A Ltd. holds 75% shares in its subsidiary B Ltd. From the following information calculate minority interest at the end of each year: Share capital of B Ltd. was ₹10,00,000 (₹10 each share) and reserves ₹2,00,000 on the d

CS Executive · Company Accounts & Auditing Practices · PYQS · June 2018
A Ltd. holds 75% shares in its subsidiary B Ltd. From the following information calculate minority interest at the end of each year: Share capital of B Ltd. was ₹10,00,000 (₹10 each share) and reserves ₹2,00,000 on the date of acquisition on 31st March, 2014. Fully paid bonus shares were issued by B Ltd. on 31st March, 2015 in the ratio of 2 bonus shares for every 5 shares held. Profit and Loss of B Ltd. for the various years are as follows: 31st March, 2015: ₹3,00,000 31st March, 2016: ₹(1,00,000) Loss 31st March, 2017: ₹2,00,000 31st March, 2018: ₹2,50,000 (including profit of ₹50,000 on revaluation of assets)

Answer & Explanation:

Calculation of Minority Interest Share of Minority for different years in profit: Year Ended Cumulative Profit at the end Calculation of Share of Minority Share of Minority 31.03.2015 (₹2,00,000 + ₹3,00,000 - ₹4,00,000 see note) = ₹1,00,000 ₹1,00,000 * 25% 25,000 31.03.2016 (₹1,00,000 - ₹1,00,000) = 0 0 * 25% 0 31.03.2017 (0 + ₹2,00,000) = ₹2,00,000 ₹2,00,000 * 25% 50,000 31.03.2018 (₹2,00,000 + ₹2,50,000) ₹4,50,000 * 25% 1,12,500 Note: Bonus share capital = 10,00,000 * 2/5 = 4,00,000 Minority Interest for different years Particulars \ Year ended 31.03.2015 31.03.2016 31.03.2017 31.03.2018 Share Capital (See Note) 3,50,000 3,50,000 3,50,000 3,50,000 Share of Profit (Rev. profit) 25,000 0 50,000 1,12,500 Total 3,75,000 3,50,000 4,00,000 4,62,500 Note: Capital held by minority = (10,00,000 + 4,00,000) * 25% = 3,50,000

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