,400 22,400
91,400
3 Trade Payables
Sundry Creditors H Ltd. 30,000
S Ltd. 20,000
50,000
4 Tangible Assets
H Ltd. 2,20,000
S Ltd. 50,000
2,70,000
5 Intangible Assets
Goodwill 30,000
Less: Capital Reserve 6,600
23,400

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Illustration 6 (Pre-Acquisition Profit and Reserves)

From the Balance Sheets given below, prepare a consolidated balance sheet of Moti Ltd. and its
subsidiary Choti Ltd. :

Particulars Note No. Moti Choti

(Rs.) (Rs.)
I EQUITY AND LIABILITIES
1. Shareholder's Funds
(a) Share Capital (shares of Rs. 10 each) 1,20,000 30,000
(b) Reserve annd Surplus
General Reserve 25,000 6,000
Surplus 12,000 9,000
2. Current Liabilities
(a) Trade Payables (Creditors) 15,000 5,000
Total 1,72,000 50,000
II ASSETS
1. Non-Current Assets
(a) Fixed Assets (Tangible)
Freehold Buildings 72,000
Leasehold Property 25,000
Plant and Machinery 30,000 10,000
(b) Non-Current Investments 25,000
(2,000 shares in Choti Ltd.)
2. Current Assets
(a) Inventories (Stock-in-trade) 18,000 3,000
(b) Trade Receivables (Debtors) 22,000 7,000
(c) Cash and Cash Equivalants (Bank) 5,000 5,000
Total 1,72,000 50,000

At the time of acquisition by Moti Ltd., of 2,000 Shares in Choti Ltd., the latter company had
undistributed surplus and reserves of Rs. 5,000, none of which have been distributed since
acquisition.

Solution
Consolidated Balance Sheet of Moti Ltd.
And Its Subsidiary Choti Ltd. as on .............
Particulars Note Rs.
I EQUITY AND LIABILITIES
1. Shareholders' Funds

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(a) Share Capital (Moti Ltd.) 1 1,20,000

(b) Reserves and Surplus 2 43,667
Sub Total 1,63,667
2. Minority Interest 15,000
3. Current Liabilities
Trade Payables 3 20,000
Total Equity and Liabilities 1,98,667
II ASSETS
1. Non-Current Assets
(a) Fixed Assets
(i) Tangible 4 1,37,000
(ii) Intangible (Net of Capital Reserves) 5 1,667
Sub Total 1,38,667
2. Current Assets
(i) Inventories 6 21,000
(ii) Trade Receivable 7 29,000
(iii) Cash and Cash Equivalents 8 10,000
Sub Total 60,000
Total Assets 1,98,667

Notes to Accounts
Particulars Rs. Rs.
1 Share capital (M Ltd.)
Issued, subscribed and Fully Paid
12,000 Equity shares of Rs. 10 each 1,20,000
2 Reserves and Surplus
(i) Capital Reserves on consolidation 3,333
Less: Goodwill on consolidation 3,333 Nil
(ii) General Reserves (M Ltd.) 25,000
2/3 share in Choti Ltd. (On consolidation) 2,667 27,667
Surplus: M Ltd. 12,000
Share in C Ltd. 4,000 16,000
43,667
3 Trade Payables
Sundry Creditors M Ltd. 15,000
C Ltd. 5,000
20,000
4 Tangible Assets
Freehold Building M Ltd. 72,000
Leasehold Property C Ltd. 25,000
Plant and Machinery M Ltd. 30,000
C Ltd. 10,000 40,000
1,37,000

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5 Intangible Assets Goodwill

Investments in shares of S Ltd. 25,000
Less: Face value of shares held in C Ltd. 20,000
Goodwill on consolidation 5,000
Less: Capital Reserves 3,333
1,667
6 Inventories
Stock of Goods (M) 18,000
(C Ltd.) 3,000
21,000
7 Trade Receivables
Debtors for Goods (M) 22,000
(C Ltd.) 7,000
29,000
8 Cash and Cash Equivalents
Cash at Bank (M) 5,000
(C Ltd.) 5,000
10,000

Illustration 7 (Pre-acquisition loss)

The balance sheets of H Ltd. and its subsidiary S Ltd., as on 31 March 2017, were as follows:
Particulars Note No. H Ltd. S Ltd.
(Rs.) (Rs.)
I EQUITY AND LIABILITIES
1. Shareholder's Funds
(a) Share Capital (shares of Rs. 1 each) 10,000 6,000
(b) Reserve and Surplus
General Reserve 4,000
Surplus 4,000 1,800
2. Current Liaiblities
(a) Trade Payables (Creditors) 2,000 2,200
Total 20,000 10,000
II ASSETS
1. Non-Current Assets
(a) Fixed Assets (Tangible) 16,000 10,000
(b) Non-Current Investments 4,000
(4,000 shares in S Ltd.)
Total 20,000 10,000

The shares were purchased by H Ltd. in S Ltd. on 30 September 2016.

On 1 April 2016 the profit and loss statement of S Ltd. showed a loss of Rs. 3,000 which was written
off from out of the profits earned during the year. Profits are earned uniformly over the year 2016-

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17. Prepare a consolidated balance sheet of H Ltd. and S Ltd. as on 31 March 2017 giving all
workings.

Solution
Consolidated Balance Sheet of H Ltd.
And Its Subsidiary S Ltd. As On 1 April 2017
Particulars Note Rs.
I EQUITY AND LIABILITIES
1. Shareholders' funds
(a) Share Capital (H Ltd.) 1 10,000
(b) Reserves and Surplus 2 9,600
Sub Total 19,600
2. Minority Interest 3 2,600
3. Current Liabilities
Trade Payables 4 4,200
Total Equity and Liabilities 26,400
II ASSETS
1. Non-Current Assets
(a) Fixed Assets
(i) Tangible 5 26,000
(ii) Intangible 6 400
Total Assets 26,400

Notes to Account
Particulars Rs. Rs.
1 Share capital (H Ltd.)
Issued, subscribed and Fully Paid up
10,000 Equity shares of Rs. 1 each 10,000
2 Reserves and Surplus
(i) General Reserve (H Ltd.) 4,000
(ii) Surplus (H Ltd.) 4,000
Share in S Ltd. 1,600 5,600
9,600
3 Minority Interest
Equity share capital 2,000
Add: share in Profit 1/3 of Rs. 1,800 600

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2,600
4 Trade Payables
Sundry Creditors for Goods:
H Ltd. 2,000
S Ltd. 2,200
4,200
5 Tangible Fixed Assets
Sundry Fixed Assets : H Ltd. 16,000
S Ltd. 10,000
26,000
6 Intangible Fixed Assets
Goodwill on consolidation 2,000
Less: Capital Reserve 1,600
400

Illustration 8: (Common Transactions)

H Ltd. acquired 8,000 equity shares of S Ltd. on 31 March 2016. The following are the balance sheets
of the two companies as at 31 March 2017:
Particulars Note No. H Ltd. S Ltd.
(Rs.) (Rs.)
I EQUITY AND LIABILITIES
1. Shareholder's Funds
(a) Share Capital
Equity Shares of Rs. 100 each 20,00,000 10,00,000
(b) Reserve and Surplus
General Reserve (31-3-2016) 4,00,000 2,00,000
Surplus Account (31-3-2016) 1,00,000 60,000
Profit for the year 2016-17 2,00,000 80,000
2. Current Liabilities
(a) Trade Payables - Creditors 1,00,000 1,00,000
Bills Payable 30,000 10,000
Total 28,30,000 14,50,000
II ASSETS
1. Non-Current Assets
(a) Fixed Assets (Tangible)
Land and Building 5,00,000 3,00,000
Plant and Machinery 5,00,000 6,00,000
(b) Non-Current Investments 10,00,000
(investment in shares of S Ltd. At cost)
(8,000 shares in S Ltd.)
2. Current Liabilities
(a) Inventories (stock in trade) 1,50,000 1,00,000
(b) Trade Receivables - Debtors 1,00,000 1,20,000
Bills Receivable 80,000 10,000
(c) Cash and Cash Equivalents (Bank) 5,00,000 3,20,000
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 CONSOLIDATION OF ACCOUNTS

Total 28,30,000 14,50,000

(i) Bills receivable of H Ltd. include Rs. 10,000 accepted by S Ltd.

(ii) Sundry debtors of H Ltd. include Rs. 50,000 due from S Ltd.

Prepare a consolidated balance sheet of H Ltd. and its subsidiary S Ltd.

