COC Holding Companies Santosh kumar (CA/CMA)

CONSOLIDATION OF FINANCIAL STATEMENTS

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Question: 1 (Wholly-owned subsidiary company)

From the following balance sheets of the H, Ltd, and S. Ltd., prepare a consolidated balance sheet of
H. Ltd. and its subsidiary S. Ltd.:
Balance Sheets as on 2017
Liabilities H. Ltd. S. Ltd. Assets H. Ltd. S. Ltd.
Rs. Rs. Rs. Rs.
Share Capital in Sundry Assets 7,00,000 5,40,000
shares of Rs. 10 each 10,00,000 5,00,000 Investment in
Other Liabilities 2,00,000 40,000 50,000 shares of
S. Ltd. 5,00,000 -
12,00,000 5,40,000 12,00,000 5,40,000

Question: 2 (Minority interest) From the following information prepare a consolidated balance sheet of H Ltd.
and its subsidiary S Ltd.:
Liabilities H. Ltd. S. Ltd. Assets 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
@ Rs, 10 each 4,00,000 -
12,00,000 5,40,000 12,00,000 5,40,000

Question: 3 (Cost of control) From the following balance sheets of H. Ltd. and its subsidiary S. Ltd., as on 31 December
2018, prepare a consolidated balance sheet:
Liabilities H. Ltd. S. Ltd. Assets H. Ltd. S. Ltd.
Rs. Rs. Rs. Rs.
Share Capital (in shares Sundry Assets 7,00,000 6,20,000
of Rs. 100 each) 10,00,000 5,00,000 Investment in
Creditors 2,00,000 50,000 the shares of
General Reserves ---- 20,000 S.Ltd 6,00,000 ----
(5,000 shares at cost)
Surplus 1,00,000 50,000
13,00,000 6,20,000 13,00,000 6,20,000
H. Ltd. purchases shares in S. Ltd. on the balance sheet date i.e., 31-12-2018.

Question: 4 (Capital reserve) From the following balance sheets of H. Ltd. and its subsidiary S. Ltd. as on 31-12-2018
prepare a consolidated balance sheet:
Liabilities H. Ltd. S. Ltd. Assets H. Ltd. S. Ltd.
Rs. Rs. Rs. Rs.
Share Capital in Sundry Assets 8,80,000 6,20,000
shares of Rs. 100 each 10,00,000 5,00,000 Investment in
Creditors 2,50,000 60,000 5,000 shares
Reserves 50,000 40,000 of S Ltd. 5,20,000 -
Profit and Loss Account 1,00,000 20,000 (bought on 31-12-2018)

14,00,000 6,20,000 14,00,000 6,20,000

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 COC Holding Companies Santosh kumar (CA/CMA)

Question: 5 (Pre-acquisition profit and reserves) From the following information prepare a consolidated balance sheet:
Balance Sheets as on 31 December 2017
Liabilities H. Ltd. S. Ltd. Assets 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 Investment in 3,000
Reserves 60,000 20,000 Shares of S. Ltd. 90,000 -
Profit and Loss Account 20,000 10,000
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 January 2017 when S Ltd's reserves stood at Rs. 5,000 and its profit and
loss account (Cr.) at Rs. 6,000.

Question: 6 (Pre-acquisition profit and reserves) From the balance sheets given below, prepare a consolidated
balance sheet of M Ltd. and its subsidiary C. Ltd.

Liabilities M C Assets M C
Ltd. Ltd. Ltd. Ltd.
Rs. Rs. Rs. Rs.
Share Capital: Non current assets :
Shares of Rs. 10 1,20,000 30,000 Freehold Buildings 72,000
Reserves & Surplus: Leasehold Property - 25,000
General Reserve 25,000 6,000 Plant & Machinery 30,000 10,000
Profit and Loss Account 12,000 9,000 Investments in
- - 2,000 Shares in C Ltd. 25,000 -
- - Current Assets:
Current Liabilities: Stock at cost 18,000 3,000
Creditors 15,000 5,000 Debtors 22,000 7,000
Bank 5,000 5,000
1,72,000 50,000 1,72,000 50,000
At the date of acquisition by M Ltd of 2,000 Shares in C Ltd, the latter company had undistributed profits and
reserves of Rs. 5,000, none of which have been distributed since acquisition.

Question: 7 (Pre-acquisition loss) The balance sheets of H. Ltd and its subsidiary S. Ltd as on 31 December 2016
were as follows :
Liabilities H Ltd. S Ltd. Assets H Ltd. S Ltd.
Rs. Rs. Rs. Rs.
Share Capital (shares fixed Assets 16,000 10,000
of Re. 1 each) 10,000 6,000 Investments: 4,000
General Reserve 4,000 - Shares in S. Ltd. 4,000 -
Profit and Loss Account 4,000 1.800
Creditors 2,000 2,200

20,000 10,000 20,000 10,000

The shares were purchased by H. Ltd. in S. Ltd. on 30 June 2016.
On 1 January 2016, the profit and loss account 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. Prepare a consolidated
balance sheet of H. Ltd. and S. Ltd. as on 31 December 2016 giving all workings.
[B. Com. (Hons.) Delhi, 1987]
[A.C.S. (lnter December, 1986]

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 COC Holding Companies Santosh kumar (CA/CMA)

Question: 8 (Common transactions) H Ltd. acquired 8,000 equity shares of S Ltd. on 31 March 2014. The
following are the balance sheets of the two companies as at 31 March 2015:
Liabilities H Ltd. S Ltd. Assets H Ltd. S Ltd.

