The following Balance Sheets of Moon Ltd. and Star Ltd. as at 31st March, 2019 are supplied: Particulars Moon Ltd. (₹) Star Ltd. (₹) I. EQUITY AND LIABILITIES (1) Shareholders' Funds (a) Share Capital Equity shares of ₹

CS Executive · Company Accounts & Auditing Practices · PYQS · December 2021
The following Balance Sheets of Moon Ltd. and Star Ltd. as at 31st March, 2019 are supplied: Particulars Moon Ltd. (₹) Star Ltd. (₹) I. EQUITY AND LIABILITIES (1) Shareholders' Funds (a) Share Capital Equity shares of ₹ 100 each 5,00,000 2,00,000 (b) Reserves and Surplus General Reserve 1,00,000 — Statement of Profit & Loss 80,000 (1,00,000) (2) Non-current Liabilities 6% Debentures — 1,00,000 (3) Current Liabilities Creditors 75,000 45,000 Total 7,55,000 2,45,000 II. ASSETS (1) Non-Currents Assets (a) Tangible Fixed Assets Fixed Assets 3,50,000 1,50,000 (b) Non-current Investments 6% Debentures in Star Ltd. (Acquired at Par) 60,000 — 1,500 Equity shares in Star Ltd. (at cost) 1,20,000 — (2) Currents Assets Stock 90,000 40,000 Debtors 60,000 30,000 Cash at Bank 75,000 25,000 Total 7,55,000 2,45,000 Additional information: (i) Moon Ltd. acquired 1,500 equity shares in Star Ltd. on 1st August, 2018. (ii) The statement of Profit and Loss of Star Ltd. showed a debit of ₹ 1,50,000 on 1st April, 2018. (iii) On 3rd June, 2018 goods of Star Ltd. costing ₹ 6,000 were destroyed by fire against which insurers paid ₹ 2,000. (iv) Creditors of Star Ltd. on 31st March, 2019 include ₹ 20,000 for goods supplied by Moon Ltd. on which the later company made profit of ₹ 2,000. One-half of these goods were still in its stock on 31st March, 2019. Prepare the consolidated Balance Sheet as at 31st March, 2019 in the books of Moon Ltd. Show your working clearly.

Answer & Explanation:

Star Ltd. Profit for the year 2018-19 is an under: (i) Memorandum of Profit & loss Account of Star Ltd. Particulars ₹ Particulars ₹ To opening Debit Balance (Loss) on 1-4-2018 1,50,000 By net profit for the year 2018-19 (balancing Figure) 50,000 By closing Debit Balance (loss on 31-3-2019 1,00,000 1,50,000 1,50,000 (ii) Computation of pre-acquisition and post- acquisition profit /reserve of Star ltd. Particulars Pre-acquisition profit ₹ Post- acquisition profit ₹ Debit balance of P & L A/c (1.4.2018) (1,50,000) - Normal Profit for the years 2018-19 (₹50000+4000) (Note 1) 18000 36000 Uncovered loss related to goods destroyed on 03.06.2018 (4000) - Total (1,36,000) 36,000 Moon Ltd. Share (75%) (1,02,000) 27,000 Minority Share (25%) (34000) 9000 The profit ascertained for year 2018-19 Note 1: ₹50000 is after charging loss of goods destroyed (₹6000 - ₹2000) = ₹4000, therefore normal profit of Star Ltd. For 2018-19 is ₹54000(i.e.50000 + 4000) (iii) Computation of Minority shareholders Particulars ₹ 25% paid up capital of Star Ltd. 50000 25% share in pre-acquisition loss of Star Ltd. (34000) 25% share in pre-acquisition profit of Star Ltd. 9000 Minority shareholders Interest 25000 (iv) Computation of Goodwill/capital reserve on consolidation Particulars ₹ ₹ Cost of 1500 Equity shares of Star Ltd held by Moon Ltd 1,20,000 Less: Moon Ltd. Share in Net worth of Star ltd. (01.08.2018) 75% paid up Equity capital 150,000 75% pre-acquisition loss of Star Ltd. (1,02,000) (48,000) 72000 Add: Excess or under cost paid up for 6% debentures of Star Ltd. (₹60000 - ₹60000) NIL Goodwill 72000 (v) Computation of Consolidated Profit Particulars ₹ Balance of Profit & Loss Accounts of Moon Ltd. on (31.3.2019) 80,000 Add: 75% share in post-acquisition profit of Star Ltd. 27,000 1,07,000 Less: Unrealised profit of Moon Ltd. in closing stock held by Star Ltd. (2000 x 1/2) (1000) Consolidated Profit 1,06,000 Consolidated Balance Sheet of Group as at 31.03.2019 Particulars ₹ I. Equity And Liabilities (1) Shareholders Fund (a) Share capital 5000 equity shares of ₹100 each fully paid 5,00,000 (b) Reserves and Surplus General Reserves 1,00,000 Consolidated profit 1,06,000 (2) Minority shareholders interest 25,000 (3) Non-current Liabilities 6% debentures (₹100000 - Mutual ₹60000) 40,000 (4) Current Liabilities (₹75000 + ₹45000 - Mutual ₹20000) 1,00,000 Total 8,71,000 II. Assets (1) Non-current Assets (a) Tangible fixed assets (350000+150000) 5,00,000 (b) Intangible fixed assets Goodwill 72,000 (2) Current Assets Stock (₹90000 + ₹40000 – unrealized profit ₹1000) 1,29,000 Debtors (₹60000 + ₹30000 – ₹20000) 70,000 Cash at Bank (₹75000 + ₹25000) 1,00,000 Total 8,71,000

Topics: Consolidation of Accounts

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