Solution
Consolidated Balance Sheet of H Ltd.
and Its Subsidiary S Ltd. As On 31 March 2017
Particulars Note Rs.
I EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital (S Ltd.) 1 20,00,000
(b) Reserves and Surplus 2 7,72,000
Sub Total 27,72,000
2. Minority Interest 2,68,000
3. Current Liabilities
(i) Trade Payable 3 1,50,000
(ii) Other Current Liabilities 4 30,000
Bills Payable (Presumed to be payable
within 12 months)
Sub Total 1,80,000
Total Equity and Liabilities 32,20,000
II ASSETS
1. Non-Current Assets
(a) Fixed Assets
(i) Tangible Assets 5 19,00,000
2. Current Assets
(i) Inventories 6 2,50,000
(ii) Trade Receivables 7 1,70,000
(iii) Cash and Cash Equivalents 8 8,20,000
(iv) Short Loans and Advances 9 80,000
Total Assets 32,20,000

Notes to Account
Particulars Rs. Rs.
1 Share capital (S Ltd.)
Issued, subscribed and Fully Paid up
20,000 Equity shares of Rs. 100 each 20,00,000

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2 Reserves and Surplus

(a) Capital Reserves on consolidation 8,000
(b) General Reserves (H Ltd.) 4,00,000
(c) Surplus (3,00,000 + 64,000) 3,64,000
7,72,000
3 Trade Payables
Sundry Creditors for Goods: H Ltd. 1,00,000
S Ltd. 1,00,000
2,00,000
Less: Inter-company debts 50,000
1,50,000
4 Bills Payables: H Ltd. 30,000
S Ltd. 10,000
40,000
Less: Inter-Company Bills 10,000
30,000
5 Tangilbe Fixed Assets
Land and Building: H Ltd. 5,00,000
S Ltd. 3,00,000
8,00,000
Plant and Machinery: H Ltd. 5,00,000
S Ltd. 6,00,000 11,00,000
19,00,000
6 Inventories
Stock of Goods: H Ltd. 1,50,000
S Ltd. 1,00,000
2,50,000
7 Trade Receivables: H Ltd. 1,00,000
S Ltd. 1,20,000
2,20,000
Less: Inter-Company Debts 50,000
1,70,000
8 Cash and Cash Equivalents
Cash at Bank H Ltd. 5,00,000
S Ltd. 3,20,000
8,20,000
9 Short-term Loans and Advances
Bill Receivables H Ltd. 80,000
S Ltd. 10,000
90,000
Less: Inter-Company Bills 10,000
80,000

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Illustration 9: (Unrealised Profit on Stock)

A Ltd., acquires all the shares in B Ltd., at cost of Rs. 1,05,000 on 1 April 2016. The extracts of
balance sheets of two companies on 31 March 2017 were as follows:
Liabilities A Ltd. B Ltd. Assets A Ltd. B Ltd.
(Rs.) (Rs.) (Rs.) (Rs.)
Share Capital : Fixed Assets:
Shares of Rs. 10
each 3,00,000 45,000 Freehold Premises 1,65,000 28,000
Reserves & Surplus: Machinery 70,000 26,000
General Reserve Investments:
Shares in Subsidiary
(1-4-2016) 1,00,000 2,000 Co. 1,05,000
Surplus 90,000 36,000 Current Assets:
Current Liabilities: Stock 62,000 18,000
Creditors 10,000 14,000 Debtors 35,000 14,000
Cash 63,000 11,000
5,00,000 97,000 5,00,000 97,000

(i) The creditors of A Ltd., include Rs. 5,000 due to B Ltd., for purchases on which the latter
company made a profit of Rs. 1,000.
(ii) The stock of A Ltd. includes Rs. 3,000 of the above purchases from B Ltd. Make necessary
adjustments and show a consolidated balance sheet as on 31.03.2017.

Solution
Consolidated Balance Sheet of A Ltd.
And Its Subsidiary B Ltd. As On 31 March 2017
Particulars Note Rs.
I EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 1 3,00,000
(b) Reserves and Surplus 2 2,25,400
Sub Total 5,25,400
2. Current Liabilities
Trade Payables 3 19,000
Total Equity and Liabilities 5,44,400
II ASSETS
1. Non-Current Assets
(a) Fixed Assets
(i) Tangible 4 2,89,000
(ii) Intangible 5 58,000
Sub Total 3,47,000
2. Current Assets
(i) Inventories 6 79,400
(ii) Trade Receivables 7 44,000
(iii) Cash and Cash Equivalents 8 74,000
Sub Total 1,97,400

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Total Assets 5,44,400

Notes to Account
Particulars Rs. Rs.
1 Share capital (A Ltd.)
Issued, subscribed and Fully Paid up
30,000 Equity shares of Rs. 10 each 3,00,000
2 Reserves and Surplus
(i) General Reserves (A Ltd.) 1,00,000
(ii) Surplus 90,000
Add: Share in B Ltd. 36,000
1,26,000
Less: unrealised profit on stock 600 1,25,400
2,25,400
3 Trade Payables
(a) Sundry Creditors A Ltd. 10,000
B Ltd. 14,000
24,000
Less: Mutual Debts 5,000
19,000
4 Tangible Fixed Assets
(a) Freehold Premises A Ltd. 1,65,000
B Ltd. 28,000
1,93,000
(b) Machinery A Ltd. 70,000
B Ltd. 26,000 96,000
2,89,000
6 Inventories
Stock of Goods A Ltd. 62,000
B Ltd. 18,000
80,000
Less: Unrealised Profit -600
79,400
7 Trade Receivables
Sundry Debtors A Ltd. 35,000
B Ltd. 14,000
49,000
Less: Mutual Debts 5,000
44,000
8 Cash and Cash Equivalents
Cash at Bank A Ltd. 63,000
B Ltd. 11,000
74,000

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There is no minority interest since it is a case of wholly owned subsidiary company.

Illustration 10: (Loss of Stock By Fire and Unrealised Profit On Stock)

The following balance sheets as on 31-3-2017 are presented to you:
Particulars Note No. H Ltd. S Ltd.
(Rs.) (Rs.)
I EQUITY AND LIABILITIES
1. Shareholder's Funds
(a) Share Capital (shares of Rs. 100 each) 5,00,000 2,00,000
(b) Reserve and Surplus
General Reserve 1,00,000
-
Surplus Account 80,000 1,00,000
2. Non-Current Liabilities
(a) Long term borrowings
6% Debentures 1,00,000
3. Current Liabilities
(a) Trade Payables (Creditors) 75,000 45,000
Total 7,55,555 2,45,000
II ASSETS
1. Non-Current Assets
(a) Fixed Assets (Tangible) 3,50,000 1,50,000
(b) Non-Current Investments
6% Debentures in S Ltd. Acquired at cost 60,000
1,500 Shares in S Ltd. At Rs. 80 each 1,20,000
2. Current Assets
(a) Inventories (stock in trade) 90,000 40,000
(b) Trade Receivables (Debtors) 60,000 30,000
(c) Cash and Cash Equivalents (Bank) 75,000 25,000
Total 7,55,000 2,45,000

H Ltd. acquired the shares on 1 August 2016. The profit and loss statement of S Ltd. showed a loss of
Rs. 1,50,000 on 1 April 2016. During June 2016, goods costing Rs. 6,000 were destroyed by fire
against which insurer paid only Rs. 2,000. Trade creditors of S Ltd. include Rs. 20,000 for goods
supplied by H Ltd. on which H Ltd. made a profit of Rs. 2,000. Half of the goods were still in stock on
31 March 2017. Prepare a consolidated balance sheet and show the complete working.