Rs. Rs. Rs. Rs.

Equity Shares of Land and Buildings 5,00,000 3,00,000

Rs. 100 each 20,00,000 10,00,000 Plant and

General Reserves Machinery 5,00,000 6,00,000
31.3.2014 4,00,000 2,00,000 Stock 1,50,000 1,00,000
Profit and Loss Sundry Debtors 1,00,000 1,20,000
Account 31.3.2014 1,00,000 60,000 Investment in
Profit for the year Shares of S Ltd.
2014-2015 2.00,000 80,000 at cost 10,00,000 -
Sundry Creditors 1,00,000 1,00,000 Bills Receivable 80,000 10,000

Bills Payable 30,000 10,000

Cash and Bank 5,00,000 3,20,000

28,30,000 14,50,000 28,30,000 14,50,000

(i) Bills receivable of H Ltd. includes 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.

Question: 9 (Unrealized Profit on Stock) A Ltd., acquires all the shares in B. Ltd., at cost of Rs. 1,05,000 on 1 April 2016. The
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: Non-current 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 in
(1-4-2016) 1,00,000 2,000 Shares in Subsidiary Co. 1,05,000 -
Profit and Loss Account 90,000 36,000 Current Assets:
Stock 62,000 18,000
Debtors 35,000 14,000
Creditors 10,000 14,000 Cash 63,000 11 ,000

5,00,000 97,000 5,00,000 97,000

(i) The creditors of B Ltd., include Rs. 5,000 due to A Ltd., for purchases on which the latter company made a profit
of Rs. 1,000.
(ii) The stock of B Ltd, includes Rs. 3,000 of the above purchases from A Ltd.
Make necessary adjustments and show a consolidated balance sheet as on 31-3-2017

Question: 10 (Loss of stock by fire and unrealized profit on Stock) The following balance sheets as on 31-3-2016 are
presented to you:
Liabilities H Ltd. S Ltd. Assets H Ltd. S Ltd.
Rs. Rs. Rs. Rs.
Share Capital: Fixed Assets 3,50,000 1,00,000
Shares of Rs. 100 each 5,00,000 2,00,000 Stock 90,000 90,000
General Reserve 1,00,000 - Debtors 60,000 30,000
Profit and Loss Account 80,000 - 6% Debentures in
6% Debentures - 1,00,000 S. Ltd. acquired at cost 60,000 -

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Creditors 75,000 45,000

1,500 Shares in S Ltd at Rs.80 1,20,000 -

Profit and loss account - 1,00,000

Cash 75,000 25,000
7,55,000 3,45,000 7,55,000 3,45,000
H Ltd. acquired the shares on 1 August 2015. The profit and loss account of S Ltd. showed a debit balance of Rs.
1,50,000 on 1 April 2015. During June 2015, 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 R. 2,000. Half of the goods were still in stock on 31 March 2016. Prepare a consolidated balance sheet
and show the complete working.

Question: 11 (Debentures in subsidiary company)The following are the balance sheets of M Ltd. and its subsidiary
N. Ltd. as at 31 March, 2017:
Liabilities M. Ltd. N. Ltd. Assets M. Ltd. N. Ltd.
Rs. Rs. Rs. Rs.
Equity Shares of Fixed Assets 6,00,000 3,40,000
Rs. 10 each, fully paid 3,00,000 2,00,000 Investments in
Capital Redemption 15,000 Equity
Reserve 1,20,000 - Shares in N. Ltd.
General Reserve 1,00,000 30,000 on 30.9.2016 2,00,000 -
Profit and Loss Debentures of
Account (before any N. Ltd. at par 50,000 -
appropriation) 60,000 40,000 Debentures of
Debentures 2,00,000 1,00,000 M Ltd. at par - 60,000
O/S Interest on Other Assets 1,50,000 1,00,000
Debentures for one
year 30,000 15,000
Other Liabilities 1,90,000 1,15,000

10,00,000 5,00,000 10,00,000 5,00,000

Prepare the consolidated balance sheet as at 31 March 2017 assuming that N. Ltd. has earned uniformly in 2016-17
and its profit and loss account showed a debit balance of Rs. 20,000 on 1.4.2016. Show the working also.

Question: 12 (Treatment of contingent liabilities) The balance sheets of H Ltd. and S Ltd. on 31 March 2017 were as
under:
Liabilities H Ltd. S Ltd. Assets H Ltd. S Ltd.
Rs. Rs. Rs. Rs.
Equity Shares of Land and Buildings 2,50,000 2,00,000
Rs. 100 each 5,00,000 3,00,000 Plant and Machinery 1,25,000 1,60,000
General Reserve on Stock 70,000 80,000
1.4.2016 90,000 51,000 Debtors 1,20,000 1,05,000
Profit and Loss Account 2,000 Shares in S. Ltd. 2,95,000 -
Balance on 1.4.2016 60,000 24,000 Bills Receivable 30,000 -
Profit for 2016-17 1,10,000 84,000 Cash 10,000 5,000
Creditors 1,40,000 71,000
Bills Payable - 20,000
9,00,000 5,50,000 9,00,000 5,50,000
H Ltd acquired shares in S. Ltd on 1.1.2017. S. Ltd issued all 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.

