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Holding company
Example:
Particulars H S Particulars H S
Share Capital (10) 8,00,000 2,00,000 Fixed Assets 9,00,000 7,00,000
Profit and Loss 3,00,000 2,00,000 Investments in 4,00,000 -
A/c S Ltd.
GR 2,00,000 2,50,000 Debtors 1,00,000 80,000
Creditors 1,00,000 1,20,000 BR 40,000 50,000
BP 55,000 80,000 Cash 15,000 20,000
Total 14,55,000 8,50,000 Total 14,55,000 8,50,000
H ltd. Acquired shares of S Ltd. On 1.10.2009.
1) H ltd. Held shares of S Ltd. No’s 16,000 on 31.03.2011.
2) S ltd. Distributed dividend:
FD1 1/12/09 10%
ID 1 1/01/11 15%
FD2 1/08/10 12%
3) Abnormal Loss on 1/7/09 ₹ 12,000 and on 1/7/10 ₹ 15,000.
4) S Ltd. Declared and distributed bonus in ratio of 1:4 whose entry is yet to be
passed by S Ltd. Date of bonus issue is 31.3.2011.
5) ₹ 7,000 is creditors of H ltd. Are due towards S ltd. S ltd. Has shown debtors of
₹ 10,000 due from H ltd. Difference is due to cash in transit.
6) B/P of S ltd. Includes ₹ 15,000 for bills issued to H ltd. H ltd. Discounted Bills
for ₹ 4500. Contingent Liabilities reported by H Ltd. Is ₹ 40,000 and by S Ltd.
₹ 10,000.
7) Fixed assets of S ltd. Have market values of ₹ 10,00,000 on 1/10/2009. Book
Value of Such assets on 1/4/2009 was ₹ 8,50,000. Depreciation is charged on
SLM Basis. Fixed assets are to be revalued in C B/S.
8) Balance of General Reserve of S Ltd. On 1.4.2009 was ₹ 2,50,000 and of Profit and
Loss A/c NIL.
Prepare CBS on 31/03/2011.

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Question No. 1: The Following Balance sheet of Sun and Moon Ltd as on 31st
March 2000 is given below:
Liabilities Sun ltd. Moon Ltd. Assets Sun Ltd. Moon Ltd.

Share Capital (₹ 10) 1,20,000 1,00,000 Fixed Assets 44,000 84,000

Investment in
General Reserve 20,000 36,000 Moon Ltd. 8,000 88,000 -
Shares @₹11
P & L A/c 12,000 20,000 Sundry Debtors 6,000 15,000
Bills payable 2,000 5,000 Bills Receivables 4,000 16,000
Sundry Creditors 4,000 7,000 Stock in trade 10,000 40,000
Contingent Liability
on Sun Ltd. Bills
Cash at bank 6,000 13,000
Discounted Not yet
Matured ₹ 2500
Total 1,58,000 1,68,000 Total 1,58,000 1,68,000
Shares were purchased on 01/04/1997. When the shares were purchased General
Reserve and Profit and loss A/c of Moon ltd. Stood at ₹ 30,000 and ₹ 16,000
respectively.
Dividends have been paid @ 10% every Year after acquisition of Shares, first
dividend being paid out of pre acquisition profits. No dividends has been proposed
for 1999-2000 as yet and no provision need be made in consolidated Balance sheet.
Sun Ltd. has credited dividend received to Profit and Loss A/c.
On 31/03/2000, Bonus shares has been declared by Moon Ltd. @ 1 fully paid shares
for 5 held, but no effect has been given to that in the above accounts. The bonus was
declared out of profits earned prior to 01/04/1997 from General Reserve.
When the shares were purchased, agreed re-valuation of fixed assets of Moon Ltd.
was ₹ 1,08,000 although no effect has been given thereto in accounts.
Depreciation has been charged @10% p.a. on the book Value as on 1/04/1997,(on
straight Line Basis), there being no addition or sale then.
Out of the current profit ₹ 2,000 has been transferred to General Reserve Every
year.
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Bills receivable of Sun ltd. Include ₹ 2,000 bills accepted by Moon Ltd. and bills
discounted by Sun Ltd. not yet Matured includes ₹ 1,500 accepted by Moon ltd.
Sundry Creditors of Sun Ltd. include ₹ 2,000 due to Moon ltd. whereas sundry
Debtors of Moon ltd. include ₹ 4,000 due from Sun Ltd. It is found that Sun ltd. has
remitted a cheque of ₹ 2,000 which has not yet been received by Moon Ltd.
Prepare Consolidated Balance Sheet as on 31/03/2000 of Sun ltd. and its subsidiary.
(Ans: Capital Reserve : ₹ 19,200; Minority Interest : ₹ 29,520; Balance Sheet
: ₹ 2,25, 600, 4)