Solution
Consolidated Balance Sheet of H Ltd.
And Its Subsidiary S Ltd. As On 31 March 2017
Particulars Note Rs.
I EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 1 5,00,000
(b) Reserves and Surplus 2 2,06,000

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Sub Total 7,06,000

2. Minority Interest 3 25,000
3. Non-Current Liabilities
Long term loans (secured) 4 40,000
4. Current Liabilities
Trade payables 5 1,00,000
Total Equity and Liabilities 8,71,000
II ASSETS
1. Non-Current Assets
(a) Fixed Assets
(i) Tangible 6 5,00,000
(ii) Intangible 7 72,000
Sub Total 5,72,000
2. Current Assets
(i) Inventories 8 1,29,000
(ii) Trade Receivables 9 70,000
(iii) Cash and Cash Equivalents 10 1,00,000
Sub Total 2,99,000
Total Assets 8,71,000

Notes to Account
Particulars Rs. Rs.
1 Share capital
Issued, subscribed and Fully Paid
5,000 Equity shares of Rs.100 each 5,00,000
2 Reserves and Surplus
(i) General Reserves (H Ltd.) 1,00,000
(ii) Surplus H Ltd. 80,000
S Ltd. 27,000
1,07,000
Less: Unrealised Profit on stock 1,000 1,06,000
2,06,000
3 Minority Interest
Paid up capital held : 1/4 of Rs. 2,00,000 50,000
Less: 1/4 of accumulated loss of Rs. 1,00,000 25,000
25,000
4 Long-term Liabilities
6% Debentures (secured) 1,00,000
Less: Held by H Ltd. 60,000
40,000
5 Trade Payables
Sundry Creditors for goods:
H Ltd. 75,000
S Ltd. 45,000

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1,20,000
Less: Inter-Company Owings 20,000
1,00,000
6 Tangible Assets
Sundry Fixed H Ltd. 3,50,000
S Ltd. 1,50,000
5,00,000
7 Intangible Assets
Goodwill on consolidation 72,000
8 Inventories
Stock of Goods H Ltd. 90,000
S Ltd. 40,000
1,30,000
Less: Unrealised Profit on Stock 1,000
1,29,000
9 Trade Receivables
Debtors for Goods H Ltd. 60,000
S Ltd. 30,000
90,000
Less: Inter-Company Owings 20,000
70,000
10 Cash and Cash Equivalents
Cash in hand H Ltd. 75,000
S Ltd. 25,000
1,00,000

There is no need to split accumulated losses and profits into pre-and-post-acquisition period while
calculating share of minority interest in them. The same could be and in fact has been directly
calculated as ¼ of Rs. 1,00,000 i.e. Rs. 25,000.

Illustration 11: (Preference Share Capital in Subsidiary Company)

The following are balance sheets of R Ltd. and S Ltd. as at 31 March 2017:
Particulars Note No. R Ltd. S Ltd.
(Rs.) (Rs.)
I EQUITY AND LIABILITIES
1. Shareholder's Funds
(a) Share Capital
Equity Shares of Rs. 10 each, fully paid 4,00,000 1,50,000
13% Preference shares of Rs. 100 each, fully
paid 1,00,000
(b) Reserve and Surplus
General Reserve 50,000 40,000
Surplus Account (before appropriation) 30,000 25,000
2. Non-Current Liabilities
(a) Long term borrowings

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 CONSOLIDATION OF ACCOUNTS

12% Debentures 2,00,000

3. Current Liabilities
(a) Trade Payables (Creditors) 3,20,000 1,85,000
Total 10,00,000 5,00,000
II ASSETS
1. Non-Current Assets
(a) Fixed Assets (Tangible) 5,00,000 2,40,000
(b) Non-Current Investments
(15,000 Equity Shares in S Ltd. On 1-4-2016) 2,00,000
2. Current Assets 3,00,000 2,60,000
(including Rs. 10,000 stock-in-trade purchased
from R Ltd.)
Total 10,00,000 5,00,000

Prepare the consolidate balance sheet as at 31 March 2017 assuming that (a) S Ltd.’s general reserve
and profit and loss account (after appropriation for dividends) stood at Rs. 25,000 and Rs. 10,000
respectively on 31 March 2016 and 31 March 2017. (b) R Ltd. Sells goods at a profit of 25% on cost.

Solution
Consolidated Balance Sheet of R Ltd.
And Its Subsidiary S Ltd. As At 31 March 2017
Particulars Note Rs.
I EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 1 4,00,000
(b) Reserves and Surplus 2 95,000
Sub Total 4,95,000
2. Minority Interest 3 1,13,000
3. Non-Current Liabilities
Long term Loans (secured) 4 2,00,000
4. Current Liabilities
Trade Payables 5 5,05,000
Total Equity and Liabilities 13,13,000
II ASSETS
1. Non-Current Assets
(a) Fixed Assets
(i) Tangible 6 7,40,000
(ii) Intangible 7 15,000
Sub Total 7,55,000
2. Current Assets 8 5,58,000
Total Assets 13,13,000

Notes to Accounts
Particulars Rs. Rs.

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 CONSOLIDATION OF ACCOUNTS

1 Share capital (R Ltd.)

Issued, subscribed and Fully Paid
40,000 Equity shares of Rs. 10 each 4,00,000
2 Reserves and Surplus
(i) General Reserves (R Ltd.) 50,000
Add: Share - in S Ltd. 15,000
65,000
(ii) Surplus (R Ltd.) 30,000
Add: Share in S Ltd. 2,000
32,000
Less: Unrealised Profit on Stock 2,000 30,000
95,000
3 Minority Interest
1,000, 13% Preference shares of Rs. 100 each 1,00,000
Add: Dividends @ 13% 13,000
1,13,000
4 Long-term Liabilities
12% Debentures (secured) 2,00,000
5 Current Liabilities: R Ltd. 3,20,000
S Ltd. 1,85,000
5,05,000
6 Tangible Assets
Sundry Fixed R Ltd. 5,00,000
S Ltd. 2,40,000
7,40,000
7 Intangible Assets
Goodwill on consolidation 15,000
8 Current Assets: R Ltd. 3,00,000
S Ltd. 2,60,000
5,60,000
Less: Unrealised Profit on Stock 2,000
5,58,000

Illustration 12: (Debentures in Subsidiary Company)

The following are the balance sheets of M Ltd. and its subsidiary N Ltd. as at 31 March, 2017 :
Particulars Note No. M Ltd. N Ltd.

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 CONSOLIDATION OF ACCOUNTS

(Rs.) (Rs.)
I EQUITY AND LIABILITIES
1. Shareholder's Funds
(a) Share Capital
Equity Shares of Rs. 10 each, fully paid 3,00,000 2,00,000
(b) Reserve and Surplus
Capital Redemption Reserve 1,20,000
General Reserve 1,00,000 30,000
Surplus Account (before appropriation) 60,000 40,000
2. Non-Current Liabilities
(a) Long term borrowings (Debentures) 2,00,000 1,00,000
3. Current Liabilities
(a) Trade Payables (Creditors) 1,90,000 1,15,000
(b) Other Current Liabilities 30,000 15,000
(Interest due on debenture for one year)
Total 10,00,000 5,00,000
II ASSETS
1. Non-Current Assets
(a) Fixed Assets (Tangible) 6,00,000 3,40,000
(b) Non-Current Investments
15,000 shares in N Ltd. On 30-9-2016 2,00,000
Debentures of N Ltd. At par 50,000
Debentures of M Ltd. At par 60,000
2. Current Assets 1,50,000 1,00,000
Total 10,00,000 5,00,000

Prepare the consolidated balance sheet as at 31 March 2017 assuming that N Ltd. has earned
uniformly in 2016-2017 and its profit and loss statement showed a loss of Rs. 20,000 on 1.4.2016.
Show the working also.

Solution
Consolidated Balance Sheet of M Ltd.
And Its Subsidiary N Ltd. As On 31 March 2017
Particulars Note Rs.
I EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 1 3,00,000
(b) Reserves and Surplus 2 3,02,500
Sub Total 6,02,500
2. Minority Interest 3 67,500
3. Non-Current Liabilities
Long Term Borrowings (secured) 4 1,90,000
4. Current Liabilities
(i) Trade payables 5 3,05,000
(ii) Other Current Liabilities 6 28,500

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Sub Total 3,33,000

Total Equity and Liabilities 11,93,500
II ASSETS
1. Non-Current Assets
(a) Fixed Assets
(i) Tangible 7 9,40,000
(ii) Intangible 8 20,000
Sub Total 9,60,000
2. Current Assets: Other Current Assets 9 2,33,500
Total Assets 11,93,500

Notes to Accounts
Particulars Rs. Rs.
1 Share capital (M Ltd.)
Issued, subscribed and Fully Paid
30,000 Equity shares of Rs. 10 each 3,00,000
2 Reserves and Surplus
(i) Capital Redemption Reserves 1,20,000
(ii) General Reserves 1,00,000
(iii) Surplus
M Ltd. 60,000
Add: Share in N Ltd. 22,500 82,500
3,02,500
3 Minority Interest
Nominal Value of the shares held
(1/4 of Rs. 2,00,000) 50,000
Add: 1/4 of Rs. 30,000 (General Reserves) 7,500
Add: 1/4 of Rs. 40,000 surplus 10,000
67,500
4 Long-term Liabilities
Debentures (M Ltd.) 2,00,000
Less: Holding by N Ltd. 60,000 1,40,000
Debentures N Ltd. 1,00,000
Less: Held by M Ltd. 50,000 50,000
1,90,000
5 Trade Payables: M Ltd. 1,90,000
N Ltd. 1,15,000
3,05,000
6 Other Current Liabilities
Interest Accrued And Due on
Debentures Issued by M Ltd. 30,000