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 COC Holding Companies Santosh kumar (CA/CMA)

Question: 13 (Profit on revaluation of assets)

The following are the balance sheets of X Ltd. and its subsidiary y Ltd. as at 31 March 2017:
Liabilities X Ltd. Y Ltd. Assets X Ltd. Y Ltd.
Rs. Rs. Rs. Rs.
Equity Shares of Equipment 2,50,000 95,000
Rs. 10 each 4,00,000 1,00,000 Investment:
Profit & Loss Account 50,000 20,000 9,000 Equity Shares
External Liabilities 7,50,000 4,80,000 in Y Ltd. on
1 April 2016 1,40,000
Other Assets 8,10,000 5,05,000
12,00,000 6,00,000 12,00,000 6,00,000
On 1.4.2016, Profit and loss account of Y Ltd. showed a credit balance 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.

Question: 14 (Issue of bonus shares from pre-acquisition profits)Strong Ltd., acquired 3,200 equity shares of Weak
Ltd., on 31 March, 2017. The summarized balance sheets of the two companies as on that date are given below:

Liabilities Strong. Weak Assets Strong Weak

Ltd. Ltd. Ltd. Ltd.
Rs. Rs. Rs. Rs.
Share Capital Land & Buildings 3,00,000 3,60,000
(Rs. 100 each fully Plant & Machinery 4,80,000 3,18,800
paid-up) 10,00,000 4,00,000 Investments in
General Reserve 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 (including
Strong Ltd.) - 16,800 Rs. 6,000 from
Sundry Creditors 94,400 18,000 Weak Ltd.) 31,600 -

Liabilities A Ltd. B Ltd.

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.

Question: 15 (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 summarized balance sheets of
the two companies as on 31 March 2017 were as follow:( BALANCE SHEET GIVEN BELOW)

B Ltd. had a credit balance of Rs. 50,000 in the reserves and Rs. 20,000 in the profit and loss account when A Ltd.
acquired shares in B Ltd. B Ltd. issued bonus shares in the 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.

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Rs. Rs.
Equity Share Capital

(Shares of Rs. 100 each) 8,00,000 2,50,000

Reserves 3,00,000 50,000
Profit &. Loss Account 1,00,000 1,00,000
Creditors 2,00,000 50,000
14,00,000 4,50,000
Assets
Fixed Assets 7,00,000 2,50,000
Current Assets 4,00,000 2,00,000
2,000 Shares in B Ltd. at cost 3,00,000 -

14,00,000 4,50,000

Question:16 (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:
Liabilities H Ltd. S Ltd. Assets H Ltd. S Ltd.
Rs. Rs. Rs. Rs.
Share Capital (Rs.10) 5,00,000 2,00,000 Goodwill 30,000 10,000
General Reserve 80,000 60,000 Machinery 3,00,000 1,50,00
Profit and Loss Stock 80,000 0
50,000
Account 90,000 70,000 Debtors 1,20,000 1,60,00
Sundry Creditors 50,000 40,000 Cash and Bank 20,000 0
10,000
Outstanding Expenses 20,000 10,000 Investments:
16,000 Shares in
S Ltd. 1,90,000 -
7,40,000 3,80,000 7,40,000 3,80,00
0
`When control was acquired, S Ltd. had Rs. 40,000 in general reserve and Rs. 30,000 in profit and loss
account. Immediately on purchase of shares H Ltd. received Rs. 16,000 as dividend from S Ltd. which was credited
to profit and loss account. 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.

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Question: 17 (Proposed dividend already shown in the balance sheet)

The following is a summary of the balances in the books of Black Ltd., and Bird Ltd., as on 31 March, 2018:
Credit Black Ltd. Bird Ltd.
Rs. Rs.
Fully paid Equity Shares of Re. 1 each 3,00,000 1,80,000
General Reserves 50,000 40,000
Profit and Loss Account 98,500 44,400
Provision for Depreciation on Fixed Assets 60,000 30,000
6%Debentures (20 debentures of Rs. 1,000 each ) -- 20,000
Proposed Dividend 30,000 18,000
Debenture Interest accrued -- 1,200
Creditors 87,000 29,800
6,25,500 3,63,400
Debits
Fixed Assets at cost 2,50,000 2,20,000
1,35,000 Equity Shares in Bird Ltd. at cost 2,25,000
6%, 5 Debentures of Bird Ltd. 5,000
Current Assets 1,45,500 1,43,400
6,25,500 3,63,400
You ascertain the following:
st
(a) Black Ltd. acquired the shares in Bird Ltd. on 31 March,2017
(b) The General reserve of Bird Ltd. was the same on 31 March, 2017. The balance of the profit and loss
account of Bird Ltd. Rs.
Balance on 31 March, 2017 28,000
Net profit, year ended 31 March, 2018 34,400
62,400
Less: Provision for proposed dividends 18,000
44,400
(c) The stock-in-trade of Bird Ltd. on 31 March, 2018 included Rs. 16,000 in respect of goods purchased from Black Ltd.
These goods had been sold by Black Ltd. to Bird Ltd. at such a price as to give Black Ltd. a profit of 20% on invoice
price.
You are required to prepare a consolidated balance sheet of Black Ltd. and its subsidiary company, Bird Ltd. as on
31 March, 2018. Ignore taxation. Workings are to be shown. [B. Com. (Hans.) Calcutta University]

Question:18 (Proposed dividend not yet given effect)

Malhotra & Co. Ltd. acquired 12,000 shares of Desai & Co. Ltd. of the face value of Rs. 10 each at a price of Rs.
1,70,000 on 1 April, 2017. The balance sheets of the two companies as at 31 March, 2018 were follows:

Liabilities Malhotra Desai Assets Malhotra Desai

Rs. Rs. Rs. Rs.

