Professional Documents
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Accounting Standards
Accounting Standards
1
PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
Accounting standards has made it simplified the comparison of different
financial statements. Financial statements of two companies can be
easily compared. If two companies are following different accounting
system & format, comparison between them becomes quite difficult.
Like if one company follows LIFO method of stock accounting while
others follows FIFO method. Here comparison becomes difficult as two
are following different methods. Accounting standards helps in
overcoming this problem.
3. Assists Auditors: Accounting standards helps the auditors in
performing their duties. It simplifies their task & makes it easy for them
to perform their roles. Accounting Standards have established different
standards, rules & regulations to be followed by companies in their
accounting system.
These rules & regulations are mandatory to be followed by every
company. It governs the whole manner of preparing & presenting
financial standards. So if auditor assures that company has followed
accounting standards, he can easily verify that all financial standards are
fair & true.
4. Makes Accounting Informative Easy & Simple
Simplifying the whole accounting information is important advantage of
accounting standards. It provides standard rules for each & every
accounting transaction. It removes all complexity in the accounting
process.
Standard & uniform process is followed. It helps the users in easy
understanding & avoids any misleads from it. For example, AS-3 clearly
shows the rules regarding flow of cash under 3 main heads. These 3
heads are operating activities, investing activities & financial activities.
5. Avoids Frauds & Manipulations
Accounting standards plays an efficient role in preventing frauds in the
accounting system. Frauds & any accounting data manipulation may
adversely affects the organisation.
Accounting standards establishes different accounting rules &
principles. These accounting principles govern the whole accounting
procedure. These principles are not optional to be followed but are
mandatory to be followed.
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PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
It becomes almost impossible to misrepresent & manipulate any
financial data on part of management. Committing any fraud also
become harder for them.
6. Provides Reliability To Financial Statements.
Financial statements are important source of acquiring information
regarding companies. Investors & different stakeholders depends on
these statements for getting information. These people take important
decisions on the basis of this data only.
It is thus very important that these financial statements are true & fair.
Accounting standards fully governs these financial statements. It is
ensured by accounting standards that these statements are real &
trustworthy.
7. Measures Management Performance
Accounting standards make it easy in determining accountability of
management. It makes it easy to measure the performance of
management team & provide any suggestions.
It helps in analysing management ability in maintaining solvency of the
firm, increasing the company’s profit & various other important roles. It
directs the management to adopt a particular accounting policy. Same
policy should be followed constantly to avoid any confusion.
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PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
3. Cost is high for maintenance: The cost is high for maintaining the
books of account according to the format set by the accounting
standard. The detailed paperwork and the use of standard equipment
also increase the cost of maintaining books of accounts.
4. Difficulty in choosing the alternative: There are many methods to
record the transaction in the books of account; thus, it becomes
difficult to choose which method to adopt and what not to. And also,
sometimes, due to restrictions on the method of choice, the entity has
to forgo its best convenient method and adopt the secondary method
of recording transactions.
5. Time-consuming process: The whole process of following
accounting standards takes time as every note and schedule
according to the format must be produced by the user and has to go
through a lengthy, time-consuming process.
6. Scope is restricted: Accounting standard has to be framed according
to the rules set presently in the nation. They cannot override the
statute. Thus the scope for providing policies gets restricted.
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PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
Difference between the IFRS and IND AS.
IFRS IND AS
Definition
IFRS stands for International Financial IND AS stands for Indian Accounting
Reporting Standards, it is an Standards, it is also known as India
internationally recognised accounting specific version of IFRS
standard
Developed by
IASB (International Accounting MCA (Ministry of Corporate Affairs)
Standards Board)
Followed by
144 countries across the world Followed only in India
Disclosure
Companies complying with IFRS have to Such a disclosure is not mandatory for
disclose as a note that the financial companies complying with Indian
statements comply with IFRS Accounting Standards or IND AS
Financial Statement Components
It includes the following It includes the following:
1. Statement of financial position 1. Balance Sheet
2. Statement of profit and loss 2. Profit and loss account
3. Statement of changes in equity for 3. Cash flow statement
the period 4. Statement of changes in equity
4. Statement of cash flows for the 5. Notes to financial statements
period 6. Disclosure of accounting policies
Balance Sheet Format
Companies complying with IFRS need Companies complying with IND AS
have specific guidelines for preparing need have no such requirements for
balance sheet with assets and liabilities balance sheet format, but the
to be classified as current and non- guidelines are defined for presenting
current balance sheet
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PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
representatives from ASSOCHAM, CII, FICCI, etc. ICAI is an independent
body formed under an act of parliament.