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 CONSOLIDATION OF ACCOUNTS

Less: Interest due on Debentures

held by N Ltd. 9,000 21,000
Interest Accrued And Due on
Debentures Issued by N Ltd. 15,000
Less: Interest due on Debentures
held by N Ltd. 7,500 7,500
28,500
7 Tangible Assets
M Ltd. 6,00,000
N Ltd. 3,40,000
9,40,000
8 Intangible Assets
Goodwill on consolidation :
Cost of Investment in N Ltd. 2,00,000
Less: Share Capital held 1,50,000
50,000
Add: Pre-acquisition Loss (3/4) 15,000
65,000
Less: Share in capital profit and capital reserves 45,000
20,000
9 Current Assets
M Ltd. 1,50,000
Less: Accrued Interest due on Debentures
held in M Ltd. 9,000
1,41,000
N Ltd.
Less: Accrued Interest due on debentures 1,00,000
held in M Ltd. 7,500 92,500
2,33,500

Illustration 13: (Treatment of Contingent Liabilities)

The balance sheets of H Ltd. and S Ltd. on 31 March 2017 were as under:
Particulars Note No. H Ltd. S Ltd.
(Rs.) (Rs.)
I EQUITY AND LIABILITIES
1. Shareholder's Funds
(a) Share Capital
Equity Shares of Rs. 100 each 5,00,000 3,00,000
(b) Reserve and Surplus
General Reserve (1-4-2016) 90,000 51,000
Surplus on (1-4-2016) 60,000 24,000
Profit for 2016-17 1,10,000 84,000
2. Non-Current Liabilities

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 CONSOLIDATION OF ACCOUNTS

(a) Long term borrowings

3. Current Liabilities
(a) Trade Payables - Creditors 1,40,000 71,000
Bills Payable 20,000
Total 9,00,000 5,50,000
II ASSETS
1. Non-Current Assets
(a) Fixed Assets (Tangible)
Land and Buildings 2,50,000 2,00,000
Plant and Machinery 1,25,000 1,60,000
(b) Non-Current Investments 2,95,000
(2,000 shares in S Ltd.)
2. Current Assets
(a) Inventories (stock-in-trade) 70,000 80,000
(b) Trade Receivables - Debtors 1,20,000 1,05,000
Bills Receivable 30,000
(c) Cash and Cash Equivalents (cash) 10,000 5,000
Total 9,00,000 5,50,000

H Ltd. acquired shares in S Ltd. on 1.1.2017. S Ltd. issued bills payable to H Ltd. Bills receivable of H
Ltd. include bills of S Ltd. for Rs. 12,000. Sundry debtors of S Ltd. include Rs. 10,000 owing by H Ltd.
Stock of H Ltd. includes goods worth Rs. 15,000 purchased from S Ltd. for which the latter company
has charged profit at 25% on cost. Contingent liability for bills discounted by H Ltd. is Rs. 25,000.
Prepare a consolidated balance sheet.

Solution
Consolidated Balance Sheet of H Ltd.
And Its Subsidiary S Ltd. As At 31 March 2017
Particulars Note Rs.
I EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 1 5,00,000
(b) Reserves and Surplus 2 2,71,000
Sub Total 7,71,000
2. Minority Interest 3 1,53,000
3. Current Liabilities
(i) Trade Payables 4 2,01,000
(ii) Other Current Liabilities 5 8,000
Sub Total 2,09,000
Total Equity and Liabilities 11,33,000
II ASSETS
1. Non-Current Assets
(a) Fixed Assets
(i) Tangible Assets 6 7,35,000
(ii) Intangible Assets 7 3,000

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 CONSOLIDATION OF ACCOUNTS

Sub Total 7,38,000

2. Current Assets
(a) Inventories 8 1,47,000
(b) Trade Receivables 9 2,15,000
(c) Cash and Cash Equivalents 10 15,000
(d) Short-term Loans and Advances 11 18,000
Sub Total 3,95,000
Total Assets 11,33,000

Notes to Accounts
Particulars Rs. Rs.
1 Equity Share capital
Issued, subscribed and Fully Paid
5,000 Equity shares of Rs. 100 each 5,00,000
2 Reserves and Surplus
(i) General Reserve 90,000
(ii) Surplus 1,81,000
2,71,000
3 Minority Interest
Paid up capital held 1,00,000
1/3 of 51,000 (General Reserves) 17,000
1/3 of 24,000 (Surplus : 1-04-2016) 8,000
1/3 of 84,000 (Surplus for 2016-17) 28,000
1,53,000
4 Trade Payables
Sundry Creditors: H Ltd. 1,40,000
S Ltd. 71,000
2,11,000
Less: Inter-Company Debts 10,000
2,01,000
5 Other Current Liabilities
Bills Payable (S Ltd.) 20,000
Less: Inter-Company Debts 12,000
8,000
6 Tangible Assets
Land and Building: H Ltd. 2,50,000
S Ltd. 2,00,000
4,50,000
Plant and Machinery: H Ltd. 1,25,000
S Ltd. 1,60,000 2,85,000
7,35,000
7 Intangible Assets
Goodwill on consolidation

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 CONSOLIDATION OF ACCOUNTS

Cost of investments 2,95,000

Less: Paid up value of shares 2,00,000
95,000
Less: Capital Reserve 34,000
Capital Profit 58,000 92,000
3,000
8 Inventories
Stock of Goods: H Ltd. 70,000
S Ltd. 80,000
1,50,000
Less: Unrealised Profit 3,000
1,47,000
9 Trade Receivables
Debtors for Goods: H Ltd. 1,20,000
S Ltd. 1,05,000
2,25,000
Less: Inter-Company Debts 10,000
2,15,000
10 Cash and Cash Equivalents
Cash in hand : H Ltd. 10,000
S Ltd. 5,000
15,000
11 Short-term Loans and Advances
Bill Receivables: H Ltd. 30,000
Less: Inter-Company Debts 12,000
18,000

There is a contingent liability of Rs. 17,000

Illustration 14: (Profit on revaluation of assets)

The following are the balance sheets of X Ltd. and its subsidiary Y Ltd. as at 31 March 2017 :
Particulars Note No. X Ltd. Y Ltd.
(Rs.) (Rs.)
I EQUITY AND LIABILITIES
1. Shareholder's Funds
(a) Share Capital
(Equity Shares of Rs. 10 each) 4,00,000 1,00,000
(b) Reserve and Surplus
Surplus Account 50,000 20,000
2. Current Liabilities 7,50,000 4,80,000
Total 12,00,000 6,00,000
II ASSETS
1. Non-Current Assets
(a) Fixed Assets (Tangible)
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 CONSOLIDATION OF ACCOUNTS

Equipments 2,50,000 95,000

(b) Non-Current Investments 1,40,000
(9,000 Equity Shares in Y Ltd.
on 1-4-2016)
2. Current Assets 8,10,000 5,05,000
Total 12,00,000 6,00,000

On 1.4.2016, Profit and Loss Statement of Y Ltd. showed a profit of Rs. 8,000 and equipment of Y Ltd.
was revalued by X Ltd. at 20% above its book value of Rs. 1,00,000 (but no such adjustment effected
in the books of Y Ltd.). Prepare the consolidated Balance Sheet as at 31 March 2017.