Share Capital (in Goodwill 3,00,000 70,000

shares of Rs. 10 each) 10,00,000 2,00,000 Land & Buildings 4,00,000 1,00,000
General Reserve Plant & Machinery 5,00,000 1,00,000
on 1.4.2017 4,20,000 1,00,000 Stock 2,00,000 40,500

Sundry Creditors 2,40,000 92,000 Debtors 3,00,000 1,34,500

Bills payable 80,000 60,000 investments 2,00,000 -

Profit & Loss Bills Receivable 20,000 30,000
Account 1.4.2017 90,000 40,000 Bank 60,000 50,000
Profit for the year Cash 20,000 12,000
Ended 31.3.2018 1,70,000 45,000
20,00,000 5,37,000 20,00,000 5,37,000

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Out of the debtors and bills receivable of Malhotra & Co. Ltd., Rs. 50,000 and Rs. 16,000 respectively represented
those due from Desai & Co. Ltd. The stock in the hands of Desai & Co. Ltd. includes goods purchased from
Malhotra & Co. Ltd. at Rs. 20,000 which includes profit charged by the latter company at 25%, on cost. Both the
companies have proposed 10% dividend for 2017-18. Prepare a consolidated balance sheet of messes Malhotra &
Co. Ltd. and its subsidiary as at 31 March, 2018.

Question:19 (Interim dividend paid by subsidiary company)

The following are the summarized balance sheets of Holkar Ltd., and Sunrise Ltd. at 31 October, 2018:
Liabilities Holkar Sunrise Assets Holkar Sunrise
Holkar Holkar
Ltd. Ltd. Ltd. Ltd.
Rs. Rs. Rs. Rs.
Share capital Freehold Premises 2,56,000 90,000
Rs. 10 Shares each Machinery 60,000 81,300
Fully paid 3,00,000 1,50,000 Stock 68,000 60,600
General Reserve 1,90,000 6,000 Sundry Debtors 56,000 47,400
Profit & Loss Account 1,60,000 1,08,000 Cash 60,000 33,000
Sundry Creditors 30,000 48,300 Investment in Shares
of Sunrise Ltd. at cost 1,80,000 -
6,80,000 3,12,300 6,80,000 1,12,300
Holkar Ltd., acquired 12,000 shares of Sunrise Ltd., on 1.11.2017 at the total cost of Rs. 1,80,000. On scrutiny of
the balance sheet of Holkar Ltd., as at 31.10.2018, the following details are obtained:
(a) Profit and loss account includes the interim dividend at the rate of 10% p.a. free of tax from Sunrise Ltd.
(b) Stock includes Rs. 6,000 of stock at cost purchased from Sunrise Ltd.
(c) Sundry creditors include Rs. 18,000 for purchases from Sunrise Ltd., on which the latter company made a
profit of Rs. 4,500.
It is further stated that on 1.11.2017 the profit and loss account of Sunrise Ltd., stood at Rs. 76,000 and the
general reserve at Rs. 4,500. No final dividends are yet proposed to be declared by Sunrise Ltd.
[M. Com. Calcutta University]

Question: 20 (discount on shares and unclaimed dividend)

The following are the balance sheet of H Ltd. and its subsidiary S. Ltd. as at 31 March 2015:
Liabilities H. Ltd. S. Ltd. Assets H. Ltd. S. Ltd.
Share Capital Rs. Rs. Rs. Rs.
(Rs. 10 Share) 6,00,000 2,00,000 Machinery 3,00,000 1,00,000
General Reserve 1,50,000 70,000 Furniture. 70,000 40;,000
Profit & Loss Account 70,000 50,000 70% Shares in
Creditors 90,000 55,000 S. Ltd. at cost 2,60,000 -
Unclaimed Dividends - 5,000 Stock 1,75,000 1,89,000
Debtors 55,000 30,000
Bank 40,000 5,000
Discount on shares - 6,000
Bills Receivable 10,000 5,000
9,10,000 3,80,000 9,10,000 3,80,000
H. Ltd. acquired the shares of S. Ltd. on 30 June 2014. On 1 April 2014, S. Ltd. general reserve and profit and loss
account stood at Rs. 60,000 and Rs. 20,000 respectively. No part of the discount on shares was written off during
the year ended 31 March 2015. Prepare a consolidated balance sheet of H. Ltd. and its subsidiary S. Ltd. as at 31
March 2015. Give all your working notes neatly. [C.S. (Inter) June 1995 Modified]

Question: 21 (Dividends, common debts, revaluation of assets)

Following are the balance sheets of Holding Ltd., and its subsidiary S Ltd., as at 31 December, 2017 :

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Liabilities H Ltd. S. Ltd. Assets H Ltd. S. Ltd