The Ind AS are named and numbered in the same way as the International
Financial Reporting Standards (IFRS). National Financial Reporting
Authority (NFRA) recommend these standards to the Ministry of Corporate
Affairs (MCA). MCA has to spell out the accounting standards applicable for
companies in India. As on date MCA has notified 40 Ind AS (Ind AS 11 is
omitted by companies).
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PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
Procedure for Issuing/Setting/Formulating of Accounting
Standards in India
Let us take a brief look at the procedure setting process that the ASB follows
1) First, the ASB will identify areas where the formulation of accounting
standards may be needed
2) Then the ASB will constitute study groups and panels to discuss and study
the topic at hand. Such panels will prepare a draft of the standards. The
draft normally includes the definition of important terms, the objective of
the standard, its scope, recognition and measurement principles and the
representation of said data in the financial statements.
3) The ASB then carries out deliberations of the said draft of the standard. If
necessary changes and revisions are made.
4) Then this preliminary draft is circulated to all concerned authorities. This
will generally include the members of the ICAI, and any other concerned
authority like the Department of Company Affairs (DCA), the SEBI, the
Central Board of Direct taxes (CBDT), Standing Conference of Public
Enterprises (SCPE), Comptroller and Auditor General of India etc. These
members and departments are invited to give their comments.
5) Then the ASB arranges meetings with these representatives to discuss
their views and concerns about the draft and its provisions
6) The exposure draft is then finalized and presented to the public for their
review and comments
7) The comments by the public on the exposure draft will be reviewed. Then
a final draft will be prepared for the review and consideration of the ICAI
8) The Council of the ICAI will then review and consider the final draft of the
standard. If necessary they may suggest a few modifications in
consultation with ASB
9) Finally, the Accounting Standard on the relevant subject is then issued
under the authority of the council.
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PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
List of Indian Accounting Standards
Ind As No. Name of Indian Accounting Objective / Deal With
Standard
Ind AS 101 First time adoption of Ind AS Its main objective is to
prepare first financial
statements as per Ind AS
containing high quality
information that is
transparent, comparable and
prepared at economical cost,
suitable starting point for
accounting in accordance
with Ind AS.
Ind AS 102 Share Based Payment It deals with accounting of
share-based payment
transactions and reflect
effect of such payment on
profit or loss and financial
statements of entity.
Ind AS 103 Business Combination It applies to transaction or
other event that meets the
definition of a business
combination. This standard
helps in improving the
relevance, reliability and
comparability of the
information that a reporting
entity provides in its
financial statements about a
business combination and its
effects.
Ind AS 104 Insurance Contracts This standard specifies
financial reporting for
insurance contracts by
insurer entity.
Ind AS 105 Non-Current Assets Held for This standard specifies
Sale and Discontinued accounting for assets held
Operations for sale, and presentation
and disclosure of
discontinued operations.
Ind AS 106 Exploration for and This standard specifies
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PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
Evaluation of Mineral financial reporting for
Resources exploration and evaluation
of mineral resources.
Ind AS 107 Financial Instruments: This standard require
Disclosures entities to provide
disclosures related to
financial instruments that
will enable users to evaluate
significance of financial
instruments for entity's
financial position and
performance and nature and
extent of risks arising from
financial instruments to
which the entity is exposed
during the period and at the
end of the reporting period,
and how the entity manages
those risks
Ind AS 108 Operating Segments This standard discloses
information to enable users
of its financial statements to
evaluate the nature and
financial effects of the
business activities in which
it engages and the economic
environments in which it
operates.
Ind AS 109 Financial Instruments This Standard establish
principles for financial
reporting of financial assets
and financial liabilities that
will present relevant and
useful information to users
of financial statements for
their assessment of the
amounts, timing and
uncertainty of an entity's
future cash flows.
Ind AS 110 Consolidated Financial This standard establishes
Statements principles for the
presentation and
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PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
preparation of consolidated
financial statements when an
entity controls one or more
other entities.
Ind AS 111 Joint Arrangements This standard establishes
principles for financial
reporting by entities that
have an interest in
arrangements that are
controlled jointly (known as
joint arrangements).
Ind AS 112 Disclosure of Interests in This standard requires an
Other Entities entity to disclose
information that enables
users of its financial
statements nature risk and
effect of such interest in
other entities.
Ind AS 113 Fair Value Measurement This standard defines fair
value, set outs framework
for measuring fair value and
disclosures about fair value
measurements. Such fair
measurement principle will
apply when another Ind AS
requires or permits use of
fair value.