Solution
Consolidated Balance Sheet of X Ltd.
And Its Subsidiary Y Ltd. As On 31 March 2017
Particulars Note Rs.
I EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 1 4,00,000
(b) Reserves and Surplus 2 59,900
Sub Total 4,59,900
2. Minority Interest 3 13,900
3. Current Liabilities 4 12,30,000
Total Equity and Liabilities 17,03,800
II ASSETS
1. Non-Current Assets
(a) Fixed Assets
(i) Tangible Assets 5 3,64,000
(ii) Intangible Assets 6 24,800
Sub Total 3,88,800
2. Current Assets 7 13,15,000
Total Assets 17,03,800

Notes to Accounts
Particulars Rs. Rs.
1 Share capital
Issued, subscribed and Fully Paid
40,000 Equity shares of Rs. 10 each 4,00,000

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 CONSOLIDATION OF ACCOUNTS

2 Reserves and Surplus

Surplus (H Ltd.) 50,000
Shares in S Ltd. 9,900
59,900
3 Minority Interest
Paid of Value of Shares held 10,000
Add: 1/10 of Pre-acquisition Profit 800
1/10 of Post-acquisition Profit 1,100
1/10 Profit on Revaluation of Assets 2,000
13,900
4 Current Liabilities: X Ltd. 7,50,000
Y Ltd. 4,80,000
12,30,000
5 Tangible Fixed Assets: X Ltd. 2,50,000
Equipment Y Ltd. 1,00,000
Add: Appreciation 20,000
1,20,000
Less: Additional Depreciation 6,000 1,14,000
3,64,000
6 Intangible Assets
Goodwill on consideration 24,800
7 Current Assets: X Ltd. 8,10,000
Y Ltd. 5,05,000
13,15,000

Illustration 15: (Revaluation of Fixed Assets From the Back Date)

M Ltd. acquired 80% shares of S Ltd. as on 1 October 2016 at a cost of Rs. 2,30,000. The summarised
balance sheet as on 31 March 2017 was as under:
Particulars Note No. M Ltd. S Ltd.
(Rs.) (Rs.)
I EQUITY AND LIABILITIES
1. Shareholder's Funds
(a) Share Capital
Equity Shares of Rs. 50 each 3,75,000
Equity Shares of Rs. 10 each 1,25,000
(b) Reserve and Surplus
General Reserve 2,37,500 5,000
Surplus 2,00,000 90,000
2. Current Liabilities
Trade Payables (creditors) 37,500 40,000
Total 8,50,000 2,60,000
II ASSETS
1. Non-Current Assets
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 CONSOLIDATION OF ACCOUNTS

(a) Fixed Assets (Tangible) 3,32,500 1,42,000

(b) Non-Current Investments 2,30,000
2. Current Assets 2,87,500 1,17,500
Total 8,50,000 2,60,000

(i) About M Ltd.:

M Ltd. purchased goods worth Rs. 30,000 from S Ltd. which were sold at cost + 33 1/3 %. Of
these, 50% remains unsold. This purchase has remained unpaid and included in current
liabilities. Surplus includes dividend at 16% received from S Ltd. for the year 2015-16.
(ii) About S Ltd.:

The balance in surplus on 1 April 2016 was Rs. 70,000 whereas general reserve has remained
unchanged. An item of plant which (included in fixed assets) had book value of Rs. 12,500 was
to be valued at Rs. 20,000 on 1 April 2016. Depreciation at 20% is provided on this item.
Prepare consolidated balance sheet from the above informations.

Solution
Consolidated Balance Sheet of M Ltd.
And Its Subsidiary S Ltd. As On 31 March 2017
Particulars Note Rs.
I EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 1 3,75,000
(b) Reserves ad Surplus 2 4,33,150
Sub Total 8,08,150
2. Minority Interest 3 45,200
3. Current Liabilities 4 47,500
Total Equity and Liabilities 9,00,850
II ASSETS
1. Non-Current Assets
(a) Fixed Assets
(i) Tangible 5 4,81,000
(ii) Intangible 6 48,600
Sub Total 5,29,600
2. Current Assets 7 3,71,250
Total Assets 9,00,850

Notes to Accounts
Particulars Rs. Rs.
1 Share capital
Issued, subscribed and Fully Paid

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 CONSOLIDATION OF ACCOUNTS

7,500 Equity shares of Rs. 50 each 3,75,000

2 Reserves and Surplus
(i) General Reserve (M Ltd.) 2,37,500
(ii) Surplus :
Balance b/d 2,00,000
Add: Share in S Ltd. 15,400
2,15,400
Less: Dividends wrongly credited 16,000
1,99,400
Less: Unrealised Profit on stock 3,750 1,95,650
4,33,150
3 Minority Interest
Paid up capital 25,000
Pre-acquisition Surplus and Reserves 11,000
Profit on Revaluation of Plant 1,350
Additional Capital Profit 4,000
Pre-acquisition Profit 3,850
45,200
4 Current Liabilities:
M Ltd. 37,500
S Ltd. 40,000
77,500
Less: Common Debts 30,000
47,500
5 Tangible Fixed Assets
N Ltd. 3,32,500
S Ltd. 1,42,500
4,75,000
Appreciation 7,500
4,82,500
Depreciation 1,500
4,81,000
6 Intangible Fixed Assets
Goodwill on consideration: 48,600
7 Current Assets
M Ltd. 2,87,500
S Ltd. 1,17,500
Less: Unrealised Profit on Stock 3,750 4,05,000
Less: Common Debts 30,000 -33,750
3,71,250

Illustration 16 (Entry for Interest Receivable Omitted)

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 CONSOLIDATION OF ACCOUNTS

H Ltd. acquired 8,000 shares of Rs. 10 each in S Ltd. on 31 March 2017. The summarised list of
assets and liabilities of the two companies as on that are given below:
Liabilities H Ltd. S Ltd.
(Rs.) (Rs.)
Share Capital
30,000 Shares of Rs. 10 each 3,00,000
10,000 Shares of Rs. 10 each 1,00,000
Capital Reserve 52,000
General Reserve 25,000 5,000
Surplus 38,200 18,000
Loan from S Ltd. 2,100
Bills Payable (including Rs. 500 to H Ltd.) 1,700
Creditors 17,900 5,000
3,83,200 1,81,700
Assets
Fixed Assets 1,50,000 1,44,700
Shares in S Ltd. (at cost) 1,70,000
Stock in hand 40,000 20,000
Loan to H Ltd. 2,000
Bills Receivable (including Rs. 200 from S Ltd.) 1,200
Debtors 20,000 10,000
Bank 2,000 5,000
3,83,200 1,81,700

Note on the balance sheet of H Ltd. : There is a contingent liability of Rs. 1,000 for bills
discounted.
The following additional information is given to you :
(a) Interest receivable Rs. 100 in respect of loan due by H Ltd. to S Ltd. has not been credited in
the accounts of S Ltd.
(b) On 31 March 2017, the directors of H Ltd. decide that the fixed assets of S Ltd. are
overvalued and should be written down by Rs. 5,000.

Prepare the consolidated Balance Sheet as on 31 March 2017.

Solution
Consolidated Balance Sheet of H Ltd.
And Its Subsidiary S Ltd. As On 31 March 2017
Particulars Note Rs.
I EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 1 3,00,000
(b) Reserves and Surplus 2 63,200
Sub Total 3,63,200
2. Minority Interest 3 34,020
3. Current Liabilities
(a) Trade Payables 4 22,900

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 CONSOLIDATION OF ACCOUNTS

(b) Other Current Liabilities 5 1,500

Sub Total 24,400
Total Equity and Liabilities 4,21,620
II 1. Non-Current Assets
(a) Fixed Assets
(i) Tangible Assets 6 2,89,700
(ii) Intangible Assets 7 33,920
Sub Total 3,23,620
2. Current Assets
(a) Inventories 8 60,000
(b) Trade Receivables 9 30,000
(c) Cash and Cash Equivalents 10 7,000
(d) Short-term Loans and Advances 11 1,000
Sub Total 98,000
Total Assets 4,21,620

Notes to Accounts
Particulars Rs. Rs.
1 Share capital (H Ltd.)
Issued, subscribed and Fully Paid up
30,000 Equity shares of Rs. 10 each 3,00,000
2 Reserves and Surplus
General Reserve (H Ltd.) 25,000
Surplus (S Ltd.) 38,200
63,200
3 Minority Interest
Share Capital 20,000
Capital Reserve (20% of 52,000) 10,400
General Reserves (20% of Rs. 5,000) 1,000
Surplus (20% of 18,000 (18,000 + 100) 3,620
35,020
Less: Loss on Revaluation of Fixed Asset 1,000
34,020
4 Trade Payables
Creditors for Goods
H Ltd. 17,900
S Ltd. 5,000
22,900
5 Other Current Liabilities
Bills Payables 1,700
Less: Mutual Debts 200
1,500
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 CONSOLIDATION OF ACCOUNTS

6 Tangible Assets
Equipment
H Ltd. 1,50,000
S Ltd. 1,44,700
Loss on Revaluation -5,000 1,39,700
2,89,700
7 Intangible Assets
Goodwill:
Investments in shares of S Ltd. 1,70,000
Paid up value of Shares held -80,000
Pre-acquisition Profit and Reserves 90,000
-60,800
29,920
Loss on Revaluation of Tangible Assets 4,000
33,920
8 Inventories
Stock of Goods
H Ltd. 40,000
S Ltd. 20,000
60,000
9 Trade Receivables
Debtors for Goods
H Ltd. 20,000
S Ltd. 10,000
30,000
10 Cash and Cash Equivalents
Cash at Bank
H Ltd. 2,000
S Ltd. 5,000
7,000
11 Short term Loans and Advances
(a) Loan to H Ltd. 2,000
Add: Interest accrued 100
Less: Mutual Debts 2,100
Nil
(b) Bills Receivables 1,200
Less: Mutual Debts 200
1,000

Illustration 17 (Issue of Bonus Shares From Pre-acquisition Profits)

Strong Ltd., acquired 3,200 equity shares of Weak Ltd., on 31 March, 2017. The summarised
figures of the two companies as on that date are given below:

Credit Strong Ltd. Weak Ltd. Debit Strong Ltd. Weak Ltd.

