l.4iQ4SSm (a5O\A<:m5 m /3gP3TTm(a5O83^CUT\m ( m"^: m ,3L<\m m$3YI<^CT?m m m&=em*VB_4Jm*V4; m&=em =KBD m m S;D4m (AUT< m m 1<6\E`<m m f _4iQ4SS 9VQm R3EMm m ]4K=] _4hQ4SS 9VQ +<?: m '>8<m m m2=]_m)bSH47Dm 4@B m&=em =KBD m m S;D4m <c<LUW<:m5km .4Sm)ZDS_]m S;D4 m)d_ m#_; m m!Q m%DK=m-_VS= m&4_FVS4Km D@Be4j m*VB_4Jm*V4;m 0DNK4@=m*VB4; m D]__ m B4HH4[m 4[j4S4 m S;D4m R3Gm m ]4K=] _4SXZDS_] 9VQ C\8L3CP<Ym : 2AC 27C" 6C ,C+ C70C :0# C 22026C02C0+#66#0,6C#,C7"#6C19 (# 7#0, C ,C61#7 C0 C7"#6 C 22026C+ AC 2 1C#, C -AC+#67 & C 2202C02C 6 2 1 , AC,07 C+ AC C 209 "7C70C092C,07# C <"# "C6" )(C C7 & ,C 2 C0 C#,C7" C, @7C #7#0, C 7C#6C,07# C7" 7C, #7" 2C7" C19 )#6" 2C,02C7" C 97"02C02C6 )( 2C?((C C2 610,6# ( C 2C ,AC + C02C(066C0 C 7#0,C70C ,AC0, C0 C ,AC'#, C#,C ,AC+ ,, 2 C7" 2 0+ C 7C#6C69 67 C7" 7C70C :0# C ,AC 09 7C7" C2 2C6"09* C 2066 " &C )(C 7" C 76 C ( =C , C 0,7 ,76C 0 C7" C 19 )# 7#0,C ?7"C 03#!. (C 0: 5+ ,7C 19 )# 7#0,C 02C ,07# 7#0,6 C 0C1 27C0 C7"#6C 00&C+ AC C2 120 9 C02C 01# C#,C ,AC 2+C02C AC ,AC + ,6C 2 1"# C ( 720,# C02C+ " ,# ( C$. (9 #, C1"070 01B, C2 02 #, C7 1#, C02C#, 2+ 7#0,C2 74 : (C 6A67 +6 C 02C 2 120 9 C 0,C ,AC #6 C 7 1 C 1 2 2 7 C + # C 02C 07" 2C #, 2+ 7#0,C 6702 C ;# C 7 C>#7"097C8 C=2#77 ,C1 2+#66#0,C0 C7" C19 )#6" 26 C 2 "C0 C7"#6C 0, #7#0,C#6C(# ( C 2C( (C 7#0, C ((C #6197 6C 2 C69 % 7C70C ("#C%92#6 # 7#0,C0/A C
CHAPTER-WISE COMPARISON WITH STUDY MATERIAL
Chapter Head
ICAI Study Material Chapter
Chapter 1: Introduction to Accounting Standards
Chapter 1
Chapter 2: Framework for Preparation and Presentation of Financial Statements
Chapter 2
Chapter 3: Applicability of Accounting Standards
Chapter 3
Chapter 4: Presentation & Disclosures Based Accounting Standards
Chapter 4
Unit 1: Accounting Standard 1 Disclosure of Accounting Policies
Chapter 4, Unit 1
Unit 2: Accounting Standard 3 Cash Flow Statement
Chapter 4, Unit 2
Unit 3: Accounting Standard 17 Segment Reporting
Chapter 4, Unit 3
Unit 4: Accounting Standard 18 Related Party Disclosures
Chapter 4, Unit 4
Unit 5: Accounting Standard 20 Earnings Per Share
Chapter 4, Unit 5
Unit 6: Accounting Standard 24 Discontinuing Operations
Chapter 4, Unit 6
Unit 7: Accounting Standard 25 Interim Financial Reporting
Chapter 4, Unit 7
Chapter 5: Assets Based Accounting Standards
Chapter 5
Unit 1: Accounting Standard 2 Valuation of Inventory
Chapter 5, Unit 1
Unit 2: Accounting Standard 10 Property, Plant and Equipment
Chapter 5, Unit 2
Unit 3: Accounting Standard 13 Accounting for Investments
Chapter 5, Unit 3
Unit 4: Accounting Standard 16 Borrowing Costs
Chapter 5, Unit 4
Unit 5: Accounting Standard 19 Leases
Chapter 5, Unit 5
Unit 6: Accounting Standard 26 Intangible Assets
Chapter 5, Unit 6
Unit 7: Accounting Standard 28 Impairment of Assets
Chapter 5, Unit 7
Chapter 6: Liabilities Based Accounting Standards
Chapter 6
Unit 1: Accounting Standard 15 Employee Benefits
Chapter 6, Unit 1
Unit 2: AS 29 (Revised) Provisions, Contingent Liabilities and Contingent Assets
Chapter 6, Unit 2
I-5
I-6
CHAPTER-WISE COMPARISON WITH STUDY MATERIAL
Chapter Head
ICAI Study Material Chapter
Chapter 7: Accounting Standards Based on Items Impacting Financial Statement
Chapter 7
Unit 1: Accounting Standard 4 Contingencies and Events occurring after the Balance Sheet Date
Chapter 7, Unit 1
Unit 2: Accounting Standard 5 Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies
Chapter 7, Unit 2
Unit 3: Accounting Standard 11 The Effects of Changes in Foreign Exchange Rates
Chapter 7, Unit 3
Unit 4: Accounting Standard 22 Accounting for Taxes on Income