Ind AS 114 Regulatory Deferral This Standard specifies
Accounts financial reporting
requirements for regulatory
deferral account balances
that arise when an entity
provides goods or services to
customers at a price or rate
that is subject to rate
regulation.
Ind AS 115 Revenue from Contracts This Standard establishes
with Customers(Applicable principles that an entity shall
from April 2018) apply to report useful
information to users of
financial statements about
nature, amount, timing and
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PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
uncertainty of revenue and
cash flows arising from a
contract with a customer.
Ind AS 116 Leases (Applicable from This standard prescribes
April 2019) appropriate accounting
policies and principle for
lessees and lessors.
Ind AS 1 Presentation of Financial This standard sets out
Statements overall requirements for
presentation of financial
statements, guidelines for
their structure and minimum
requirements for their
content to ensure
comparability.
Ind AS 2 Inventories Its deals with accounting of
inventories such as
measurement of inventory,
inclusions and exclusions in
its cost, disclosure
requirements, etc.
Ind AS 7 Statement of Cash Flows It deals with cash received or
paid during the period from
operating, financing and
investing activities. It also
shows any change in the
cash and cash equivalents of
any entity.
Ind AS 8 Accounting Policies, Changes It prescribes criteria for
in Accounting Estimates and selecting and changing
Errors accounting policies together
with accounting treatments
and disclosures.
Ind AS 10 Events occurring after It deals with any adjusting or
Reporting Period non-adjusting event
occurring after reporting
date
Ind AS 11 Construction Contracts
(Omitted by the Companies
(Indian Accounting
Standards) Amendment
Rules, 2018)
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PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
Ind AS 12 Income Taxes This standard prescribes
accounting treatment for
income taxes. The principal
issue in accounting for
income taxes is how to
account for the current and
future tax
Ind AS 16 Property, Plant and This standard prescribes
Equipment accounting treatment for
Property, Plant And
Equipment (PPE) such as
recognition of assets,
determination of their
carrying amounts and the
depreciation charges and
impairment losses to be
recognised in relation to
them.
Ind AS 19 Employee Benefits This standard prescribes
accounting and disclosure
requirements relating to
employee benefits.
Ind AS 20 Accounting for Government This Standard shall be
Grants and Disclosure of applied in accounting for and
Government Assistance in disclosure of, government
grants and in disclosure of
other forms of government
assistance.
Ind AS 21 The Effects of Changes in This Standard prescribes
Foreign Exchange Rates how to include foreign
currency transactions and
foreign operations in the
financial statements of an
entity and how to translate
financial statements into a
presentation currency.
Ind AS 23 Borrowing Costs It provides borrowing cost
incurred on qualifying asset
should form part of that
asset, it also guides on which
finance cost should be
capitalised, conditions for
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PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
capitalisation, time of
commencement and
cessation of capitalisation of
borrowing cost.
Ind AS 24 Related Party Disclosures This standard ensures that
an entity's financial
statements contains
necessary disclosures to
draw attention to the
possibility that its financial
position and profit or loss
may have been affected by
the existence of related
parties and by transactions
and outstanding balances.
Ind AS 27 Separate Financial This Standard prescribes
Statements accounting and disclosure
requirements for
investments in subsidiaries,
joint ventures and associates
when an entity prepares
separate financial
statements.
Ind AS 28 Investments in Associates This standard prescribes
and Joint Ventures accounting for investments
in associates and to set out
requirements for the
application of equity method
when accounting for
investments in associates
and joint ventures.
Ind AS 29 Financial Reporting in Hyper This standard will give
inflationary Economies inclusive list of
characteristics that will
categorise an economy as
hyper inflationary and
reporting of operating
results and financial
position.
Ind AS 32 Financial Instruments: This Standard establishes
Presentation principles for presenting
financial instruments as
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PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
liabilities or equity and for
offsetting financial assets
and financial liabilities.
Ind AS 33 Earnings per Share This Standard prescribe
principles for the
determination and
presentation of earnings per
share
Ind AS 34 Interim Financial Reporting This Standard prescribes
minimum content of an
interim financial report and
principles for recognition &
measurement in complete or
condensed financial
statements for an interim
period.
Ind AS 36 Impairment of Assets This Standard prescribes
procedures that an entity
applies to ensure that an
asset’s carrying amount is
not more than its
recoverable amount.
