The extracts of balance sheets of H Ltd. and S Ltd. as on 31st March, 2015 are given below: I. EQUITY AND LIABILITIES (1) Shareholders' funds (a) Share capital Equity shares of ₹10 each: H Ltd. ₹5,00,000, S Ltd. ₹2,00,00

CS Executive · Company Accounts & Auditing Practices · PYQS · December 2015
The extracts of balance sheets of H Ltd. and S Ltd. as on 31st March, 2015 are given below: I. EQUITY AND LIABILITIES (1) Shareholders' funds (a) Share capital Equity shares of ₹10 each: H Ltd. ₹5,00,000, S Ltd. ₹2,00,000 (b) Reserves and surplus Securities premium: H Ltd. ₹50,000, S Ltd. ₹10,000 General reserve: H Ltd. ₹1,00,000, S Ltd. ₹50,000 Surplus: H Ltd. ₹75,000, S Ltd. ₹20,000 (2) Current liabilities Trade payables: H Ltd. ₹80,000, S Ltd. ₹40,000 TOTAL: H Ltd. ₹8,05,000, S Ltd. ₹3,20,000 II. ASSETS (1) Non-current assets (a) Fixed assets Tangible assets: H Ltd. ₹5,10,000, S Ltd. ₹3,20,000 (b) Long-term investment (15,000 equity shares in S Ltd. at cost): H Ltd. ₹2,95,000 TOTAL: H Ltd. ₹8,05,000, S Ltd. ₹3,20,000 H Ltd. acquired shares in S Ltd. on 31st March, 2015. You are required to calculate: (a) Minority interest; and (b) Goodwill/capital reserve.

Answer & Explanation:

Working Notes: Pre-acquisition profits and reserves of S Ltd. = (₹10,000 + ₹50,000 + ₹20,000) = ₹80,000 (i) Calculation of Minority Interest Particulars ₹ Paid up value of 5,000 (20,000 - 15,000) equity shares 50,000 Add: 1/4 share of ₹80,000 Pre acquisition profits and reserves of S Ltd. 20,000 Net amount due to Minority shareholders 70,000 (ii) Goodwill/Capital Reserve calculation Particulars ₹ Intrinsic value of shares held in S Ltd. Paid up value of 15,000 equity shares 1,50,000 Add: 3/4 share of ₹80,000 pre-acquisition profits and reserves of S Ltd. 60,000 Intrinsic value of 15,000 equity shares 2,10,000 Price paid for 15,000 equity shares 2,95,000 Cost of control or Goodwill (₹2,95,000 - ₹2,10,000) 85,000

Topics: Company Accounts

Open in Interactive Practice Hub · Full Practice Hub · Chapter Weightage · More in this subject

Related Questions in this Topic