Chapter 7, Unit 4
Chapter 8: Revenue Based Accounting Standards
Chapter 8
Unit 1: Accounting Standard 7 Construction Contracts
Chapter 8, Unit 1
Unit 2: Accounting Standard 9 Revenue Recognition
Chapter 8, Unit 2
Chapter 9: Other Accounting Standards
Chapter 9
Unit 1: Accounting Standard 12 Accounting for Government Grants
Chapter 9, Unit 1
Unit 2: Accounting Standard 14 Accounting for Amalgamations
Chapter 9, Unit 2
Chapter 10: Accounting Standards for Consolidated Financial Statement
Chapter 10
Unit 1: Accounting Standard 21 Consolidated Financial Statements
Chapter 10, Unit 1
Unit 2: Accounting Standard 23 Accounting for Investments in Associates in Consolidated Financial Statements
Chapter 10, Unit 2
Unit 3: Accounting Standard 27 Financial Reporting of Interests in Joint Ventures
Chapter 10, Unit 3
Chapter 11: Financial Statements of Companies
Chapter 11
Unit 1: Preparation of Financial Statements
Chapter 11, Unit 1
Unit 2: Cash Flow Statement
Chapter 11, Unit 2
Chapter 12: Buyback of Securities
Chapter 12
Chapter 13: Amalgamation of Companies
Chapter 13
Chapter 14: Accounting for Reconstruction of Companies
Chapter 14
Chapter 15: Accounting for Branches including Foreign Branches
Chapter 15
Contents PAGE l Chapter-wise comparison with study material
I-5
Chapter 1 u
Introduction to Accounting Standards
1.1
Chapter 2 u
Framework for Preparation & Presentation of FS
2.1
Chapter 3 u
Applicability of Accounting Standards
3.1
Chapter 4 u
Presentation & Disclosures Based Accounting Standards
4.1
Chapter 5 u
Asset Based Accounting Standards
5.1
Chapter 6 u
Liabilities Based Accounting Standards
6.1
Chapter 7 u
Accounting Standards Based on Items Impacting Financial Statements
7.1
Chapter 8 u
Revenue Based Accounting Standards
8.1
Chapter 9 u
Other Accounting Standards
9.1
Chapter 10 u
Consolidated Financial Statements
I-7
10.1
I-8
CONTENTS PAGE
Chapter 11 u
Financial Statement of Companies
11.1
Chapter 12 u
Buy-Back & Equity Shares with Differential Rights
12.1
Chapter 13 u
Amalgamation
13.1
Chapter 14 u
Internal Reconstruction
14.1
Chapter 15 u
Branch Accounting
15.1
10 CHAPTER
CONSOLIDATED FINANCIAL STATEMENTS
SECTION I : CASE STUDIES ON RULES FOR PREPARING CONSOLIDATED BALANCE SHEET Q.1 A Ltd. holds 75% of the equity capital and voting power in B Ltd. A Ltd. purchases inventories costing ` 150 lacs from B Ltd. at a price of ` 200 lacs. The entire inventories remain unsold with A Ltd. at the financial year end i.e. 31st March, 2019. Suggest the accounting treatment for this transaction in the consolidated financial statements of A Ltd. giving reference of the relevant accounting standard. (RTP Nov. 2020) Ans. What AS-21 states? As per para provisions of AS-21, intragroup balances and intragroup transactions and resulting unrealized profits should be eliminated in full. Unrealized losses resulting from intragroup transactions should also be eliminated unless cost cannot be recovered. Interpretation: 1. Intragroup balances and intragroup transactions, including sales, expenses and dividends, are eliminated in full. 2. Unrealized profits resulting from intragroup transactions that are included in the carrying amount of assets, such as inventory and fixed assets, are eliminated in full. 3. Unrealized losses resulting from intragroup transactions that are deducted in arriving at the carrying amount of assets are also eliminated unless cost cannot be recovered. Analysis: One also needs to see whether the intragroup transaction is “upstream” or “down-stream”.
