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Pinnacle Academy
Chapter Tests [CT] Series
August 2015 Batch
201-202, Florence Classic, Besides Unnati Vidhyalay,
Jain Derasar Road, Ashapuri Society, Akota, Vadodara-20. ph: 98258 561 55
Solution of Test of
CFS – 1
[FR – CA Final]
Conducted on 12th March 2016
(Solution is at the end with markings for self assessment)
Time Allowed-1 hour
Q1
Maximum Marks- 20
Following are the Balance Sheets of X Ltd. and Y Ltd. as on 31st December, 2015:
Liabilities
Equity Shares of Rs.
10 each
12% Pref. Shares of
Rs. 10 each
General Reserve
Profit & Loss A/c
10% Debentures of
Rs. 100 each
Capital Reserve
Proposed Dividend:
Equity
Preference
Bills Payable
X Ltd.
8,00,000
----3,60,000
2,40,000
----2,00,000
1,20,000
----2,10,000
19,30,000
Y Ltd. Assets
Fixed Assets
5,00,000 Investments:
Equity Shares in
2,00,000 Y Ltd.
1,20,000 Preference
1,20,000 Shares in Y Ltd.
Debentures in Y
50,000 Ltd.
1,00,000 Bills Receivables
Preliminary
60,000 expenses
24,000
1,15,000
12,89,000
X Ltd.
12,11,000
Y Ltd.
12,10,000
4,50,000
-----
1,80,000
-----
25,000
51,600
----69,000
12,400
10,000
19,30,000
12,89,000
Other information is as under:
i.
The general reserve of Y Ltd as on 01.01.2015 was Rs.1,80,000.
ii.
The capital reserve of Y Ltd. as on 01.01.2015 was Rs.60,000.
iii.
X Ltd. acquired 30,000 equity shares and 15,000 preference shares in Y Ltd. on
01.01.2015. 240 Debentures of Y Ltd. were purchased by X Ltd. many years ago
when those debentures were first issued by Y Ltd.
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iv.
The balance of Profit and Loss Account of Y Ltd. as on 01.01.2015 of Rs.1,39,000 is
after providing for preference dividend and proposed equity dividend @ 10%; both of
which were subsequently paid and credited to Profit and loss A/c of X Ltd.
v.
Y Ltd. has issued fully paid bonus shares in the ratio of 1 share for every 4 shares
held in October 2015 by drawing upon the general reserve. The transaction has
been given effect to in the books of Y Ltd.
vi.
Fixed assets of Y Ltd. were revalued at Rs.14,12,500 as on 01.01.2015 effect of
which is pending in books of Y Ltd. Depreciation has been provided on fixed assets
at 20% p.a.
vii.
Bills receivables of X Ltd. includes bills of Rs.30,000 accepted by Y Ltd.
Prepare consolidated balance sheets of X Ltd. as on 31.12.2015.
(20 Marks)
th
(Assessed answer papers shall be returned latest by 26 March 2016)
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Solution of Test of Consolidated Financial Statements – 1
Conducted on 12th March 2016
Q1
Working Notes:
(1) Extent of Holding:
(a) Equity Shares:
Pre bonus shares:
Bonus shares:
Post bonus shares:
4
1
5
Pre-bonus shares = 50,000 X 4 / 5 i.e. 40,000
% of holding = (30,000 + Bonus 30,000 X 1 / 4) i.e. 37,500 / 50,000 = 75%
(b) Preference Shares:
% of holding = 15,000 / 20,000 i.e. 75%
(2) Profits earned by Y Ltd. during 2015:
P & L A/c as on 31.12.15
Add: Transfer to general reserve
Proposed Dividend for 2015
Less: P & L A/c as on 01.01.15
Amount
(Rs.)
1,20,000
40,000
84,000
2,44,000
1,39,000
1,05,000
(2 Marks)
(3) Revaluation of Fixed Assets of Y Ltd.:
Amount
(Rs.)