Ind AS 37 Provisions, Contingent This Standard ensures that
Liabilities and Contingent appropriate recognition
Assets criteria and measurement
bases are applied to
provisions, contingent
liabilities and contingent
assets and proper
disclosures are made in the
notes to enable users to
understand their nature,
timing and amount.
Ind AS 38 Intangible Assets This Standard prescribes
accounting treatment for
intangible assets. It specifies
conditions for recognition of
intangible asset and how to
measure carrying amount at
which intangible asset
should be recognised.
Ind AS 40 Investment Property This Standard prescribes
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PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
accounting treatment for
investment property and
related disclosure
requirements.
Ind AS 41 Agriculture This Standard prescribes
accounting treatment and
disclosures related to
agricultural activity.
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PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
UNIT -2
GROUPING OF ACCOUNTS / HOLDING COMPNAY
What is holding company?
The company which is acquired the controlling interest in full or partly
in another company, is called holding company.
For example: Indian Overseas Bank acquired the controlling interest of
Karnataka Bank Ltd, Indian Overseas Bank company is called holding
company.
1. What is subsidiary company?
The affairs of the company is controlled by another company is called
subsidiary company.
For example: Overseas Bank acquired the controlling interest of
Karnataka Bank Ltd, Karnataka Bank is called subsidiary company.
Circumstances as per sec.4 of the companies act,
I. If the other company controls the composition of its board of
directors or
Example: FM TV Ltd has power to appoint or to remove or the
majority of the directors of NDTV Ltd.
II. If the other company holds more than half in the nominal value of
its equity share capital ; or
Example: Reliance has purchased more than 50% [51% to 100%]
of the value of equity shares in Wipro Ltd,
III. If the company is a subsidiary of any company which is the
subsidiary of that other company.
Example: Intel Co., Ltd is a subsidiary of HCL Ltd, which is an
already a subsidiary of IBM Ltd.
2. Cost of control in holding company?
Cost of control is the cost of holding company for acquiring the shares in
subsidiary company.
3. What are the types of subsidiary company?
a. Wholly owned subsidiary company: The Company in which
all the shares acquired by another company at 100%, is called
wholly subsidiary company.
b. Partially owned subsidiary company: The Company, in
which partially shares acquired by another company less than
100% of shareholding, is called partially subsidiary company.
4. What are the documents to be attached to the balance sheet of the
company?
a. A copy of the balance sheet of subsidiary company
b. A copy of its profit and loss account.
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PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
c. A copy of the report of its board of directors.
d. A copy of the report of its auditors.
e. A statement showing the interest in subsidiary company.
5. What is consolidated balance sheet?
The balance sheet of the holding company is prepared with the balance
of the subsidiary company. Such balance sheet is called consolidated
balance sheet.
6. What is minority interest in a subsidiary company? How do you
represent /treat?
To what extent the holding has interest in the form of
shareholdings of the company; proportionate of shareholding in
subsidiary company is called minority interest in a subsidiary company.
It is shown on liabilities of balance sheet of holding company.
7. How do you calculate minority interest?
Minority interest is calculated on the basis of shares purchased by
holding company in subsidiary company by way chart in majority
interest and minority interest.
8. What is unrealized profit?
When one company sells goods to another company in the group, the
selling company naturally adds some profit to the cost of such goods. In
that case, if there remains any unsold stock of the goods on the date of
consolidated balance sheet, the profit so included is called the
“unrealized profit”.
9. How treat UN realized profit in closing stock item of subsidiary
company and why prepare consolidated Balance Sheet?
Unrealized profit relating to holding company share is deducted from
the total stock as well as from surplus in consolidated balance sheet.
10. Why the shares are held by a holding company in its subsidiary
company are not shown in the consolidated balance sheet?
Holding company purchases share in subsidiary company, it treated as
investment in subsidiary company i.e. it is not shown in consolidated
balance sheet.
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PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
11. How do you prepare the minority chart?
Chart Showing Minority Interest in Subsidiary Company
Holding
Total Minority
Particulars Compan
Amount Share
y
1. Proportionate share capital of
minority company xxx xxx xxx
2. Profit
Pre-acquisition profit xxx xxx xxx
Post-acquisition profit xxx xxx xxx
3. Reserves
Pre-acquisition reserves xxx xxx xxx
Post-acquisition reserves xxx xxx xxx
4. Under valuation / Increase in
the value of assets xxx xxx xxx
5. Over Valuation / Decrease in the
value of liabilities xxx xxx xxx
xxx xxx xxx
Less:
6. Loss [P and L Account] xxx xxx xxx
7. Over valuation / Decrease in the
value of assets [xxx] [xxx] [xxx]
8. Under Valuation / Increase in
the value of liabilities [xxx] [xxx] [xxx]
xxx xxx Xxx
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PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
Consolidated Balance sheet
As on …………………………….