10.1
10.2
CONSOLIDATED FINANCIAL STATEMENTS
Upstream transaction: Upstream transaction is a transaction in which the subsidiary company sells goods to holding company. While in the downstream transaction, holding company is the seller and subsidiary company is the buyer. In the case of upstream transaction, since the goods are sold by the subsidiary to holding company; profit is made by the subsidiary company, which is ultimately shared by the holding company and the minority shareholders. In such a transaction, if some goods remain unsold at the balance sheet date, the unrealized profit on such goods should be eliminated from minority interest as well as from consolidated profit on the basis of their share-holding besides deducting the same from unsold inventory. Downstream transaction: In the case of downstream transaction, the whole profit is earned by the holding company, therefore, whole unrealized profit should be adjusted from unsold inventory and consolidated profit and loss account only irrespective of the percentage of the shares held by the parent. Conclusion: The case given in the question is the case of upstream transaction. In the consolidated profit and loss account for the year ended on 31st March, 2019, entire transaction of sale and purchase of ` 200 lacs each, would be eliminated by reducing both sales and purchases (cost of sales). Further, the unrealized profits of ` 50 lacs (i.e. ` 200 lacs – ` 150 lacs), would be eliminated in the consolidated financial statements for financial year ended on 31st March, 2019, by reducing the value of closing inventories by ` 50 lacs as of 31st March, 2019. In the consolidated balance sheet as of 31st March, 2019, A Ltd.’s share of profit from B Ltd. will be reduced by ` 37.50 lacs (being 75% of ` 50 lacs) and the minority’s share of the profits of B Ltd. would be reduced by ` 12.50 lacs (being 25% of ` 50 lacs). Q.2 A Ltd. holds 80% of the equity capital and voting power in B Ltd. A Ltd. sells inventories costing ` 180 lacs to B Ltd. at a price of ` 200 lacs. The entire inventories remain unsold with B Ltd. at the financial year end i.e. 31st March, 2020. What will be the accounting treatment for this transaction in the consolidated financial statements of A Ltd.? (MTP Oct. 2020) Ans. Analysis and Conclusion: The given transaction is a case of downstream transaction. In the consolidated profit and loss account for the year ended on 31st March, 2020, entire transaction of sale and purchase of ` 200 lacs each, would be eliminated by reducing both sales and purchases (cost of sales). Further, the unrealized profits of ` 20 lacs (i.e. ` 200 lacs – ` 180 lacs), would be eliminated
10.3
CONSOLIDATED FINANCIAL STATEMENTS
from the consolidated financial statements for financial year ended 31st March, 2020, by reducing the consolidated profits/ increasing the consolidated losses, and reducing the value of closing inventories as of 31st March, 2020. Q.3 From the following data, determine Minority Interest on the date of acquisition and on the date of consolidation in each case: Case
Subsidiary Company
%of Share Owned
Cost
Date of Acquisition
Consolidation date
01-01-2019
31-12-2019
Share Capital `
Profit and Loss A/c
Share Capital
Profit and Loss A/c
`
`
`
Case A
X
90%
2,00,000 1,50,000
75,000
1,50,000
85,000
Case B
Y
75%
1,75,000 1,40,000
60,000
1,40,000
20,000
Case C
Z
70%
98,000
40,000
20,000
40,000
20,000
Case D
M
95%
75,000
60,000
35,000
60,000
55,000
Case E
N
100%
1,00,000
40,000
40,000
40,000
65,000
(RTP November 2020) Ans. Minority Interest = Equity attributable to minorities Where, Equity is the residual interest in the assets of an enterprise after deducting all its liabilities. In this case, it should be equal to Share Capital + Profit & Loss A/c Thus, let’s assume the following; A = Share capital on 1.1.2019 B = Profit & loss account balance on 1.1.2019 C = Share capital on 31.12.2019 D = Profit & loss account balance on 31.12.2019 Case
Minority % Shares Owned
Minority interest as at the date of acquisition