Question No. 2: X ltd. acquired 1,600 ordinary Shares of Rs. 100 Each of Y ltd.
on 1st July 1999. On December 31,1999 the Balance Sheet of the two companies were
as follows:
Liabilities X ltd. Y ltd. Assets X ltd. Y ltd.
Capital (Share of ₹
100 each fully paid 5,00,000 2,00,000 Land & Building 1,50,000 1,80,000
up)
Plant &
Reserves 2,40,000 1,00,000 2,40,000 1,35,000
Machinery
Investment in Y
P & L A/c 57,200 82,000 3,40,000 -
Ltd. at Cost
Bank Overdraft 80,000 - Stock 1,20,000 36,400
Bills payable - 8,400 Sundry Debtors 44,000 40,000
Creditors 47,100 9,000 Bills receivables 15,800 -
Cash 14,500 8,000
Total 9,24,300 3,99,400 Total 9,24,300 3,99,400
The profit and loss A/c of Y ltd. showed a credit balance of ₹ 30,000 on 1st January,
1999 out of which a dividend a dividend of 10% was paid on 1st August; X ltd. has
credited the dividend received to its Profit and loss A/c. the plant and Machinery
which stood at ₹ 1,50,000 on 1st January,1999 was considered as worth ₹

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1,80,000 on 1st July, 1999; this figure is to be considered while consolidated balance
Sheets.
Prepare consolidated Balance Sheet as on December 31st ,1999. (Study Material)
(Ans: Goodwill : ₹ 17,200; Minority Interest : ₹ 83,525,1)

Question No. 3: A ltd. Acquired 8,000 Shares of ₹ 100 each in B ltd. on 30th
September,1991. The summarized Balance Sheet of the two companies as on 31 st
March 1992 were as follows:
Liabilities A ltd. B ltd. Assets A ltd. B ltd.
Share Capital: Fixed Assets 15,00,000 14,47,000
30,000 Shares of ₹ Investment In B
30,00,000 - 17,00,000 -
100 Each ltd at cost
10,000 Shares of ₹
- 10,00,000 Stock 4,00,000 2,00,000
100 Each
Capital Reserves - 5,50,000 Loans to A ltd. - 20,000
Bills
receivables(
General Reserves 3,00,000 50,000 Including ₹ 12,000 -
5000 from B
ltd.)
P & L A/c 3,82,000 1,80,000 Debtors 2,50,000 1,80,000
Loans from B ltd. 21,000 - Cash 20,000 20,000
Bills
payable(Including - 17,000
₹ 5000 to A ltd.)
Creditors 1,79,000 70,000
Note: On the balance
Sheet of A ltd. there
is a contingent
liability of ₹ 6000
for the bills

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discounted.

Total 3882000 1867000 Total 3882000 1867000

You are given the following information:
1. B Ltd. made a bonus Issue on 31st March, 1992 of one share for every two
shares held, reducing the capital reserve equivalently but the accounting
effect to this has not been given in the above balance sheet.

