HOLDING COMPANY ACCOUNTS

Working notes 1. Calculation of ratios No. of shares in S ltd

=1,00,000/10 = 10,000 shares. No. of shares held by H ltd. =8,000 shares. No. of shares held by minority shareholders. =2,000 shares. ratio =8:2 =4:1 2. Calculation of Capital profits Reserves on the date of acquisition of shares :5,000 Profit on the date of acquisition of shares :1,500 ---------6,500 ---------Share of H company = 6,500 X 4/5 Share of Minority shareholders. =6,500 X 1/5

=5,200 =1,300

3. Calculation of revenue profits Reserves after the date of acquisition (15000 - 5000) :10000 Profit after the date of acquisition (4500-1500) : 3000
Revenue profits Shares of H company Share of minority shareholders 4. Calculation of minority interest Face value of shares held by Minority shareholders(2000 X 10) Add : proportionate share of capital profits Add : share of Revenue profits Minority interest 1300 2600 3900 23900 20000 :13000 13000 X 4/5 13000 X 1/5

= =

=10400 =2600

5. Calculation of goodwill Particulars Rs. Rs.

Cost of 8000 shares held by H ltd

98000

Less:(a) face value of 8000 shares (b) H company s share of capital profit Goodwill

80000 5200

85200 12800

Consolidated Balance Sheet of H ltd and its Subsidiary S ltd as at 31/12/2002 Liabilities Rs Rs Share capital 200000 Reserves 10000 P & L a/c: H company 5000 S company 10400 15400 Bank loan: H company -S company 12000 Creditors: H company 40000 S company 20000 60000 Bills payable: H company 2000 S company 1000 3000 Minority interest (no 4 ) 23000 --------------------------------324300 ---------------------------------

Assets Goodwill (no 5) Machinery H company S company Stock H company S company Debtors H company S company Furniture H company S company Cash H company S company Bills receivable H company S company

Rs

Rs 12800

60000 45000 42000 65000 18000 27000 2000 4000 36000 10000

105000

107000

45000

6000

46000

1000 1500 2500 -------------------------------324300