Minority interest as at the date of consolidation
[E]
[E] × [A + B]
[E] × [C + D]
Case A
10 %
22,500
23,500
Case B
25 %
50,000
40,000
Case C
30 %
18,000
18,000
Case D
5%
4,750
5,750
Case E
NIL
NIL
NIL
10.4
CONSOLIDATED FINANCIAL STATEMENTS
Q.4 Hemant Ltd. purchased 80% shares of Power Ltd. on 1st January, 2019 for ` 2,10,000. The issued capital of Power Ltd., on 1st January, 2019 was ` 1,50,000 and the balance in the Profit & Loss Account was ` 90,000. During the year ended on 31st December, 2019, Power Ltd. earned a profit of ` 30,000 and at year end, declared and paid a dividend of ` 22,500. What is the amount of minority interest as on 1st January, 2019 and 31st December, 2019? Also compute goodwill/ capital reserve at the date of acquisition. (MTP Oct. 2020) Ans. Total dividend paid is ` 22,500 (out of post-acquisition profits), hence dividend received by Hemant will be credited to P & L account. Hemant Ltd.’s share of dividend = ` 22,500 × 80% = ` 18,000 Computation of Goodwill on consolidation (at the date of acquisition): Particulars
`
Cost of shares
` 2,10,000
Less: Face value of capital i.e. 80% of capital
1,20,000
Add: Share of capital profit [90,000 × 80 %]
72,000
Goodwill
(1,92,000) 18,000
Computation of Minority interest: Particulars
`
`
On1st January, 2019: 20% of ` 2,40,000 [1,50,000 + 90,000]
48,000
On 31st December, 2019:
49,500
20% of ` 2,47,500 [1,50,000 + 90,000 + 30,000 – 22,500] Q.5 King Ltd. acquires 70% of equity shares of Queen Ltd. as on 31st March, 2020 at a cost of ` 140 lakhs. The following information is available from the balance sheet of Queen Ltd. as on 31st March, 2020: Particulars
` in lakhs
Property, plant and equipment
240
Investments
110
Current Assets
140
Loans & Advances
30
15% Debentures
180
Current Liabilities
100
10.5
CONSOLIDATED FINANCIAL STATEMENTS
The following revaluations have been agreed upon (not included in the above figures): Property, plant and equipment Up by 20% Investments
Down by 10%
Queen Ltd. declared and paid dividend @ 20% on its equity shares as on 31st March, 2020 (Face value - ` 10 per share). King Ltd. purchased the shares of Queen Ltd. @ ` 20 per share. Calculate the amount of goodwill/capital reserve on acquisition of shares of Queen Ltd. (MTP Oct. 2020) Ans. Computation of Revalued Net Assets of Queen Ltd. as on 31st March, 2020 Particulars
` in lakhs
` in lakhs
PPE [240 × 120%]
288
Investments [110 × 90%]
99
Current Assets
140
Loans and Advances
30
Total Assets after revaluation
557
Less: 15% Debentures
180.0
Current Liabilities
100.0
(280)
Equity / Net Worth
277
King Ltd.’s share of net assets (70% of 277)
193.9
Computation of Goodwill on consolidation (at the date of acquisition): Particulars Cost of shares[` 140 lakhs – ` 14 lakhs (pre-acquisition dividend)]
` 126 lakhs
Less: King Ltd.’s share of net assets (193.9 lakhs) Capital Reserve
67.9 lakhs
Working Note: Computation of Pre-acquisition dividend: Purchase Price of each share = ` 20 Number of shares purchased = 7 lakhs [140 lakhs /` 20] Dividend @ 20 % i.e. ` 2 per share Thus, Total dividend = ` 14 lakhs (7 lakhs × 2)
10.6
CONSOLIDATED FINANCIAL STATEMENTS
Since dividend received is for pre-acquisition period, it has been reduced from the cost of investment in the subsidiary company. Q.6 Long Limited acquired 60% stake in Short Limited for a consideration of ` 112 lakhs. On the date of acquisition Short Limited’s Equity Share Capital was ` 100 lakhs, Revenue Reserve was ` 40 lakhs and balance in Profit & Loss Account was ` 30 lakhs. From the above information you are required to calculate Goodwill/ Capital Reserve in the following situations: (i) On consolidation of Balance Sheet. (ii) If Long Limited showed the investment in subsidiary at a carrying amount of ` 104 lakhs. (iii) If the consideration paid for acquiring the 60% stake was ` 92 lakhs. (July 2021, 5 Marks) Ans. Particulars
`
60% of the Equity Share Capital ` 100 Lakhs
60
60% of Accumulated Reserve ` 70 Lakhs (40+30) Lakhs
42
Book value of shares of Short Ltd.