15,12,500
14,12,500
1,00,000
Book value on 01.01.15 (12,10,000 / 80%)
Revalued on 01.01.15 at
Revaluation Loss on 01.01.15
Depreciation for 01.01.15 to 31.12.15 on Revalued Amount (14,12,500 X 20%)
Book Value (already provided) (15,12,500 X 20%)
Excess depreciation to be reversed
2,82,500
3,02,500
20,000
(2 Marks)
(4) Analysis of Profits of Y Ltd.:
General Reserve on 01.01.15
P & L A/c on 01.01.15
Capital Reserve on 01.01.15
Profits in 2015
Transfer to general reserve
Revaluation loss on 01.01.15
Depreciation reversed
Increase in capital reserve
Bonus issue
Capital
Profits
1,80,000
1,39,000
60,000
---------3,79,000
(1,00,000)
------------------(1,00,000)
Revenue
Profits
---------------------------1,05,000
1,05,000
(40,000)
---------20,000
-------------------
Revenue
Reserve
---------------------------------------------40,000
-------------------------------------
Capital
Reserve
------------------------------------------------------------------------40,000
----------
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Provision for Declared
Preference Dividend (2015)
Preliminary expenses
Minority (25%)
X Ltd. (75%)
---------(10,000)
1,69,000
42,250
1,26,750
(24,000)
---------61,000
15,250
45,750
------------------40,000
10,000
30,000
------------------40,000
10,000
30,000
(4 Marks)
(5) Cost of Control:
Cost of Shares
Less: Pre-acquisition dividend:
Correct Cost
Less: Paid up value including bonus
Share in capital profits
Capital Reserve
Equity
Preference
4,50,000
1,80,000
30,000
18,000
(40,000 X 75%) (24,000 X 75%)
4,20,000
1,62,000
3,75,000
1,50,000
1,26,750
--(81,750)
12,000
69,750
(2 Marks)
(6) Cancellation of Investment in Debentures of Y Ltd.
Cost of Debentures
Less: Paid up value
Loss on cancellation
25,000
24,000
1,000
(1 Mark)
(7) Minority Interest:
Paid up value of shares
Share in profits and reserves
Share in declared preference dividend
(24,000 X 25%)
Equity Preference
1,25,000
50,000
77,500
---6,000
2,02,500
56,000
2,58,500
(1 Mark)
(8) Consolidated P & L A/c:
P & L A/c as on 31.12.15 of X Ltd.
Add: Share in revenue profits
Pre-acquisition dividend wrongly credited (30 + 18)
Loss on cancellation of debentures
Share in declared preference dividend (24,000 X 75%)
Amount
(Rs.)
2,40,000
45,750
(48,000)
(1,000)
18,000
2,54,750
(1 Mark)
(9) Consolidated General Reserve and (10) Capital Reserve:
Balance on 31.12.15 of X Ltd.
Add: Share from Y Ltd.
Capital reserve on consolidation
Loss on cancellation of debentures
General
Capital
Reserve Reserve
3,60,000 2,00,000
30,000
30,000
---------69,750
3,90,000 2,99,750
(1 Mark)
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Consolidated Balance Sheet of X Ltd. as on 31st December 2015
I.
1.
(a)
(b)
Equity and Liabilities:
Shareholders’ Funds
Share Capital
Reserves and Surplus
2.
Minority Interest
3.
Non Current Liabilities
Long Term Borrowings
4.
II.
1.
2.
Note No.
Amount
1
8,00,000
9,32,100
Amount
17,32,100
2,58,500
2
Current Liabilities
Trade Payables
Short Term Provisions (Proposed Dividend)
Total
Assets:
Non Current Assets
Fixed Assets
- Tangible
Current Assets
Trade Receivables
26,000
4,15,000
3
2,95,000
1,20,000
24,31,600
23,41,000
4
23,41,000
90,600
5
90,600
24,31,600
Total
See accompanying notes.
Note
No.
1
Amount
(Rs.)
Reserves and Surplus
Consolidated Capital Reserve
Consolidated General Reserve
Consolidated Profit and Loss Account
Less: Preliminary Expenses
2
3
4
Long Term Borrowings
10 % Debentures
Less: Mutual Obligation
Trade Payables
Bills Payables
Less: Mutual Obligation
Tangible Fixed Assets
Less: Revaluation Loss
Add: Depreciation reversed
5
Trade Receivables
Bills Receivables
Less: Mutual Obligation
Amount
(Rs.)
2,99,750
3,90,000
2,54,750
9,44,500
12,400
9,32,100
50,000
24,000
26,000
3,25,000
30,000
2,95,000
24,21,000
1,00,000
23,21,000
20,000
23,41,000
1,20,600
30,000
90,600
(6 Marks)
Solution prepared by
CA. Ashish Lalaji
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