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 CONSOLIDATION OF ACCOUNTS

(Rs.) (Rs.) (Rs.) (Rs.)

Share Capital 10,00,000 4,00,000 Land & Buildings 3,00,000 3,60,000
(Rs. 100 each fully Plant & Machinery 4,80,000 3,18,800
paid-up) Investments in
General Reserves 4,80,000 3,40,000 Weak Ltd. At cost 6,80,000
Profit & Loss Account 1,14,400 72,000 Stocks 2,40,000 72,000
Bank Loan 1,60,000 Sundry Debtors 88,000 80,000
Bills Payable (including Bills Receivable
Rs. 8,000 to Strong Ltd.) 16,800 (including Rs. 6,000
Sundry Creditors 94,400 18,000 from Weak Ltd.) 31,600
Cash at Bank 29,200 16,000
18,48,800 8,46,800 18,48,800 8,46,800

You are supplied with the following information:

(a) Weak Ltd., made a bonus issue on 31 March 2017 of one equity share for every four shares
held by its shareholders. Effect has not yet been given in the accounts for this.
(b) The directors have decided to revalue the land and buildings and Plant & Machinery of Weak
Ltd. at Rs. 4,00,000 and Rs. 2,98,800 respectively.
(c) Sundry creditors of Strong Ltd. included Rs. 24,000 due to Weak Ltd. Prepare the
consolidated balance sheet as at 31 March 2017 in the books of Strong Ltd. Show your
working clearly.

Also calculate cost of control when bonus shares are not issued.

Solution
Consolidated Balance Sheet of Strong Ltd.
And Its Subsidiary S Ltd. As On 31 March 2017
Particulars Note Rs.
I EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 1 10,00,000
(b) Reserves and Surplus 2 5,94,400
Sub Total 15,94,400
2. Minority Interest 3 1,66,400
3. Non-Current Liabilities
Long-term Borrowings 4 1,60,000
4. Current Liabilities
(a) Trade Payables 5 88,400
(b) Other Current Liabilities 6 10,800
Sub Total 99,200
Total Assets and Liabilities 20,20,000
II ASSETS
1. Non-Current Assets
(a) Fixed Assets
(i) Tangible Assets 7 14,78,800

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 CONSOLIDATION OF ACCOUNTS

(ii) Intangible Assets 8 14,400

Sub Total 14,93,200
2. Current Assets
(a) Inventories 9 3,12,000
(b) Trade Receivables 10 1,44,000
(c) Cash and Cash Equivalents 11 45,200
(d) Short-term Loans and Advances 12 25,600
Sub Total 5,26,800
Total Assets 20,20,000

Notes to Accounts
Particulars Rs. Rs.
1 Share capital (Strong Ltd.)
Issued, subscribed and Fully Paid
10,000 Equity shares of Rs. 10 each 10,00,000
2 Reserves and Surplus
General Reserve 4,80,000
Surplus 1,14,400
5,94,400
3 Minority Interest
Paid up value of shares held (1/5 of Rs. 5,00,000) 1,00,000
Add: Profit on Revaluation of Assets 4,000
Add: Share in General Reserve (Rs. 2,40,000) 48,000
Add: Share in surplus (Rs. 72,000) 14,400
1,66,400
4 Long-term Borrowings
Bank Loan 1,60,000
5 Trade Payables
Strong Ltd. 94,400
Weak Ltd. 18,000
1,12,400
Less: Inter-Company Debts 24,000
88,400
6 Other Current Liabilities
Bills Payables 16,800
Less: Inter-Company Debts 6,000
10,800
7 Tangible Assets
(i) Land and Building:
Strong Ltd. 3,00,000
Weak Ltd. 4,00,000
7,00,000
(ii) Plant and Machinery

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Strong Ltd. 4,80,000

Weak Ltd. 2,98,800 7,78,800
14,78,800
8 Intangible Assets
Goodwill on consolidation
Cost of Investment in Weak Ltd. 6,80,000
Less: Paid up value of share capital
acquired (including bonus shares) 4,00,000
2,80,000
Less: Profit on Revaluation of Assets 16,000
2,64,000
Less: Share in Capital Profits and
Capital Reserves 2,49,600
14,400
9 Inventories
Stock of Goods :
Strong Ltd. 2,40,000
Weak Ltd. 72,000
3,12,000
10 Trade Receivables
Debtors for Goods :
Strong Ltd. 88,000
Weak Ltd. 80,000
1,68,000
Less: Common Debts 24,000
1,44,000
11 Cash and Cash Equivalents
Cash in hand :
Strong Ltd. 29,200
Weak Ltd. 16,000
45,200
12 Short term Loans and Advances
Bills Receivables 31,600
Less: Common Debts 6,000
25,600

Illustration 18 (Bonus Issue)

H Ltd., acquired 1,200 equity shares in S Ltd., on 1.4.2016. The Summarised financial information of
H Ltd. and its subsidiary S Ltd. as on 31 March, 2017 are as follows:
Liabilities H Ltd. S Ltd.
(Rs.) (Rs.)
Preference Share Capital 1,00,000
Equity Share Capital (Rs. 100 fully paid) 5,00,000 1,50,000

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General Reserve 3,40,000 6,000

Surplus 3,60,000 1,08,000
Creditors 1,00,000 44,150
Bills Payable 24,150
14,00,000 3,32,300
Assets
Land 3,56,000 70,000
Properties 3,76,000 40,000
Plant and Machinery 1,40,000 91,300
Investments in S Ltd. 1,80,000
Stock 1,36,000 50,600
Debtors and Cash 2,12,000 80,400
14,00,000 3,32,300

The other information given are :

(a) On 1.4.2016, Surplus of S Ltd., stood at Rs. 77,500 and General Reserve at Rs. 3,000. Also H
Ltd. revalued Plant and Machinery of S Ltd., at the time of purchase of shares by Rs. 20,000
more than its book value (Ignore Depreciation).
(b) Stock of H Ltd., includes Rs. 8,000 of stock purchased from S Ltd. Further, debtors of S Ltd.,
include Rs. 24,000 for sales to H Ltd., on which S Ltd., made a profit of Rs. 6,000.
(c) S Ltd. made a Bonus issue during the year out of pre-acquisition profits for Rs. 60,000 not
recorded in the books.

You are required to prepare the Consolidated Balance Sheet of H Ltd. and its subsidiary S Ltd. as on
31.3.2016.

Solution

Consolidated Balance Sheet of H Ltd.