Rs. Rs. Rs. Rs.
Share Capital Goodwill 40,000 30,000
Shares of Rs. 10 each 5,00,000 2,00,000 Land & Buildings 2,00,000 1,30,000
General Reserve on Plant & Machinery 1,60,000 90.000
January 1, 2017 1,00,000 60,000 Stock 1,00,000 90,000
Profit & Loss Account 1,40,000 90,000 Debtors 20,000 75,000
Bills Payable - 40,000 15,000 Shares in
Creditors 80,000 50,000 S. Ltd. at cost 2,40,000 -
Cash at Bank 60,000 25,000
8,20,000 4,40,000 8,20,000 4,40,000
st
The profit and loss account of S. Ltd., showed a balance of Rs. 50,000 on 1 January 2017. A dividend of 15% was paid
in October, 2017 for the year 2016. This dividend, was credited to profit and loss account by H. Ltd .H. Ltd acquired
the shares in S. Ltd on 1 July, 2017. The bills payable to S. Ltd were all issued in favour of H. Ltd, which company got
the bills discounted. Included in the creditors of S. Ltd are Rs. 20,000 for goods supplied by H. Ltd included in the
stock of S. Ltd., are goods to the value of Rs. 8,000 which were supplied by H. Ltd at a profit of 33 1/3% on cost. In
arriving at the value of the S. Ltd.'s shares, the plant and machinery which then stood in the books at Rs. 1,00,000 was
revalued at Rs. 1,50,000. The new value was not incorporated in the books. No changes in these assets have been
made since that date.
Prepare a consolidated balance sheet of H. Ltd. and S. Ltd.
Show workings in detail.

Question: 22 (Revaluation of fixed assets from the back date) M. Ltd. acquired 80% of shares of S. Ltd. as on 1
October 2016 at a cost of Rs. 2,30,000. The balance sheet as on 31 March 2017 was as under:
Liabilities Rs. Assets Rs.
Share Capital (Rs. 50 share) 3,75,000 Fixed Assets 3,32,500
General Reserve 2,37,500 Investments 2,30,000
Profit and Loss Account 2,00,000 Current Assets 2,87,500
Current Liabilities 37,500
8,50,000 8,50,000
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. Profit and loss account includes
dividend at 16% received from S. Ltd. for the year 2015-16.
Balance Sheet of S. Ltd.
Liabilities Amount Assets Amount
Rs. Rs.
Share Capital (Rs.10 share ) 1,25,000 Fixed Assets 1,42,500
Profit and Loss Account 90,000 Current Assets 1,17,500
General Reserve 5,000

Creditors 40,000

2,60,000 2,60,000
The balance in profit and loss account 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 as from 1 April 1996. Depreciation at 20% is provided on this item.
Prepare consolidated balance sheet from the above information.[C.S. (Inter) December 1988 Modified]

Question:23 (Dividends from pre-acquisition profits and bonus issue from pre-acquisition reserves)
The following are the balance sheets of H. Ltd. and S. Ltd. as on 30 September 2015:

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Liabilities H. Ltd. S. Ltd. Assets H.. Ltd. S. Ltd.

Rs. Rs. Rs. Rs.
Equity Shares of Goodwill 60,000 40,000
Rs. 100 each 5,00,000 2,00,000 Machinery 1,00,000 60,000
12% Preference Shares Vehicles 1,80,000 70,000
of Rs. 100 each 1,00,000 50,000 Furniture 50,000 30,000
General Reserve 1,00,000 60,000 Shares in S.Ltd.
Profit & Loss Account 1,50,000 90,000 at Cost 3,80,000 -
Creditors 60,000 70,000 Stock 70,000 1,40,000
Income Tax 70,000 60,000 Debtors 1,00,000 1,65,000
Bank Balance 40,000 25,000
9,80,000 5,30,000 9,80,000 5,30,000
The following further information is furnished:
(1) H. Ltd. acquired 1,200 equity shares and 400 preference shares on 1.10.2014 at a cost of
Rs. 2,80,000 and Rs. 1,00,000 respectively.
(2) The profit and loss account of S. Ltd. had a credit balance of Rs. 30,000 as on 1.10.2014 and that of general
reserve on that date was Rs. 50,000.
(3) On 31 December 2014, S. Ltd. declared a dividend, out of its pre-acquisition profits of 12% on its share capital;
H. Ltd. credited the receipt of dividend to its profit and loss account.

(4) On 1.4.2015, S. Ltd. issued one equity share for every three shares held as bonus shares at a face value of Rs. 100
per share out of its general reserve. No entry has been made in the books of
H. Ltd. for receipt of these bonus shares.
(5) S. Ltd. owed H. Ltd. Rs. 20,000 for purchase of stock from H. Ltd. The entire stock is held by
S. Ltd. on 30.9.2015. H. Ltd. made a profit of 25% on cost.
Prepare a consolidated balance sheet as at 30 September 2015.

