From the following Balance Sheets of Hani Ltd. and its subsidiary Sani Ltd., drawn up at 31st March, 2019, prepare a Consolidated Balance Sheet as at that date, having regard to the following: (i) General Reserves and Pr

CS Executive · Company Accounts & Auditing Practices · PYQS · December 2020
From the following Balance Sheets of Hani Ltd. and its subsidiary Sani Ltd., drawn up at 31st March, 2019, prepare a Consolidated Balance Sheet as at that date, having regard to the following: (i) General Reserves and Profit (Surplus) of Sani Ltd. stood at ₹50,000 and ₹30,000 respectively on the date of acquisition and 80% of its shares were held by Hani Ltd. on 1st April, 2018. (ii) Machinery (Book-value ₹2,00,000 and furniture (Book value ₹40,000) were revalued at ₹1,50,000 and ₹30,000 respectively as on 1st April, 2018 for the purpose of fixing the price of its shares. (iii) Depreciation is charged @ 10% on machinery and @ 15% on furniture. Balance Sheets of Hani Ltd. & Sani Ltd. as on 31st March, 2019 Particulars | Hani Ltd. (₹) | Sani Ltd. (₹) I. EQUITY AND LIABILITIES (1) Shareholders' Funds (a) Share Capital Equity shares of ₹10 each | 6,00,000 | 1,00,000 (b) Reserves and Surplus General Reserve | 2,00,000 | 1,50,000 Statement of Profit & Loss | 1,00,000 | 50,000 (2) Current Liabilities Trade payable | 1,10,000 | 57,000 Total | 10,10,000 | 3,57,000 II. ASSETS (1) Non-Currents Assets (a) Tangible Fixed Assets Machinery | 3,00,000 | 1,80,000 Furniture | 1,50,000 | 34,000 (b) Non-current Investments Investment in Shares of Sani Ltd. | 1,20,000 | (2) Currents Assets | 4,40,000 | 1,43,000 Total | 10,10,000 | 3,57,000

Answer & Explanation:

Consolidated Balance Sheet of Hani Ltd. and its Subsidiary Sani Ltd. As on 31st March, 2019 Particulars Notes to Accounts Amount ₹ I EQUITY AND LIABILITIES (1) Shareholder's Funds: (a) Share Capital 60000 Equity shares of ₹10 each 600000 (b) Reserves and Surplus (i) General Reserve 1 401200 (2) Minority Interest (W. No. 5) 49300 (3) Current Liabilities: Trade Payables 2 167000 Total 1217500 II ASSETS (1) Non-Current Assets: (a) Fixed Assets (i) Tangible Assets 3 610500 (ii) Intangible Assets 4 24000 (2) Current Assets 5 583000 Total 1217500 Notes to Accounts ₹ ₹ I. Reserves and Surplus Reserves (W. No 3) 2,00,000 Add: 4/5 share of Sani Ltd. post acquisition reserves (W. No. 3) 80000 2,80,000 Profit & loss A/c 100,000 Add: 4/5 share of Sani Ltd. post acquisition reserves (W. No. 4) 21200 121200 Total 4,01,200 2. Trade payable Hani Ltd. 1,10,000 Sani Ltd. 57,000 1,67000 3. Tangible Assets (a) Machinery Hani Ltd. 3,00,000 Sani Ltd. (180000 x 100 / 90) 2,00,000 5,00,000 Less: Decrease in Value (Sani Ltd.) (50,000) Less: Depreciation (Sani Ltd. 150000 x 10/100) (15000) 4,35,000 (b) Furniture Hani Ltd. 1,50,000 Sani Ltd. (34000 x 100 / 85) 40,000 1,90,000 Less: Decrease in Value (Sani Ltd.) (10000) Less: Depreciation (Sani Itd. 30000 x 15 / 100) (4500) 1,75,500 Total 6,10,500 4. Intangible Assets Goodwill (W. No. 6) 24000 5. Current Assets Hani 4,40,000 Sani 1,43,000 5,83000 Working Notes: Pre-acquisition profits and reserves of Sani Ltd. Reserves ₹50,000 Profit ₹30,000 ₹80,000 Hani Ltd. Share (4/5*80000) ₹64000 Minority Interest (1/5*80000) ₹16000 Loss on revaluation of assets of Sani Ltd. Machinery (200000-150000) = ₹50,000 Furniture (40000 - ₹30000) = ₹10,000 = ₹60,000 Hani Ltd.' Share (60000*4/5) = ₹48,000 Minority Interest (60000*1/5) = ₹12000 Post-acquisition reserves of Sani Ltd. (150000-50000) = ₹100,000 Hani Ltd. Share (100000*4/5) = ₹80000 Minority Interest (100000*1/5) = 20,000 Post-acquisition profits of Sani Ltd. (₹50000-₹30000) = ₹20,000 Add: Excess depreciation charged on Machinery @ 10% on ₹50000 (200000-150000) = ₹5000 Furniture @15% on ₹10,000 (₹40000-30000) = ₹1500 26,500 Hani Ltd. Share (26500*4/5) = 21200 Minority Interest (26500*1/5) = 5,300 Minority Interest Paid up value of Equity Share held 20000 Add: 1/5 Share of Pre-acquisition profit & reserves 16000 Add: 1/5 Share of Post-acquisition reserves 20000 Add: 1/5 Share of Post-acquisition profit 5300 Less: 1/5 Share of loss on revaluation of Assets (12000) Minority Interest 49300 Cost of Control or Goodwill Paid up value of Equity Share held by Hani Ltd. 80000 Add: 4/5 Share of Pre-acquisition profit & reserves of Sani Ltd. 64000 Less: 4/5 Share of loss on revaluation of Assets of Sani Ltd. (48000) Intrinsic Value of Share on the date of acquisition 96000 Less: Investment in share of Sani Ltd. by Hani Ltd. (120000) Goodwill 24000

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