102
Computation of Goodwill/Capital Reserve: S. No. (i)
Particulars
Workings
On consolidation of Long Ltd. paid a positive differential of ` 10 Balance Sheet Lakhs (112 - 102). This differential ` 10 Lakhs is called goodwill and is shown in the balance sheet under the head intangibles.
(ii)
If Long Ltd. showed Then the goodwill will be ` 2 Lakhs. the investment in (104 - 102). Short Ltd. at carrying amount of ` 104 Lakhs
(iii)
If the consideration Then there would have been capital reserve paid is ` 92 lakhs amounting ` 10 Lakhs (102- 92).
10.7
CONSOLIDATED FINANCIAL STATEMENTS
Q.7 H Ltd. and S Ltd. provide the following information as at 31st March, 2022 : H Ltd. `
S Ltd. `
Property, Plant and Equipment
2,00,000
2,60,000
Investments (14,000 Equity Shares of S Ltd.)
2,52,000
—
Current Assets
1,48,000
1,40,000
Share capital (Fully paid equity shares of ` 10 each)
3,00,000
2,00,000
Profit and loss account
1,00,000
80,000
Trade Payables
2,00,000
1,20,000
Additional information: H Ltd. acquired the shares of S Ltd. on 1st July, 2021 and Balance of profit and loss account of S Ltd. on 1st April, 2021 was ` 60,000. Prepare consolidated balance sheet of H Ltd. and its subsidiary as at 31st March, 2022. (May 2023, 15 Marks) Ans. Step 1: Date of Acquisition: 1st July, 2021 Step 2: % of Holding: 70% (14,000/20,000 × 100) Step 3: Analysis of Profit (AoP): Particulars
P&L
Pre-acquisition profits Pre-1st July, 2021
Post-Acquisition profits 1st July, 2021 to 31st March, 2022
60,000 Balance on 1st April, 2021
Increase in P&L i.e., Profit for the year = 80,000 – 60,000 = 20,000 In time ratio – 3 months: 9 months
5,000
15,000
Total
65,000
15,000
Holding company’s share (70%)
45,500
10,500
Minority’s share (30%)
19,500
4,500
10.8
CONSOLIDATED FINANCIAL STATEMENTS
Step 4: Minority Interest: Particulars
Amount
Paid-up share capital (2,00,000 × 30%)
60,000
Pre-acquisition profits (Step 3)
19,500
Post-acquisition profits (Step 3)
4,500
Total
84,000
Step 5: Cost of control: Particulars
Amount
Cost of shares
Amount 2,52,000
Paid-up share capital (2,00,000 × 70%)
1,40,000
Pre-acquisition profits (Step 3)
45,500
Goodwill
1,85,500 66,500
CONSOLIDATED BALANCE SHEET as at 31st March, 2022 Particulars
Note
`
I. EQUITY AND LIABILITIES 1. Shareholders’ Funds (a) Share Capital
3,00,000
(b) Reserve and Surplus [1,00,000 + 10,500]
1,10,500
2. Minority Interest
84,000
3. Current Liabilities Trade Payables
3,20,000
Total
8,14,500
II. ASSETS 1. Non-current Assets PPE (i) Tangible (ii) Intangible [Goodwill]
4,60,000 66,500
2. Current Assets
2,88,000
Total
8,14,500
10.9
CONSOLIDATED FINANCIAL STATEMENTS
Q.8 White Ltd. acquired 2,250 shares of Black Ltd. on 1st October, 2020. The summarized balance sheets of both the companies as on 31st March, 2021 are given below: Particulars
White Ltd. (`)
Black Ltd. (`)
6,50,000
3,00,000
60,000
30,000
1,50,000
90,000
1,15,000
75,000
-
30,000
9,75,000
5,25,000
5,80,000
3,51,000
Equity and Liabilities: Shareholder’s fund Share capital (Equity shares of ` 100 each fully paid-up) Reserves and Surplus General Reserve Profit and loss account Current Liabilities Trade payables Due to White Ltd. Total Assets: Non-current assets Property, Plant and Equipment Investments Shares in Black Ltd. (2,250 shares)
2,70,000
Current assets Inventories
50,000
Due from Black Ltd.