Q uestion:24 (Interim and final dividends and loss on revaluation of assets)

The following are the balance sheets of A Ltd. and its subsidiary B Ltd. as at 31 December, 2017:
Liabilities A Ltd. B. Ltd.
Rs. Rs.
Shine Capital 7,50,000 2,50,000
Sundry Creditors 66,000 80,500
Reserve 4,75,000 10,000
Profit & Loss Account 4,00,000 1,80,000
Current Account with B Ltd. 9,000 -
17,00,000 5,20,500
Assets
Land & Buildings 5,15,000 1,50,000
Machinery 1,50,000 1,35,500
Sundry Debtors 3,00,000 69000
Stock 1,70,000 1,01,000
Investment (share in B Ltd.) 2,00,000 --
Cash at Bank 3,05,000 55,000
Current account with A Ltd. - 10,000
17,00,000 5,20,500
-- - Notes:
(a) A Ltd. Acquired 80% shares of B Ltd. On 1 January , 2017 when the balances of the reserve account and profit &
loss account were Rs. 10,000 and Rs. 1,40,000 respectively.
(b) Land & buildings of B Ltd. whose book value on 1 January, 2017 was Rs. 1,60,000 were revalued at Rs. 1,40,000,
but it was not passed in the books.
(c) B Ltd. declared an interim dividend of 16% during the year ended 31 December, 2017 and a final dividend of 6%
on account of the year ended 31 December, 2016.
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(d) A Ltd. credited the entire amount of dividends received from B Ltd to its profit & loss account.
(e) Stock of A Ltd. includes Rs. 15,000 goods purchased from B Ltd.

(f) Sundry creditors of A Ltd. include Rs. 30,000 for purchases from B Ltd. on which B Ltd. made a profit of Rs. 7,500.
(g) On 31 December, 2017 A Ltd. remitted cash Rs. 1,000 on current account to B Ltd.
From the above information, prepare a consolidated balance sheet of A Ltd. [A.C.S. (Inter) June 1988 ]

Question: 25 (Cheque-in-transit)
On April 1, 2018, S Ltd. issued 10% Preference Shares of Rs. 1,00,000 at par. On this date, S Ltd's General Reserve
and Profit and Loss Account showed balances of Rs. 80,000 and Rs. 50,000 respectively. On July 5, 2018 S. Ltd.
paid a final dividend of 12% on equity shares for the year ended 31 March 2018. On April 1, 2018, 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, 2019, the summarized balance sheets of H Ltd. and its
subsidiary S Ltd. stood as follows:
Balance Sheet As At 31 March, 2019
Liabilities H Ltd. S Ltd. Assets H Ltd. S Ltd.
Rs. Rs. Rs. Rs.
Equity Share Capital 8,00,000 3,00,000 Machinery 6,25,000 2,70,001l
10% Preference Shares in S Ltd. 85,000 50,000
Share Capital - 1,00,000 Stock 4,00,000 1,90,000
General Reserve 4,00,000 1,50,000 Loan to H Ltd. - 10,000
Profit and Loss 2,00,000 90,000 Debtors 1,50,000 80,000
Loans 1,10,000 - Bank 1,20,000 1,10,000
Creditors 1,70,000 76,000 Preliminary
Bills Payable - 4,000 expenses - 10,000
16,80,000 7,20,000 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, 2019, for repayment of loan, which was received by S
Ltd. in April 2019.
(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, 2019. [B.Com. (Hons). Delhi 1997]
Working Notes
(i) Pre-acquisition Profit and Reserves Rs.
Opening Balance on 1.4.2018 50,000
Less : Dividend @ 12% on Rs. 3,00,000 36,000
14,000
Add : Opening Balance in General Reserves 80,000
94,000
H. Ltd. : 80% 75,200
Minority Interest: 20% 18,800
(ii) Post-acquisition Profit
Balance on 31.3.2019 90,000
Less : Opening Balance [Rs. 50,000- Rs.36,000] 14,000
76,000
Add : Depreciation written back [see (v)] 5,000
81,000
Less : Preference Dividend 10,000
71,000
H. Ltd.: 80% 56,800
Minority Interest: 20% 14,200
(iii) Post-acquisition Reserves
Balance on 31.3.2019 1,50,000
Less : Opening Balance 80,000
70,000
H. Ltd. : 80% 56,000
Minority Interest: 20% 14,000
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(iv) Revaluation of Machinery

Opening Balance (2,70,000 * 100/90) 3,00,000
Revalued figure 2,50,000
Loss on Revaluation 50,000
H. Ltd. 80% 40,000
Minority Interest 20% 10,000
(v) Reduction in Depreciation
10% on Rs. 50,000 5,000
[To be added back to current year's profit [See (ii) above]
(vi) Cost of Control (Goodwill)
Cost of investments in shares of S Ltd. 3,00,000
Less : Paid up value of shares held 2,40,000
60,000
Add : Loss on Revaluation of Assets 40,000
1,00,000
Add : Preliminary Expenses 8,000
1,08,000
Add : Pre-acquisition Profit and Reserves 75,200
32,800
Less : Dividend from pre-acquisition profits wrongly credited
earlier (12% of Rs. 2,40,000) 28,800
Goodwill 4,000
(vii) Minority Interest
Paid up value of Equity Shares held 60,000
Add : Paid up value of 10% Preference Share Capital 1,00,000
Pre-acquisition Profit and Reserves 18,800
Post-acquisition Profit 14,200
Post-acquisition Reserve 14,000
Dividend on Preference Shares 10,000
2,17,000
Less : Loss on Revaluation of Machinery (10,000)
Preliminary Expenses (2,000)
2,05,000
Balance Sheet (Not in a Prescribed Form)
Liabilities Rs. Assets Rs.