2. Interest receivable for the year ₹ 1000 in respect of the loan due by A ltd.
to B ltd. has not been credited in the books of B ltd.
3. The Credit balance in Profit and Loss A/c of B ltd. as on 1/04/1991 was ₹
21,000.
4. The director decided on the date of acquisition that fixed assets of B ltd. were
over valued and should be written down by ₹ 50,000. Consequential
adjustments on depreciation are to be ignored.
Prepare the consolidated Balance Sheet as at 31st March,1992 showing your
working.
(Ans: Minority Interest 3,46,200; Goodwill : ₹ 3,79,200,17)

Question No. 4(12): The Balance Sheet of Golden and Silver Limited as on
31.03.2006 are given below:
Silver Silver
Golden Ltd.(₹ Golden Ltd.(₹
Liabilities Ltd(₹) ) Assets Ltd(₹) )
Equity Share Capital 240000 240000 Fixed Assets 88,000 168000
General Reserve 40,000 32,000 Investments 180000 10000
Profit and Loss A/c 24,000 39,000 Sundry Debtors 12,000 30000
Bills
Bills Payable 4,000 10,000 Receivables 8,000 32000
Sundry Creditors 8,000 15,000 Stock in Trade 20,000 80000
Cash at Bank 8,000 16000
Total 316,000 336000 Total 316,000 336000
Note: Contingent Liability of Golden Ltd.: Bills discounted not yet matured at ₹ 5000.

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Additional Information:
1. On 1.10.2003, Golden Ltd. Acquired 16,000 shares of ₹ 10 each at the rate of
₹ 11 per share.
2. Balances to General Reserve and Profit and loss A/c of Silver Ltd. Stood on
1.4.2003 at ₹ 60,000 and ₹ 32,000 respectively.
3. Dividends have been paid @10% for each of the years 2003-04 and 2004-05.
Dividend for the year 2003-04 was paid out of the pre-acquisitions profits.
No dividend has been proposed for the year 2005-06 as yet and no provision
need to be made in consolidated Balance Sheet. Golden Ltd. Has credited all
dividends received to profit and loss A/c.
4. On 1.3.2006 Bonus shares were issued by Silver Ltd. At the rate of one fully
paid share for every five shares held and effect has been given to that in the
above accounts. The bonus was declared from general Reserve from out of
profits earned prior to 1.4.2003.
5. On 1.10.2003, Fixed assets was revalued at ₹ 2,16,000, but no adjustment has
been made in the books.
6. Depreciation had been charged @10% p.a. on the book value as on 1.4.2003 (
on Straight line basis), there being no addition or sale since then.
7. Out of Current Profits ₹ 4,000 have been transferred to General Reserve
every year.
8. Bills Receivables of Golden Ltd. Include ₹ 4,000 bills accepted by Silver Ltd.
Bills discounted by Golden Ltd., but not yet matured include ₹ 3,000 accepted
by Silver Ltd.
9. Sundry Creditors of Golden Ltd. Include ₹ 4,000 due to Silver ltd. Sundry of
Debtors Silver Ltd. Include ₹ 8,000 due from Golden ltd.
10. It is found that Golden Ltd. Has remitted a cheque of ₹ 4,000, which has not
yet been received by Silver Ltd.
Prepare Consolidated Balance Sheet as at 31.03.2006 of Golden Ltd. And its
Subsidiary.
(Ans: Capital Reserve ₹ 55,866; Minority Interest ₹ 60,400)

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Question No. 5(8): The following the Balance Sheet of H ltd. And S ltd. As on 31st
March, 1989:
H Ltd.(₹) S Ltd.(₹)
Share Capital:
Equity Shares of ₹ 100 Each fully Paid
Up 1,000,000 800,000
Reserve and Surplus:
General Reserves 200,000 200,000
Profit and Loss A/c 400,000 300,000
Current Liabilities 200,000 200,000
Total 1,800,000 1,500,000
Assets:
Fixed Assets 500,000 400000
Investments in S Ltd. 500,000 0