36,000
Cash and Cash equivalents
39,000
54,000
9,75,000
5,25,000
Total
1,20,000
Other information: (i) During the year, Black Limited fabricated a machine, which is sold to White Ltd. for ` 39,000, the transaction being completed on 30th March,2021. (ii) Cash in transit from Black Ltd. to White Ltd. was ` 6,000 on 31st March,2021. (iii) Profits during the year 2020-21 were earned evenly. (iv) The balances of Reserve and Profit and Loss account as on 1st April,2020 were as follows:
10.10
CONSOLIDATED FINANCIAL STATEMENTS
Reserves
Profit and Loss A/c
`
`
White Ltd.
30,000
15,000 Profit
Black Ltd.
30,000
10,000 Loss
You are required to prepare consolidated Balance Sheet of the group as on 31st March,2021 as per the requirement of Schedule III of the Companies Act, 2013. (May 2022, 15 Marks) Ans. Working Note – I: Step 1: Date of Acquisition: 1st October, 2020 Step 2: % of Holding: 2,250/3,000 × 100 = 75% Step 3: Analysis of Profit (AOP): Particulars
General Reserve
Increase in General Reserve In time ratio – 6 months:6 months Surplus in P&L
Pre-acquisition profits Pre - 1st October, 2020
Post-Acquisition profits 1st October, 2020 to 31st March, 2021
30,000 Balance on 1st April, 2020 (Still available) Nil
Nil
(10,000) Balance on 1st April, 2020
Increase in Surplus in P&L i.e., Profit for the year = 1,00,000 [90,000 – (10,000)] In time ratio – 6 months:6 months
50,000
50,000
Total
70,000
50,000
Holding company’s share (75%)
52,500
37,500
Minority’s share (25%)
17,500
12,500
Step 4:
10.11
CONSOLIDATED FINANCIAL STATEMENTS
Minority Interest: Particulars
Amount
Paid-up share capital
75,000
Pre-acquisition profits (Step 3)
17,500
Post-acquisition profits (Step 3)
12,500
Total
1,05,000
Step 5: Cost of control: Particulars
Amount
Cost of shares
Amount 2,70,000
Paid-up share capital
2,25,000
Pre-acquisition profits (Step 3)
52,500
Capital Reserve
2,77,500 7,500
Consolidated Balance Sheet as at 31st March, 2021 Particulars
Note No.
(`)
Equity and Liabilities (1) Shareholder’s Funds (a) Share Capital
1
6,50,000
(b) Reserves and Surplus
2
2,55,000
3
1,05,000
4
1,90,000
(2) Minority Interest (3) Current Liabilities (a) Trade Payables Total
12,00,000
Assets (1) Non-current assets (a) Property, Plant and Equipment
5
9,31,000
(a) Inventory
6
1,70,000
(b) Cash & cash equivalent
7
99,000
(2) Current assets
Total
12,00,000
Notes to Accounts: No. 1.
Particulars
`
Share capital 6,500 equity shares of ` 100 each, fully paid-up
6,50,000
Total
6,50,000
10.12
CONSOLIDATED FINANCIAL STATEMENTS
No. 2.
Particulars
`
Reserves and Surplus General Reserves
60,000
Profit and Loss Account
1,50,000
Add: 75% share of Black Ltd.’s post-acquisition profits (Step 3)
37,500
Capital reserve (Step 5)
1,87,500 7,500
Total
2,55,000
3.
Minority interest in Black Ltd. (Step 4)
1,05,000
4.
Trade payables
5.
6.
7.
White Ltd.
1,15,000
Black Ltd.
75,000
1,90,000
Property, plant and equipment White Ltd.
5,80,000
Black Ltd.
3,51,000
9,31,000
Inventory White Ltd.
50,000
Black Ltd.
1,20,000
1,70,000
Cash & cash equivalent White Ltd.
39,000
Black Ltd.
54,000
Cash in transit
6,000
99,000
Q.9 H Ltd. acquired 15,000 shares in S Ltd. for ` 1,55,000 on July 1, 2022. The Balance sheet of the two companies as on 31st March, 2023 were as follows: H Ltd.
S Ltd.