Equity Share Capital 8,00,000 Goodwill 4,000

Minority Interest 2,05,000 Machinery (6,25,000+2,70,000
General Reserve (A) 4,56,000 -50,000+5,000) 8,50,000
Profit and Loss Account (B) 2,28,000 Furniture 1,35,000
Loans 1,10,000 Debtors 2,30,000
Creditors 2,46,000 Stock 5,90,000
Bills Payable 4,000 Bank 2,30,000
Cheque-in-transit 10,000
20,49,000 20,49,000

(A) General Reserve of H. Ltd

Balance 4,00,000
Add: Share in S ltd. [See Working Note (ii) ] 56,000

4,56,000
(B) Profit and Loss Account of H. Ltd.
Balance 2,00,000
Add: Share in S Ltd. 56,000
2,56,800
Less: Dividends wrongly credited 28,800
2,28,000

st
Question: 26. The Balance Sheets of H Ltd. and its subsidiary S Ltd. as on 31 March, 2019 are as follows:

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Liabilities H. Ltd, S. Ltd.

Equity shares of Rs. 100 each 30,00,00 15,00,000

General Reserve (1-4-18) 8,00,000 4,00,000
P & L A/c (1-4-18) 2,00,000 2,50,000
Net profit for the year 6,00,000 4,00,000
15% Debentures 10,00,000 -
Creditors 4,00,000 2,70,000
Bills payable 60,000 30,000
60,60,000 28,50,000

Liabilities H. Ltd. S. Ltd.

Premises 14,00,000 9,00,000

Machinery 12,00,000 7,00,000
Investment in shares of S Ltd. 17,00,000 —
Inventories 7,00,000 4,50,000
Debtors 5,00,000 4,20,000
Bills receivable 1,80,000 80,000
Cash and Bank 3,80,000 2,00,000
Discount on shares - 1,00,000
60,60,000 28,50,000

The following is the additional information :

i) H Ltd. acquired 12,000 equity shares in S Ltd. on 1 April 2018.
ii) Bills receivable of H Ltd. include Rs. 30,000 accepted by S Ltd.
iii) Accounts receivable of H Ltd. include Rs. 1,00,000 due from S Ltd.
iv) Inventories of S Ltd. include goods purchased from H Ltd. for 1,25,000 which were invoiced by H Ltd. at a profit of 25% on cost,
v) Both H Ltd. and S Ltd. have proposed 10% dividend for the year 2018-19, but no effect has been given in the balance sheets.
Solution: Consolidated Balance Sheet ot H. Ltd. and its Subsidiary S. Ltd. As At 31 March 2019
Liabilities Rs. Assets Rs.
Share Capital Fixed Assets
30,000 Equity Shares Goodwill 60,000
of Rs. 100 each 30,00,000 Premises
Minority Interest 4,60,000 (14,00,000+9,00,000) 23,00,000
Reserves and Surplus Machinery
General Reserve 8,00,000 (12,00,000+7,00,000) 19,00,000
Profit and Loss Account 7,95,000 Investments —
Secured Loans Current Assets and
15% Debentures 10,00,000 Loans and Advances
— (A) Current Assets
Current Liabilities and Inventories (7,00,000+
Provisions 4,50,000 -25,000) 11,25,000
(A) Current Liabilities : Debtors (5,00,000+
Creditors (4,00,000 + 4,20,000 -1,00,000) 8,20,000
2,70,000-1,00,000) 5,70,000 Cash and Bank
Bills Payable (60,000 +30,000 - 60,000 (3,80,000 + 2,00,000) 5,80,000
30,000)
(B) Provisions : (B) Loans and Advances :
Proposed Dividends : Bills Receivable (1,80,000+
H Ltd. 3,00,000 80,000-30,000) 2,30,000
Minority Interest 30,000 3,30,000
-
70/15,000 70,15,000

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Working Notes
1. Pre-acquisition Profit and Reserves Rs.
Balance in Profit and Loss Account on 1.4.18 2,50,000
Add : General Reserves on 1.4.18 4,00,000
6,50,000
Share of H Ltd. 5,20,000
Minority Interest 1,30,000
2. Post-acquisition Profits
Profits for 1998-99 4,00,000
Share of H Ltd. 3,20,000
Minority Interest 80,000
3. Cost of Control (Goodwill)
Cost of investments in shares of S Ltd. 17,00,000
Less : Paid up value of shares held 12,00,000
5,00,000
Less : Share in Pre-acquisition Profits and Reserves 5,20,000
Capital Reserve 20,000
Less : Share in Miscellaneous Expenditures 80,000
Goodwill 60,000

4. Minority Interest
Share Capital 3,00,000
Share in Pre-acquisition Profit and Reserves 1,30,000
Share in Post-acquisition Profits 80,000
5,10,000
Less : Miscellaneous Expenditure 20,000
4,90,000
Less : Proposed Dividends (10% of Rs. 3,00,000) 30,000
4,60,000
5. Unrealized Profit on Stock
Value of unsold stock 1,25,000
Profit Margin 25,000
6. Profit and Loss Account (H Ltd.)
Balance (6,00,000+2,00,000) 8,00,000
Share in S Ltd. 3,20,000
11,20,000
Less : Proposed Dividends (10% of Rs. 3,00,000) 3,00,000
8,20,000
Less : Unrealized Profit on Stock 25,000
7,95,000
Question: 27 (Bonus Issue) H. Ltd., acquired 1,200 equity shares in S Ltd., Ltd. on 1.4.2009. The Balance Sheets of H
Ltd. and its subsidiary S Ltd. as on 31 March, 2010 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
General Reserve 3,40,000 6,000
Profit and Loss Account 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 50600
Debtors 2,12,000 80,400
14,00,000 3,32,300

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The other information’s given are.

