Orchid Ltd. holds 80% shares in its subsidiary Tulip Ltd. From the following information calculate minority interest at the end of each year: Share capital of Tulip Ltd. was ₹10,00,000 (₹10 each) and reserves ₹2,00,000 o

CS Executive · Company Accounts & Auditing Practices · PYQS · December 2016
Orchid Ltd. holds 80% shares in its subsidiary Tulip Ltd. From the following information calculate minority interest at the end of each year: Share capital of Tulip Ltd. was ₹10,00,000 (₹10 each) and reserves ₹2,00,000 on the date of acquisition on 31 st March, 2012. Fully paid bonus shares were issued by Tulip Ltd. on 31 st March, 2013 in the ratio of 2 bonus shares for every 5 shares held. Profit and loss of Tulip Ltd. for the various years are : Profit/Loss (₹) 31 st March, 2013 3,00,000 31 st March, 2014 (1,00,000) (loss) 31 st March, 2015 2,00,000 31 st March, 2016 2,50,000 (including profit of ₹50,000 on revaluation of assets)

Answer & Explanation:

Calculation of Minority Interest Year Ending ₹ 31/3/12 Minority interest on the date of Acquisition (20%) Share Capital 2,00,000 Reserve 40,000 2,40,000 31/3/2013 Share in share capital including Bonus Shares: 14,00,000 x 20% 280000 Add: Share in Reserve and Profits Reserve on 31/3/12 200000 Profit for 2012-13 300000 500000 Less: Capitalisation through bonus shares 400000 100000 Net Balance of Profits 100000 x 20% 20000 3,00,000 31/3/2014 Opening Balance 3,00,000 Less: Share in Loss for the year 20,000 2,80,000 31/3/2015 Opening Balance 2,80,000 Add: Share in Profit for the year 40,000 3,20,000 31/3/2016 Opening Balance 3,20,000 Add: Share in Profit for the year 50,000 3,70,000

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