`
`
9,00,000
2,50,000
1,60,000
40,000
Surplus i.e., Balance in Statement of Profit and Loss
80,000
25,000
Bills Payable
40,000
20,000
Equity and Liabilities : Equity Share Capital (Fully paid shares of ` 10 each) General Reserve
Trade Creditors Total
50,000
30,000
12,30,000
3,65,000
10.13
CONSOLIDATED FINANCIAL STATEMENTS
H Ltd.
S Ltd.
`
`
Machinery
7,00,000
1,50,000
Furniture
1,00,000
70,000
Investment in Equity Shares of S Ltd.
1,55,000
-
Stock-in-Trade
1,00,000
50,000
Trade Debtors
60,000
35,000
Bills Receivable
25,000
20,000
Cash at Bank
90,000
40,000
12,30,000
3,65,000
Assets:
Total
The following additional information is provided to you : (i) General reserve appearing in the Balance Sheet of S Ltd. remained unchanged since 31st March, 2022. (ii) Profit earned by S Ltd. for the year ended on 31st March, 2023 amounted to ` 20,000. (iii) H Ltd. sold goods to S Ltd. costing ` 8,000 for ` 10,000, 25% of these goods remained unsold with S Ltd. on 31st March, 2023. (iv) Creditors of S Ltd. include ` 4000 due to H Ltd. on account of these goods. (v) Out of Bills payable issued by S Ltd. ` 15,000 are those which have been accepted in favour of H Ltd. Out of these, H Ltd. had endorsed by 31st March, 2023, ` 8000 worth of bills receivable in favour of its creditors. You are required to draw a consolidated Balance Sheet as on 31st March, 2023. (May 2023, 15 Marks) Ans. Step 1: Date of Acquisition: 1st July, 2015 Step 2: % of Holding: 60% i.e. [15,000/25,000 × 100] Step 3: Analysis of Profit (AoP):
10.14
CONSOLIDATED FINANCIAL STATEMENTS
Particulars
General Reserve
Pre-acquisition profits 1st July, 2015
Post-acquisition profits 1st July, 2015 to 31st March, 2016
40,000 Balance on 1st April, 2015
Nil
Nil
Nil
Increase in General Reserve (40,000 – 40,000 = Nil) In time ratio – 3 months : 9 months Surplus in P&L
5,000 (25,000 – 5,000) Balance on 1st April, 2015
Increase in Surplus in P&L i.e., Profit for the year = 20,000
5,000
15,000
Total
50,000
15,000
Holding company’s share (60%)
30,000
9,000
Minority’s share (40%)
20,000
6,000
In time ratio – 3 months : 9 months
Step 4: Minority Interest: Particulars
Amount
Paid-up share capital (2,50,000 × 40%)
1,00,000
Pre-acquisition profits (Step 3)
20,000
Post-acquisition profits (Step 3)
6,000
Total
1,26,000
Step 5: Cost of control: Particulars
Amount
Cost of shares
1,55,000
Paid-up share capital (2,50,000 × 60%)
1,50,000
Pre-acquisition profits (Step 3)
30,000
Capital Reserve
Amount
1,80,000 25,000
10.15
CONSOLIDATED FINANCIAL STATEMENTS
Step 6: Special Issues: 1. Eliminate ` 4,000 from debtors and creditors in the Balance Sheet. 2. Eliminate ` 7,000 from B/R and B/P in the Balance Sheet. 3. Reduce stock reserve i.e., ` 2000 × 25% = 500; from both Surplus in Balance sheet and from stock in the Balance sheet as it is a downstream transaction. CONSOLIDATED BALANCE SHEET OF H LTD. AND ITS SUBSIDIARY S LTD. as at 31st March, 2016 Particulars I.
Note
`
EQUITY AND LIABILITIES 1. Shareholders’ Funds (a) Share Capital
1
9,00,000
(b) Reserve and Surplus
2
2,73,500
3
1,26,000
4
1,29,000
2. Minority Interest 3. Current Liabilities Trade Payables Total
14,28,500
II. ASSETS 1. Non-current Assets (a) Fixed Assets (i) Tangible
5
10,20,000
2. Current Assets (a) Inventories
6
1,49,500
(b) Trade Receivables
7
1,29,000
(c) Cash and Cash Equivalents
8
1,30,000
Total
14,28,500
Notes to Accounts: Particulars 1.
`
Share Capital Authorised Capital Issued, Subscribed and Fully paid 90,000 Equity Shares of `10 each
2.