(a) On 1.4.2009, Profit and Loss Account 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 31.3.2010.

Question: 28 (Bonus Issue) The Balance Sheet of H Ltd. and its subsidiary S Ltd. as on 31 March, 2001 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
Profit and Loss Account 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, 2,000. The Reserves and Surplus position of S Ltd. as on 1 April 2,000 was as
under :
General Reserve : Rs. 2,50,000
P & L Account (Credit): Rs. 1,20,000
(ii) On 1 October, 2,000. 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, 2,000, S Ltd. declared a dividend out of pre-acquisition profits @ 25% on Rs. 4,00,000, its capital on that
date. H Ltd., credited the dividend to its Profit and Loss Account._
(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 2001. 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 2001.

Solution: Working Notes

(i) For every four shares held, one share was issued by way of bonus. It means,out of share capital of Rs. 5,00,000, shares
for Rs. 1,00,000 pertain to bonus issue.
(ii) Pre-acquisition Profit Rs.
Balance on 1 April 2000 1,20,000
Less : Dividend @ 25% on Rs. 4,00,000 1,00,000
20,000
Share of H Ltd.: 75% 15,000
Minority Interest: 25% 5,000
(iii) Pre-acquisition Reserves
Balance on 1 April 2000 2,50,000
Less : Bonus Issue 1,00,000
1,50,000
Share of H Ltd.: 75 % 1,12,500
Minority Ltd. : 25% 37,500
(iv) Bonus Issue
Total Amount 1,00,000
Share of H Ltd.: 75% 75,000
Minority Interest: 25% 25,000
(v) Post-acquisition Profit
Balance in the Profit and Loss' Account on 1-4.2001 1,30,000
Less : Opening Balance 20,000
1,10,000
Add : Transferred from General reserve (see (vii) below) 20,000
1,30,000
Less : Pre-acquisition Profit for months 32,500
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(From 1-4-2000 to 30-6-2000) 97,500

Share of H Ltd.: 75 % of Rs. 97,500 73,125
Minority Interest 25% of Rs. 97,500 24,375
Share of H Ltd. : 75%
Minority Interest 25%
(vi) Additional Pre-acquisition Profit
Total Amount 32,500
Share of H Ltd. : 75 % 24,375
Minority Interest: 25% 8,125
(vii) Post-acquisition Reserves
Balance in the Reserves Account on 31-3-2001 1,70,000
Less : Opening Balance 1,50,000
Transferred to Profit and Loss Account 20,000
(viii)Calculation of Goodwill (or Capital Reserve)
Cost of Investments in the Shares of S Ltd. 5,00,000
Less : Face value of the shares held 3,00,000
2,00,000
Less : Bonus Issue 75,000
1,25,000
Less : Pre-acquisition Reserves 39,375
85,625
Less : Pre-acquisition Reserves 1,12,500

Capital Reserve 26,875

Add : Dividends from Pre-acquisition Profit wrongly credited
to Profit and Loss Account 75,000
1,01,875
(ix) Minority Interest
Face Value of the Shares held 1,25,000
(25% of Rs. 5,00,000)
Add : 25% of Rs. 1,70,000 (General Reserves) 42,500
Add : 25% of Rs. 1,30,000 (Profit) 32,500
2,00,000
(x) Unrealized Profit on Stock
Total amount of unsold stock 50,000
25
Profit Margin ------------------- x 50,000 10,000
125
(xi) Consolidated Profit and Loss Account
Balance in the Profit and Loss Account of
H Ltd. on 31-3-2001 1,60,000
Add : Share in S Ltd. 73,125
2,33,125
Less: Dividends wrongly credited 75,000
10,000
Less: Unrealized profit on stock [See X Above] 1,48,125

Consolidated Balance Sheet of H. Ltd. and its subsidiary S. Ltd. As On 31 March 1999
Liabilities Rs. Assets Rs.
Share Capital Fixed Assets 7,30,000
Issued and Subscribed : H Ltd. 4,80,000
10,000 Equity Shares of 10,00,000 S Ltd. 2,50,000
Rs. 100 each, fully paid-up Minority 2,00,000 Current Assets, Loans and Advances :
Interest (A) Current Assets :
Reserves and Surplus 1,01,875 H Ltd. 7,20,000
Capital Reserve 1,00,000 S Ltd. 7,50,000
General Reserve 1,48,125 14,70,000
Profit and Loss Account Less : Mutual Owing 50,000
Current Liabilities and Provisions 14,20,000
(A) Current Liabilities : Less : Unrealized 10,000
H Ltd. 4,40,000 Profit
S Ltd. 2,00,000 (B) Loans and Advances
6,40,000 14,10,000
Less : Mutual Owing 50,000 5,90,000 --
(B) Provisions ---
21,40,000 21,40,000

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