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201-202, Florence Classic, Besides Unnati Vidhyalay,
Jain Derasar Road, Ashapuri Society, Akota, Vadodara-20. ph: 98258 561 55
Conducted on 5 th
September 2015
(Solution is at the end with markings for self assessment)
Time Allowed-1 hour Maximum Marks- 20
Q 1 A Ltd. purchased 14,000 equity shares of B Ltd. on 1 st
April 2014 @ Rs.20 per share and on 1 st
August 2014 further purchased 2,000 equity shares of B Ltd. @ Rs.25 per share. Balance sheets as on 31 st
March 2015 are as under:
Liabilities A Ltd B Ltd Assets A Ltd B Ltd (Rs.)
Equity Capital (10)
General
Reserve
Profit & Loss A/c
8 % Debentures
Creditors
Deferred Tax
Liability
Provision for tax
5,00,000
40,000
60,000
2,00,000
40,000
60,000
Goodwill
Building
Machinery
Investments
1,40,000
50,000
77,000
---
35,000
---
80,000
Stock
Debtors
Deferred Tax
Asset
1,00,000 Cash at Bank
Preliminary
9,67,000 4,15,000
Expenses
20,000
1,00,000
3,00,000
3,30,000
18,000
49,000
---
1,40,000
10,000
9,67,000
10,000
90,000
1,05,000
30,000
10,000
30,000
80,000
55,000
5,000
4,15,000
Balance in General Reserve and Profit and Loss account of B Ltd. as on 1 st
April
2014 was Rs.16,000 and Rs.46,000 respectively.
B Ltd. paid dividend @ 8 % for the year 2013 – 14 on 1 st
May 2014. On 31 st
March
2015, B Ltd. paid interim dividend @ 9 % for the full year 2014 – 15. Both the dividends were received by A Ltd. and credited to its profit and loss account.
Balance in General Reserve and Profit and Loss account of B Ltd. as on 1 st
August
2014 was Rs.24,000 and Rs.50,000 respectively.
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B Ltd. sold on 1 st
March 2015 goods costing Rs.20,000 to A Ltd. for Rs.30,000.
Goods worth Rs.15,000 are still lying in stock of A Ltd. as on balance sheet date. A balance of Rs.10,000 with respect to this transaction is still outstanding as on the balance sheet date.
Prepare consolidated balance sheet of A Ltd. as on 31 st
March 2015.
(20 Marks)
(Assessed answer papers shall be returned latest by 19 th
September 2015 )
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Solution of Test of CFS – 1
Conducted on 5 th September 2015
Q 1
Date Nos. acquired % of Holding Remark
1.4.2014 14,000 / 20,000
1.8.2014 16,000 / 20,000
70%
80%
Relevant date for 70%
Relevant date for 10%
Case of 2 relevant dates
Working Notes:
(1) Profits earned by B Ltd. during 2014 – 15:
Amount
(Rs.)
P & L A/c as on 31.03.15 60,000
Add: Transfer to general reserve 24,000
Dividend for 2013 – 14
Dividend for 2014 – 15
16,000
18,000
Less: P & L A/c as on 01.04.14
1,18,000
46,000
72,000
(1 Mark)
(2) Analysis of Profits of B Ltd.:
General Reserve on 01.04.14
P & L A/c on 01.04.14
Profits in 2014 – 15
Transfer to general reserve
Capital
Profits
Revenue
Profits
16,000 ---
46,000 ---
-------- 72,000
Revenue
Reserve
---
---
---
62,000 72,000
--- (24,000)
---
24,000
Dividend for 2013 – 14
Dividend for 2014 – 15
Unrealised profit in stock
[15,000 X 10,000 / 30,000]
Preliminary Expenses
Minority (20%)
A Ltd. (80%)
Adjustment for profits earned from
01.04.14 to 01.08.14 wrongly considered as revenue for additional 10% shares
(16,000)
---
---
---
(18,000)
(5,000)
---
---
---
(5,000) --- ---
41,000 25,000 24,000
8,200 5,000 4,800
32,800 20,000 19,200
Increase in P & L A/c
[50,000 – 46,000 i.e. 4,000 X 10%]
Increase in General Reserve
[24,000 – 16,000 i.e. 8,000 X 10%]
A Ltd. (Revised)
400
800
(400)
---
---
(800)
34,000 19,600 18,400
(5 Marks)
Solution prepared by
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(3) Cost of Control:
Cost of Shares [(14,000 X 20) + (2,000 X 25)]
Less: Pre-acquisition dividend:
3,30,000
2013 – 14 (14,000 X 10 X 8%)#
2014 – 15 (2,000 X 10 X 9% X 4/12)##
Correct Cost
Less: Paid up value
Share in capital profits
Goodwill
# Dividend is paid on 1 st
May 2014 for 2013 – 14.
So dividend for 2013 – 14 shall be received simply for
14,000 shares purchased on 1 st
April 2014.
## Dividend is paid on 31 st
March 2015 for 2014 – 15.
So dividend for 2014 – 15 shall be post acquisition for
14,000 shares purchased on 1 st
April 2014. It shall be pre-acquisition for 2,000 shares purchased on
01.08.14 for the period 01.04.14 to 31.07.14 (4 months)
11,200
600
3,18,200
1,60,000
34,000
1,24,200
(3 Marks)
(4) Minority Interest:
Paid up value of shares 40,000
Share in profits and reserves 18,000
58,000
(5) Consolidated P & L A/c:
(1 Mark)
P & L A/c as on 31.03.15 of A Ltd.
Add: Share in revenue profits
Pre-acquisition dividend wrongly credited
60,000
19,600
(11,800)
67,800
(6) Consolidated General Resreve:
General Reserve as on 31.03.15 of A Ltd. 40,000
Add: Share in revenue reserve 18,400
58,400
(1 Mark)
(1 Mark)
Consolidated Balance Sheet of A Ltd. as on 31 st
March 2015
I. Equity and Liabilities:
1. Shareholders’ Funds
(a) Share Capital
(b) Reserves and Surplus
Note No. Amount Amount
1
5,00,000
1,16,200
6,16,200
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2. Minority Interest
3. Non Current Liabilities
Long Term Borrowings
(8 % Debentures)
4. Current Liabilities
Trade Payables
Short Term Provisions
(Provision for Tax)
II. Assets:
Total
1. Non Current Assets
Tangible Fixed Assets
Intangible Fixed Assets
(Goodwill) (1,24,200 + 30,000)
Deferred Tax Asset (net)
Non Current Investments
2. Current Assets
Inventories
Trade Receivables
Cash and Cash Equivalents
Total
4
5
3
2
58,000
1,40,000
1,40,000
75,000
2,55,000
1,80,000
10,69,200
5,95,000
1,54,200
7,82,200
3,000
30,000
23,000
2,87,000
69,000
1,95,000
10,69,200
See accompanying notes to Consolidated Balance Sheet.
Notes forming part of Consolidated Balance Sheet
Note
No.
Amount
(Rs.)
Amount
(Rs.)
1 Reserves and Surplus
Consolidated General Reserve
Consolidated Profit and Loss Account
Less: Preliminary Expenses
58,400
67,800
1,26,200
10,000
1,16,200
2 Trade Payables
Creditors
Less: Mutual Obligations
3 Tangible Fixed Assets
85,000
10,000
75,000
Buildings
Machinery
5,95,000
1,90,000
4,05,000
5

4 Inventories
Less: Unrealised Profit
5 Trade Receivables
Debtors
Less: Mutual Obligations
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28,000
5,000
23,000
79,000
10,000
69,000
Solution prepared by
(8 Marks)
6