Particulars Note Nos Rs.
I. Equity and liabilities
1) Shareholders fund
a) Share capital 1 XXX
b) Reserve and surplus 2 XXX
2) Minority interest (as per chart) XXX
3) Noncurrent liabilities 3 XXX
4) Current liabilities
a) Trade payables 4 XXX
b) Short term borrowings 5 XXX
c) Other current liabilities 6 XXX
Total XXX
II. Assets
1) Noncurrent assets
a) Tangible fixed assets 7 XXX
b) Intangible fixed assets 8 XXX
2) Noncurrent investments 9 XXX
3) Current assets
a) Inventories 10 XXX
b) Trade receivables 11 XXX
c) Cash and cash equivalents 12 XXX
Total XXX
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PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
Note 3 Noncurrent liabilities
a) Long term borrowings H Ltd XXX
S Ltd XXX
XXX
Less ; Intercompany borrowings XXX XXX
b) Debentures H Ltd XXX
S Ltd XXX
XXX
Less ; Intercompany debentures XXX XXX
Total XXXX
Note 4 current liabilities : Trade Payables
a) Sundry creditors H Ltd XXX
S Ltd XXX
XXX
Less: Intercompany dues XXX XXX
b) Bills payable H Ltd XXX
S Ltd XXX
XXX
Less: Intercompany bills XXX XXX
Total XXXX
Note 5 short term borrowings and provisions
a) Loan from banks and other companies H Ltd XXX
S Ltd XXX
XXX
Less: Intercompany borrowings XXX XXX
b) Proposed dividend XXX
Total XXXX
Note 6 other current liabilities
Bank over draft H Ltd XXX
S ltd XXX XXX
Total XXXX
Note 7 Tangible fixed assets
a) Land and building H Ltd XXX
S ltd XXX
XXX
Add: Increase in the value XXX XXX
b) Plant and machinery H Ltd XXX
S ltd XXX
XXX
Less : decrease in the value XXX XXX
c) Furniture H Ltd XXX
S ltd XXX XXX
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PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
Total XXXX
Note 8 Intangible fixed assets
a) Goodwill or cost of control as per working note XXX
b) Patents copy rights H Ltd XXX
S ltd XXX XXX
Total XXXX
Note 9 noncurrent investments
a) Investment in govt securities H Ltd XXX
S ltd XXX XXX
b) Investment in debenture H Ltd XXX
S ltd XXX
XXX
Less: Intercompany debenture XXX XXX
c) Other Investment H Ltd XXX
S ltd XXX XXX
Total XXXX
Note 10 inventories
a) Stock in trade H Ltd XXX
S ltd XXX
XXX
Less: unrealized profit XXX XXX
Total XXXX
Note 11 trade receivables
a) Sundry debtors H Ltd XXX
S ltd XXX
XXX
Less: intercompany debts XXX XXX
b) Bills receivables H Ltd XXX
S ltd XXX
XXX
Less: intercompany bills XXX XXX
Total XXXX
Note 12 cash and cash equivalents
a) Cash in hand H Ltd XXX
S ltd XXX XXX
b) Cash with banks H Ltd XXX
S ltd XXX XXX
Total XXXX
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PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
Problems based on minority interest
1. Calculate minority interest and goodwill from the following
Particulars H co S co
Share capital of Rs.10 each (H Co acquired 4/5 of
shares of S Co on 1-4-2014) 1000000 500000
Reserve on 1-4-2014 40000 40000
Profit on 1-4-2014 20000 30000
Total reserve on 31-3-2015 60000 100000
Total profit on 31-3-2015 30000 80000
2. H.W Calculate minority interest and goodwill from the following
Particulars H co S co
Share capital of Rs.10 each (H Co acquired 4/5 of
shares of S Co on 1-4-2014) 500000 250000
Reserve on 1-4-2014 20000 20000
Profit on 1-4-2014 10000 15000
Total reserve on 31-3-2015 30000 50000
Total profit on 31-3-2015 15000 40000
3. Calculate minority interest and goodwill from the following
Particulars H co S co
Share capital
Shares of Rs.10 each (Sun ltd acquired 3000
shares of Moon ltd for Rs.75000 on 1-10-2014) 200000 50000
General Reserve on 1-4-2014 30000 20000
Profit on 1-4-2014 40000 10000
Total profit for the year (1-4-2014 to 31-3-2015) 50000 25000
4. H.W Calculate minority interest and goodwill from the following
Particulars H co S co
Share capital
Shares of Rs.10 each (Sun ltd acquired 6000
shares of Moon ltd for Rs.150000 on 1-10-2014) 400000 100000
General Reserve on 1-4-2014 60000 40000
Profit on 1-4-2014 80000 20000
Total profit for the year (1-4-2014 to 31-3-2015) 100000 50000
5. A ltd acquired 70% of shares in B Ltd on 1-10-2014 at Rs.15 per
share. Following is the balance sheet of B ltd as on 31-3-2015.