Current Assets 800,000 1,100,000

Total 1,800,000 1,500,000
The following information is furnished:
1. H ltd. Acquired 3,000 shares in S Ltd. On 1.4.88 when the Reserves and
Surplus of S ltd. Was as under:
 General Reserve ₹ 5,00,000.
 Profit and Loss A/c – Credit Balance ₹ 2,00,000.
2. On 1.10.88 S Ltd. Issued 3 Fully paid up shares for every 5 shares held,
as bonus shares out of the pre-acquisition General Reserve. No entry is
made in the books of H Ltd. For the receipt of these bonus shares.
3. On 30.06.88 S Ltd. Declared 20% dividend, out of pre-acquisition
profit and H ltd. Credited the receipt of dividend to its Profit and loss
A/c.
4. S Ltd. Owed H ltd. On 31.3.89 ₹ 1,00,000 for purchase of stock from H
ltd. The entire stock is held by S ltd. On 31.3.1989. H ltd. Made a profit
of 25% on cost.
5. H ltd. Transferred for cash payment a machine to S Ltd. For ₹ 80,000.
The book Value of the machine to H ltd. Was ₹ 60,000.
Prepare consolidated Balance sheet as at 31st March 1989. Adjustment for
depreciation on machine transferred by H ltd. To S Ltd. Is to be ignored.

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(Ans: Minority Interest 5,20,000; Capital Reserve 2,20,000)

Question No. 6(11): On March 31st 2004 the Balance Sheets Of H ltd. And its
subsidiary S Ltd. Stood as follows:
H Ltd.(₹in S Ltd.(₹ in
Liabilities lacs) Lacs)
Share Capital:
Authorized 15,000 6,000
Issued and Subscribed:
Equity shares of ₹10 each, Fully Paid
Up 12,000 4,800
General Reserve 2,784 1,380
Profit and Loss A/c 2,715 1,620
Bills Payables 372 160
Sundry Creditors 1,461 854
Provision for taxation 855 394
Proposed Dividend 1,200 -
Total 21,387 9,208
H Ltd.(₹in S Ltd.(₹ in
Assets lacs) Lacs)
Land and building 2,718 -
Plant and Machinery 4,905 4,900
Furniture and fittings 1,845 586
Investment in shares of S ltd. 3,000 -
Stock 3,949 1,956
Debtors 2,600 1,363
Cash and Bank Balance 1,490 204
Bills Receivables 360 199
Sundry Advances 520 -
Total 21,387 9,208
The following information is also provided to you:
1. H Ltd. Purchased 180 lakh shares in S ltd. On 1st April, 2003 when the
balances to General Reserve and Profit and Loss A/c of S ltd. Stood at ₹ 3,000
lakh and ₹ 1,200 lakh respectively.
2. On 4th July, S ltd. Declared Dividend @20% for the year ended 31st March,
2003. H ltd. Credited the dividend received by it to its Profit and Loss A/c.
3. On 1st January, 2004 S Ltd. Issued 3 fully paid up shares for every 5 shares
held as bonus shares out of balances to its general reserve as on 31st March,
2003.

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4. On 31st March, 2004 all the bills payables in S Ltd.’s Balance sheet were
acceptances in favour of H ltd. But on that date, H. ltd. Held only ₹ 45 lakh of
these acceptance in hand, the rest having been endorsed in favour of its
credito₹
5. On 31st March, 2004 S ltd.’s Stock included goods which it had purchased for ₹
100 lakh from H ltd. Which made a profit @25%on cost.
Prepare a Consolidated Balance Sheet of H ltd. And its subsidiary S ltd. As at 31 st
March, 2004 bearing in mind the requirements of AS-21.
( Ans: Capital Reserve ₹ 1320; MI ₹ 3120)

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