And Its Subsidiary S Ltd. As At 31 March 2017
Particulars Note Rs.
I EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 1 6,00,000
(b) Reserves and Surplus 2 7,45,200
Sub Total 13,45,200
2. Minority Interest 3 56,800
3. Current Liabilities
(a) Trade Payables 4 1,20,150
(b) Other Current Liabilities 5 24,150
Sub Total 1,44,300
Total Equity and Liabilities 15,46,300
II ASSETS
1. Non-Current Assets
(a) Fixed Assets

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(i) Tangible Assets 6 10,93,300

(ii) Intangible Assets Nil
Sub Total 10,93,300
2. Current Assets
(a) Inventories 7 1,84,600
(b) Trade Receivables and 8 2,68,400
Cash and Cash Equivalents 4,53,000
Sub Total 4,53,000
Total Assets 15,46,300

Notes to Account
Particulars Rs. Rs.
1 Share capital (H Ltd.)
Issued, subscribed and Fully Paid
5,000 Equity shares of Rs. 100 each 5,00,000
Preference Share Capital 1,00,000
6,00,000
2 Minority Interest 56,800
3 Reserves and Surplus
(i) Capital Reserves 20,400
(ii) General Reserves 3,40,000
(iii) Surplus 3,84,800
7,45,200
4 Trade Payables
Creditors for Goods
H Ltd. 1,00,000
S Ltd. 44,150
1,44,150
Less : Inter-Company Debts 20,000
1,20,150
5 Other Current Liabilities
Bills Payables 24,150
6 Tangible (Fixed) Assets
(i) Land
H Ltd. 3,56,000
S Ltd. 70,000
4,26,000
(ii) Properties
H Ltd. 3,76,000
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S Ltd. 40,000 4,16,000

(iii) Plant and Machinery
H Ltd. 1,40,000
S Ltd. (91,300 + 20,000) 1,11,300 2,51,300
10,93,300
7 Inventories
Stock of Goods
H Ltd. 1,36,000
S Ltd. 50,000
1,86,000
Less: Unrealised Profit 2,000
1,84,800
8 Trade Receivables and Cash and Cash Equivalents
Debtors for Goods and cash in hand 2,92,400
Less: Common Debts 24,000
2,68,400

Illustration 19 (Bonus Issue From Post-Acquisition Profits)

A Ltd. acquired 2,000 equity shares of Rs. 100 each in B Ltd. on 31 March 2016. The Balance Sheets
of the two companies as on 31 March 2017 were as follows:

Particulars Note No. A Ltd. B Ltd.

(Rs.) (Rs.)
I EQUITY AND LIABILITIES
1. Shareholder's Funds
(a) Share Capital
Equity Share Capital (Rs. 100 each) 8,00,000 2,50,000
(b) Reserve and Surplus
Reserves 3,00,000 50,000
Surplus 1,00,000 1,00,000
2. Current Liabilities
Trade Payables (Creditors) 2,00,000 50,000
Total 14,00,000 4,50,000
II ASSETS
1. Non-Current Assets
(a) Fixed Assets (Tangible) 7,00,000 2,50,000
(b) Non-Current Investments 3,00,000
(2,000 shares in B Ltd. At cost)
2. Current Assets 4,00,000 2,00,000
Total 14,00,000 4,50,000

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B Ltd. had a credit balance of Rs. 50,000 in the reserves and Rs. 20,000 when A Ltd. acquired shares
in B Ltd. B Ltd. issued bonus shares in ratio of one for every five shares held out of the profits
earned during 2016-17. This is not shown in the above balance sheet of B Ltd. Prepare a
consolidated balance sheet of A Ltd. and its subsidiary on 31 March 2017, giving all necessary
workings.

Solution
Consolidated Balance Sheet of A Ltd.
And Its Subsidiary B Ltd. As On 31 March 2017
Particulars Note Rs.
I EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 1 8,00,000
(b) Reserves and Surplus 2 4,24,000
Sub Total 12,24,000
2. Minority Interest 3 80,000
3. Current Liabilities 4 2,50,000
Total Equity and Liabilities 15,54,000
II ASSETS
1. Non-Current Assets
(a) Fixed Assets
(i) Tangible Assets 5 9,50,000
(ii) Intangible Assets 6 4,000
Sub Total 9,54,000
2. Current Assets 7 6,00,000
Total Assets 15,54,000

Notes to Accounts
Particulars Rs. Rs.
1 Share capital (A Ltd.)
Issued, subscribed and Fully Paid
8,000 Equity shares of Rs. 100 each 8,00,000
2 Reserves and Surplus
(i) General Reserves 3,00,000
(ii) Surplus 1,00,000
Add: Share in B Ltd. 24,000 1,24,000
4,24,000
3 Minority Interest
Paid up Capital including Bonus shares 60,000
Add: 1/5 of Surplus 1,00,000 20,000
80,000
4 Trade Payables etc (Creditors for Goods)
A Ltd. 2,00,000
B Ltd. 50,000

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 CONSOLIDATION OF ACCOUNTS

2,50,000
5 Tangible (Fixed) Assets
A Ltd. 7,00,000
B Ltd. 2,50,000
9,50,000
6 Intangible Assets
Goodwill on consolidation:
Cost of Investments in B Ltd. 3,00,000
Less: Share Capital including Bonus shares 2,40,000
60,000
Less: Capital profit and Reserve 56,000
4,000
7 Current Assets
A Ltd. 60,000
B Ltd. 20,000
80,000

Illustration 20 (Dividends Paid From Pre-Acquisition Profits, Cheque-in-Transit and

Goodwill of Subsidiary)

From the following balance sheets of a holding company and its subsidiary on 31.3.2017, prepare a
consolidated balance sheet:

Particulars Note No. X Ltd. Y Ltd.

(Rs.) (Rs.)
I EQUITY AND LIABILITIES
1. Shareholder's Funds
(a) Share Capital (Rs. 10 each) 5,00,000 2,00,000
(b) Reserve and Surplus
General Reserves 80,000 60,000
Surplus Account 90,000 70,000
2. Current Liabilities
(a) Trade Payables (Creditors) 50,000 40,000
(b) Other Current Liabilities
(Outstanding Expenses) 20,000 10,000
Total 7,40,000 3,80,000
II ASSETS
1. Non-Current Assets
(a) Fixed Assets
(i) Tangible (Machinery) 3,00,000 1,50,000
(ii) Intangible (Goodwill) 30,000 10,000

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 CONSOLIDATION OF ACCOUNTS

(b) Non-Current Investments 1,90,000

(16,000 shares in Y Ltd.)
2. Current Assets
(a) Inventories (stock-in-trade) 80,000 50,000
(b) Trade Receivables (Debtors) 1,20,000 1,60,000
(c) Cash and Cash Equivalents (Bank) 20,000 10,000
Total 7,40,000 3,80,000

When control was acquired, S Ltd. had Rs. 40,000 in general reserve and surplus of Rs. 30,000.
Immediately on purchases of shares H Ltd. received Rs. 16,000 as dividend from S Ltd., which was
transferred to profit and loss statement. Debtors of H Ltd. include Rs. 20,000 due from S Ltd.
whereas creditors of S Ltd. include Rs. 15,000 due to H Ltd. : the difference being accounted for by a
cheque-in-transit.

Solution
Consolidated Balance Sheet of H Ltd.
And Its Subsidiary S Ltd. As At 31 March 2017
Particulars Note Rs.
I EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 1 5,00,000
(b) Reserves and Surplus 2 2,18,000
Sub Total 7,18,000
2. Minority Interest 3 66,000
3. Current Liabilities
(i) Trade Payables 4 75,000
(ii) Other Current Liabilities 5 30,000
Sub Total 1,05,000
Total Equity and Liabilities 8,89,000
II ASSETS
1. Non-Current Assets
Fixed Assets
(i) Tangible Assets 6 4,50,000
(ii) Intangible Assets 7 14,000
Sub Total 4,64,000
2. Current Assets
(a) Inventories 8 1,30,000

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(b) Trade Receivables 9 2,60,000

(c) Cash and Cash Equivalents 10 35,000
Sub Total 4,25,000
Total Assets 8,89,000

Notes to Accounts
Particulars Rs. Rs.
1 Share capital
Issued, subscribed and Fully Paid up
50,000 Equity shares of Rs. 10 each 5,00,000
2 Reserves and Surplus
(i) General Reserves (H Ltd.) 80,000
Share in S Ltd. 16,000 96,000
(ii) Surplus ( H Ltd.) 90,000
Share in S Ltd. 48,000
1,38,000
Less: Dividend Paid 16,000 1,22,000
2,18,000
3 Minority Interest
Paid up capital 40,000
1/5 of Rs. 60,000 (General Reserve) 12,000
1/5 of Rs. 70,000 (Surplus) 14,000
66,000
4 Trade Payables etc
Sundry Creditors for Goods
H Ltd. 50,000
S Ltd. 40,000
90,000
Less: Inter-Company debts 15,000
75,000
5 Other Current Liabilities
Creditors for Expenses
H Ltd. 20,000
S Ltd. 10,000
30,000
6 Tangible Assets
Machinery
H Ltd. 3,00,000
S Ltd. 1,50,000
4,50,000
7 Intangible Assets
Goodwill 14,000
8 Inventories