Particulars Note No’s Rs.
I. Equity and liabilities
Shareholders fund
Share capital 1 1000000
Reserve and surplus 2 350000
Current liabilities
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PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
Trade payables(creditors) 3 200000
Total 1550000
II. Assets
Noncurrent assets
Tangible fixed assets 1000000
Intangible fixed assets 550000
Total 1550000
Notes: Rs.
1) Share capital 100000 equity shares of Rs.10 each 1000000
Total 1000000
2) Reserve and surplus
General reserve 1-4-5014 200000
Less: Preliminary expenses 50000 150000
Profit and loss accounts on 1-4-2014 100000
Add profit for the year ending 100000 200000
Total 350000
Calculate:
a. Cost of control
b. Pre acquisition reserve and profits
c. Post acquisition reserves and profits in the books of A Ltd (Holding
company) assuming that the profits earned uniformly during the
year.
6. A ltd acquired 70% of shares in B Ltd on 1-10-2014 at Rs.15 per
share. Following is the balance sheet of B ltd as on 31-3-2015.
Particulars Note No’s Rs.
I. Equity and liabilities
Shareholders fund
Share capital 1 500000
Reserve and surplus 2 175000
Current liabilities
Trade payables(creditors) 3 100000
Total 775000
II. Assets
Noncurrent assets
Tangible fixed assets 500000
Intangible fixed assets 275000
Total 775000
Notes: Rs.
1) Share capital 100000 equity shares of Rs.10 each 500000
Total 500000
25
PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
2) Reserve and surplus
General reserve 1-4-5014 100000
Less: Preliminary expenses 25000 75000
Profit and loss accounts on 1-4-2014 50000
Add profit for the year ending 50000 100000
Total 175000
Calculate:
a. Cost of control
b. Pre acquisition reserve and profits
c. Post acquisition reserves and profits in the books of A Ltd (Holding
company) assuming that the profits earned uniformly during the
year.
26
PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
2. H.W The balance sheets of H ltd and S ltd as on 31-3-2015 were as
follows:
Note
Particulars H ltd S ltd
No’s
I. Equity and liabilities
Shareholders fund
Share capital 1 400000 240000
Reserve and surplus 2 200000 100000
Current liabilities
Trade payables(creditors) 160000 20000
Total 760000 360000
II. Assets
Sundry assets -- 440000 360000
Noncurrent investments 3 320000 --------
Total 760000 360000
Notes: H ltd S ltd
1. Share capital shares of Rs.10 each 400000 240000
2. Reserve and surplus : General reserve 120000 60000
Profit and loss a/c 80000 40000
Total 200000 100000
3. Noncurrent investments shares in S ltd 320000 ------
H ltd acquired all the shares on 1-10-2014. There was a credit
balance of Rs.40000 to general reserve and Rs.20000 to profit and
loss account of S ltd on 1-10-2014.
Prepare the consolidated balance sheet of H ltd and its
subsidiary of S ltd
3. The balance sheets of H ltd and S ltd as on 31-3-2015 were as follows:
Note
Particulars H ltd S ltd
No’s
I. Equity and liabilities
Shareholders fund
Share capital 1 200000 100000
Reserve and surplus 2 100000 50000
Current liabilities
Trade payables(creditors) 80000 10000
Total 380000 160000
II. Assets
Sundry assets -- 290000 160000
Noncurrent investments 3 90000 --------
Total 380000 160000
Notes: H ltd S ltd
1. Share capital shares of Rs.10 each 200000 100000
27
PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
2. Reserve and surplus : General reserve 60000 30000
Profit and loss a/c 40000 20000
Total 100000 50000
3. Noncurrent investments 6000 shares in S ltd 90000 ----
H ltd acquired 6000 shares in S ltd on 1-10-2014. There was a credit
balance of Rs.20000 to general reserve and Rs.10000 to profit and
loss account of S ltd on 1-10-2014.