9,00,000
Reserve and Surplus Capital Reserve
25,000
10.16
CONSOLIDATED FINANCIAL STATEMENTS
Particulars
`
General Reserve
1,60,000
Surplus, i.e., Balance in Statement of Profit and Loss H Ltd.
90,000
Share in S Ltd.
9,000 89,000
Less: Unrealised Profit
500
88,500 2,73,500
3.
Minority Interest Paid-up equity share capital
1,00,000
Add: Share in pre and post-acquisition profits 4.
6.
1,26,000
Trade Payables Trade creditors
Bills receivable
H Ltd.
50,000
40,000
S Ltd.
30,000
20,000
80,000
60,000
4,000
7,000
76,000
53,000
Less: Intragroup balances 5.
26,000
Tangible Assets
Machinery
Furniture
H Ltd.
7,00,000
1,00,000
S Ltd.
1,50,000
70,000
8,50,000
1,70,000
1,29,000
10,20,000
Inventories Stock-in-trade: H Ltd.
1,00,000
S Ltd.
50,000 1,50,000
Less: Unrealised profit 7.
Trade Receivables
500 Trade debtors
Bills receivable
H Ltd.
60,000
25,000
S Ltd.
35,000
20,000
95,000
45,000
Less: Intragroup balances
4,000
7,000
91,000
38,000
1,49,500
1,29,000
10.17
CONSOLIDATED FINANCIAL STATEMENTS
Particulars 8.
`
Cash and Cash Equivalents H Ltd.
90,000
S Ltd.
40,000 1,30,000
Q.10 [80% Shares + Consolidated Balance Sheet after 1 year] From the following summarized balance sheets of Kedar Ltd. and its subsidiary Vijay Ltd. drawn up at 31st March, 2019, prepare a consolidated balance sheet as at that date, having regard to the following: (i) Reserves and Profit and Loss Account of Vijay Ltd. stood at ` 62,500 and ` 37,500 respectively on the date of acquisition of its 80% shares by Kedar Ltd. on 1st April, 2018. (ii) Machinery (Book-value ` 2,50,000) and Furniture (Book value ` 50,000) of Vijay Ltd. were revalued at ` 3,75,000 and ` 37,500 respectively on 1st April, 2018 for the purpose of fixing the price of its shares. [Rates of depreciation computed on the basis of useful lives: Machinery 10%, Furniture 15%.] Summarized Balance Sheet of Kedar Ltd. and Vijay Ltd. as on 31st March, 2019 Liabilities
Kedar Ltd.
Vijay Ltd.
`
`
Assets
Equity and Liabilities
Non-current assets
Shareholder’s funds
Fixed assets
Share Capital
Machinery
Shares of ` 100 each 15,00,000 2,50,000 Furniture
Kedar Ltd.
Vijay Ltd.
`
`
7,50,000 2,25,000 3,75,000
42,500
Reserves
5,00,000 1,87,500 Other non-current assets 11,00,000 3,75,000
Profit and Loss A/c
2,50,000
62,500 Non-current Investments
Account Trade Payables
Shares in Vijay Ltd.: 3,75,000 1,42,500 2,000 shares at ` 200 each
4,00,000
26,25,000 6,42,500
26,25,000 6,42,500
(RTP May 2020)
Advanced Accounting (Advanced Accounts) | CRACKER AUTHOR PUBLISHER DATE OF PUBLICATION EDITION ISBN NO NO. OF PAGES BINDING TYPE
: : : : : : :
PARVEEN SHARMA, KAPILESHWAR BHALLA TAXMANN 01/01/2024 8TH EDITION 9789357787673 928 PAPERBACK
Rs. 716
Description This book is prepared exclusively for the Intermediate Level of Chartered Accountancy Examination requirement. It covers the questions & detailed answers for the past exams strictly as per the new syllabus of ICAI. The Present Publication is the 8th Edition for the CA Inter | New Syllabus | May 2024 Exam. This book is authored by CA Parveen Sharma & CA Kapileshwar Bhalla, with the following noteworthy features:
Strictly as per the New Syllabus of ICAI
Coverage of this book includes:
Past Exam Questions, including Nov. 2024 Exam (Solved)
Questions from RTPs and MTPs of ICAI
[Arrangement of Question] Questions in each chapter are arranged ‘sub-topic’ wise based on Para No. of each Ind AS
[Marks Distribution] Chapter-wise marks distribution
[Trend Analysis] for the previous exams
[Comparison with Study Material] Chapter-wise comparison with ICAI Study Material
ORDER NOW