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Stock of Goods:
H Ltd. 80,000
S Ltd. 50,000
1,30,000
9 Trade Receivables
H Ltd. 1,20,000
S Ltd. 1,60,000
2,80,000
Less: Inter-Company Debts 15,000
Cheque-in transit 5,000 -20,000
2,60,000
10 Cash and Cash Equivalents:
Cash in hand and Bank
H Ltd. 20,000
S Ltd. 10,000
30,000
Cheque in-transit 5,000
35,000

Illustration 21 (Dividend from Pre-acquisition Surplus)

The statement of affair of H Ltd. and its subsidiary S Ltd. as on 31 March 2017 are as follows:
Liabilities H Ltd. S Ltd.
(Rs.) (Rs.)
Equity Shares of Rs. 100 each, fully paid up 10,00,000 5,00,000
General Reserve 1,00,000 1,70,000
Surplus 1,60,000 1,30,000
Current Liabilities 4,40,000 2,00,000
17,00,000 10,00,000
Assets
Fixed Assets 4,80,000 2,50,000
Investment in Shares of S Ltd. 5,00,000
Current Assets 7,20,000 7,50,000
17,00,000 10,00,000

The following additional information is provided :

(i) H Ltd. acquired 3,000 shares in S Ltd. on 1 July, 2016. The Reserves and Surplus position of S
Ltd. as on 1 April 2016 was as under :
General Reserve : Rs. 2,50,000
Surplus : Rs. 1,20,000

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(ii) On 1 October, 2016 S Ltd. issued one equity share for every four shares held as Bonus shares
out of the General Reserve. No entry has been made in the books of H Ltd., for the
receipt of these bonus shares. However, entry has been made in the books of S Ltd. for
the issue of bonus shares.
(iii) On 30 September, 2016, S Ltd. declared a dividend out of pre-acquisition profits @ 25% on
Rs. 4,00,000, its capital on that date. H Ltd., transferred the dividend to its Profit and
Loss Statement.
(iv) S Ltd. owed H Ltd., Rs. 50,000 for purchase of stock from H Ltd. The entire stock is held by S
Ltd. on 31 March 2017. H Ltd. made a profit of 25% on cost.

Prepare a Consolidated Balance Sheet of H Ltd. and its subsidiary S Ltd. as on 31 March 2017.

Solution

Consolidated Balance Sheet of H Ltd.

And Its Subsidiary S Ltd. As On 31 March 2017
Particulars Note Rs.
I EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 1 10,00,000
(b) Reserves and Surplus 2 3,50,000
Sub Total 13,50,000
2. Minority Interest 3 2,00,000
3. Current Liabilities
(a) Trade Payables etc. 4 5,90,000
Total Equity and Liabilities 21,40,000
II ASSETS
1. Non-Current Assets
(a) Fixed Assets
(i) Tangible Assets 5 7,30,000
2. Current Assets
(a) Inventories, Trade payables 6 14,10,000
Cash and Cash Equivalents
Total Assets 21,40,000

Notes to Accounts
Particulars Rs. Rs.
1 Share capital (H Ltd.)
Issued, subscribed and Fully Paid up
10,000 Equity shares of Rs. 100 each 10,00,000
2 Reserves and Surplus
(i) Capital Reserves (On consolidation)
Cost of Investments in shares of S Ltd. 5,00,000
Less: Face value of shares held 3,00,000
2,00,000

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Less: Bonus Issue 75,000

1,25,000
Less: Pre-acquisition Surplus 39,375
Provisional Goodwill 85,625
Less: Pre-acquisition Reserves 1,12,500
Dividend wrongly credited 75,000
Capital Reserve 1,01,875
(ii) General Reserves 1,00,000
(iii) Surplus 1,48,125
3,50,000
3 Minority Interest
Face Value of Shares held 1,25,000
Add: 25% of General Reserve (1,70,000) 42,500
Add: 25% of Surplus (1,30,000): 32,500
2,00,000
4 Trade Payables etc
H Ltd. 4,40,000
S Ltd. 2,00,000
6,40,000
Less: Mutual owings 50,000
5,90,000
5 Tangible (Fixed) Assets
H Ltd. 4,80,000
S Ltd. 2,50,000
7,30,000
6 Invetories, Trade Payables Cash and Cash
Equivalents
H Ltd. 7,20,000
S Ltd. 7,50,000
14,70,000
Less: Mutual owings 50,000
14,20,000
Less: Unrealised profit on stock 10,000
14,10,000

Illustration 22 (Cheque-in-Transit)
On April 1, 2016 S Ltd. issued 10% Preference Shares of Rs.1,00,000 at par. On this date, S Ltd.’s
General Reserve and Statement of Profit and Loss Account showed balances of Rs. 80,000 and Rs.
50,000 respectively. On July 5, 2016 S Ltd. paid a final dividend of 12% on equity shares for the year
ended 31 March 2016. On April 1, 2016, H Ltd. acquired 80% equity shares in S Ltd. for Rs. 3,00,000.
On this date, machinery of S Ltd. was revalued at Rs. 2,50,000. No entry for this was made in the
books of S Ltd.
On March 31, 2017 the summarised balance sheets of H Ltd. and its subsidiary S Ltd. stood as
follows:

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 CONSOLIDATION OF ACCOUNTS

Balance Sheet As At 31 March, 2017

Particulars Note No. H Ltd. S Ltd.
(Rs.) (Rs.)
I EQUITY AND LIABILITIES
1. Shareholder's Funds
(a) Share Capital
Equity Share Capital 8,00,000 3,00,000
10% Preference Share Capital 1,00,000
(b) Reserve and Surplus
General Reserve 4,00,000 1,50,000
Surplus 2,00,000 90,000
2. Non-Current Liabilities
(a) Long term borrowings (loans) 1,10,000
3. Current Liabilities
Trade Payables - Creditors 1,70,000 76,000
Bills Payable 4,000
Total 16,80,000 7,20,000
II ASSETS
1. Non-Current Assets
(a) Fixed Assets (Tangible)
Machinery 6,25,000 2,70,000
Furniture 85,000 50,000
(b) Non-Current Investments 3,00,000
(shares in S Ltd.)
(c) Long term loans & Advances
(Loan to H Ltd.) 10,000
2. Current Assets
(a) Inventories (stock-in-trade) 4,00,000 1,90,000
(b) Trade Receivables (Debtors) 1,50,000 80,000
(c) Cash and Cash Equivalents (Bank) 1,20,000 1,10,000
(d) Other Current Assets 10,000
(Preliminary Expenses)
Total 16,80,000 7,20,000

The following further information is furnished:

(i) S Ltd. provides depreciation on Machinery @ 10% on written down value. No Machine was
sold or purchased during the year.
(ii) H Ltd. remitted a cheque of Rs. 10,000 to S Ltd. on 27 March, 2017 for repayment of loan,
which was received by S Ltd. in April 2017.
(iii) No part of preliminary expenses was written off during the year.

Prepare consolidated Balance Sheet of H Ltd. and S Ltd. as at 31 March, 2017

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Solution:
Consolidated Balance Sheet of H Ltd. And Its
Subsidiary S Ltd. As On 31 March 2017
Particulars Note Rs.
I EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 1 8,00,000
(b) Reserves and Surplus 2 6,84,000
Sub Total 14,84,000
2. Minority Interest 3 2,05,000
3. Non-Current Liabilities
(a) Long-term Borrowings 4 1,10,000
4. Current Liabilities
(a) Trade Payables 5 2,46,000
(b) Other Current Liabilities 6 4,000
Sub Total 2,50,000
Total Equity and Liabilities 20,49,000
II ASSETS
1. Non-Current Assets
(a) Fixed Assets
(i) Tangible Assets 7 9,85,000
(ii) Intangible Assets 8 4,000
Sub Total 9,89,000
2. Current Assets
(a) Inventories 9 5,90,000
(b) Trade Receivables 10 2,30,000
(c) Cash and Cash Equivalents 11 2,40,000
Sub Total 10,60,000
Total Assets 20,49,000

Notes to Accounts
Particulars Rs. Rs.
1 Share capital
Issued, subscribed and Fully Paid
Equity Share Capital 8,00,000
2 Reserves and Surplus
(i) General Reserves (H Ltd.) 4,00,000
Add: Share in S Ltd. 56,000
4,56,000
(ii) Surplus (H Ltd.) 2,00,000
Add: Share in S Ltd. 56,800
Less: Dividend wrongly credited -28,800 2,28,000
6,84,000

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