Prepare the consolidated balance sheet of H ltd and its
subsidiary of S ltd.
4. H.W The balance sheets of H ltd and S ltd as on 31-3-2015 were as
follows:
Note
Particulars H ltd S ltd
No’s
I. Equity and liabilities
Shareholders fund
Share capital 1 400000 200000
Reserve and surplus 2 200000 100000
Current liabilities
Trade payables(creditors) 160000 20000
Total 760000 320000
II. Assets
Sundry assets -- 580000 320000
Noncurrent investments 3 180000 --------
Total 760000 320000
Notes: H ltd S ltd
1. Share capital shares of Rs.10 each 400000 200000
2. Reserve and surplus : General reserve 120000 60000
Profit and loss a/c 80000 40000
Total 200000 100000
3. Noncurrent investments 12000 shares in S ltd 180000 ------
H ltd acquired 12000 shares in S ltd on 1-10-2014. There was a
credit balance of Rs.40000 to general reserve and Rs.20000 to profit
and loss account of S ltd on 1-10-2014.
Prepare the consolidated balance sheet of H ltd and its
subsidiary of S ltd.
5. Prepare a consolidate balance sheet of A ltd with its subsidiary B ltd
from the following balance sheet as on 31-3-2015.
Note
Particulars A ltd B ltd
No’s
I. Equity and liabilities
Shareholders fund
Share capital 1 375000 100000
28
PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
Reserve and surplus 2 175000 43750
Non Current liabilities : Debentures 75000 ----
Current liabilities Trade payables 18750 18750
Total 643750 162500
II. Assets: Noncurrent assets
Tangible fixed assets 3 406250 43750
Noncurrent investments 4 112500 ---
Current assets: Inventories -- 56250 75000
Trade receivables -- 50000 31250
Cash and cash equivalents -- 18750 12500
Total 643750 162500
Notes A ltd B ltd
1. Share capital shares of Rs.10 each 375000 100000
2. Reserve and surplus : General reserve 125000 12500
Profit and loss a/c 50000 31250
Total 175000 43750
3. Tangible fixed assets : Building 250000 ----
Machinery 156250 43750
Total 406250 43750
4. Noncurrent investments
7500 shares in B ltd at Rs.15 each 112500 --------
A ltd acquired the shares in B ltd on 1-4-2014 when B ltd profit and
loss account stood at Rs.20000 (credit) and there was no general reserve.
The creditors of A ltd included Rs.6250 due to B ltd.
6. H.W Prepare a consolidate balance sheet of A ltd with its subsidiary B ltd
from the following balance sheet as on 31-3-2015.
Note
Particulars A ltd B ltd
No’s
I. Equity and liabilities
Shareholders fund
Share capital 1 750000 200000
Reserve and surplus 2 350000 87500
Non Current liabilities : Debentures 150000 ----
Current liabilities Trade payables 37500 37500
Total 1287500 325000
II. Assets: Noncurrent assets
Tangible fixed assets 3 812500 87500
Noncurrent investments 4 225000 ---
Current assets: Inventories -- 112500 150000
Trade receivables -- 100000 62500
Cash and cash equivalents -- 37500 25000
Total 1287500 325000
29
PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
34
PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
I. Equity and liabilities
Shareholders fund
Share capital 1 300000 200000
Reserve and surplus 2 115000 95000
Non Current liabilities :
12%Debentures -- 100000 ------
Current liabilities Trade payables 3 75000 87500
Total 590000 382500
II. Assets: Noncurrent assets
Tangible fixed assets 4 150000 125000
Intangible fixed assets (Goodwill) -- 50000 100000
Noncurrent investments 5 205000 30000
Current assets: Inventories (stock) -- 75000 37500
Trade receivables 6 100000 70000
Cash and cash equivalents -- 10000 20000
Total 590000 382500
Notes H ltd Sltd
1. Share capital: shares of Rs.10 each 300000 200000
2. Reserve and surplus :
General reserve on 30000 20000
Profit and loss account 1-4-2014 35000 30000
Profit for the year 50000 45000
Total 115000 95000
3. Trade payable : Creditors 60000 87500
Bills payable 15000 --------
Total 75000 87500
4. Tangible fixed assets: Building 100000 75000
Machinery 50000 50000
Total 150000 12500
5. Noncurrent investments
1500 shares in S ltd 180000 --------
Govt securities 25000 30000
Total 205000 30000
6. Trade receivables : Debtors 100000 60000
Bills receivable ------ 10000
Total 100000 70000
Adjustments:
a) H ltd acquired the shares in S ltd on 1-8-2014.
b) The general reserve of S ltd on 1-4-2014 was Rs.17000.
c) Bills receivable of S ltd were all accepted by H ltd.
d) Debtors of S ltd included the amount of Rs.10000 for supply of goods
to H ltd.
35
PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
e) The stock of H ltd included goods purchased from S ltd worth
Rs.5000. The goods were supplied by S ltd at cost plus 25%.
13. From the following balance sheet and adjustments given below
prepare the consolidated balance sheet as on 31-3-2015.
Note
Particulars H ltd S ltd
No’s
I. Equity and liabilities
Shareholders fund
Share capital 1 500000 100000
Reserve and surplus 2 250000 90000
Current liabilities Trade payables 3 100000 75000
Total 850000 265000
II. Assets: Noncurrent assets
Tangible fixed assets -- 400000 60000
Noncurrent investments
7500 shares in S ltd -- 150000 -------
Current assets: Inventories (stock) 230000 120000
Trade receivables 4 70000 85000
Total 850000 265000
Notes H ltd Sltd
1. Share capital: shares of Rs.10 each 500000 100000
2. Reserve and surplus :
General reserve on 1-4-2014 50000 30000
Profit and loss account 1-4-2014 150000 40000
Profit for the year 50000 20000
Total 250000 90000
3. Trade payable : Creditors 100000 60000
Bills payable --------- 15000
Total 100000 75000
4. Trade receivables : Debtors 65000 85000
Bills receivable 5000 --------
Total 70000 85000
Adjustments:
a) The shares were acquired by H ltd in S ltd on 1-7-2014.
b) The bills receivable of H ltd were all accepted by S ltd.
c) The creditors of H ltd included Rs.20000 payable to S ltd.
d) The stock of H ltd included goods purchased from S ltd worth
Rs.10000. the goods were supplied by S ltd at cost plus 25%.
14. From the following balance sheet of Ravi Ltd and Kiran ltd, prepare
the consolidated balance sheet as on 31-3-2015.
Particulars Not Ravi ltd Kiran
e ltd
36
PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
No’s
I. Equity and liabilities
Shareholders fund
Share capital 1 1000000 400000
Reserve and surplus 2 180000 100000
Current liabilities Trade payables 3 120000 50000
Total 1300000 550000
II. Assets: Noncurrent assets
Tangible fixed assets 4 650000 375000
Intangible fixed assets -- 50000 20000
(Goodwill)
Noncurrent investments
30000 shares in Kiran ltd -- 350000 -------
Current assets: Inventories -- 70000 60000
Trade receivables 5 100000 60000
Cash and cash equivalents -- 80000 35000
Total 1300000 550000
Notes Ravi ltd Kiran ltd
1. Share capital: shares of Rs.10 each 1000000 400000
2. Reserve and surplus :
General reserve 80000 60000
Profit and loss account 100000 40000
Total 180000 100000
3. Trade payable : Creditors 70000 30000
Bills payable 50000 20000
Total 120000 50000
4. Tangible fixed assets: Building 400000 250000
Machinery 250000 125000
Total 650000 375000
5. Trade receivables : Debtors 60000 45000
Bills receivable 40000 15000
Total 100000 60000
Adjustments:
a) Ravi ltd acquired the shares in Kiran ltd on 1-10-2014.
b) The general reserve and profit and loss account balance of Kiran ltd
as on 1-4-2014 were Rs.40000 and Rs.20000 respectively.
c) The creditors of Kiran ltd include an amount of Rs.10000 due to Ravi
ltd.
d) The bills payable of Kiran ltd were all in favour of Ravi ltd.
e) The stock of Kiran ltd included goods purchased from Ravi ltd worth
Rs.10000. the goods were supplied by Ravi ltd at cost plus 25%.
37
PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
15. The following were the balance sheets of H ltd and S ltd as on 31-3-
2015.
Note
Particulars H ltd S ltd
No’s
I. Equity and liabilities
Shareholders fund
Share capital 1 250000 125000
Reserve and surplus 2 45000 45000
Current liabilities Trade payables 3 15000 20000
Total 310000 190000
II. Assets: Noncurrent assets
Tangible fixed assets -- 100000 75000
Noncurrent investments 4 125000 40000
Current assets: Inventories (stock) -- 35000 37500
Trade receivables 5 27500 25000
Cash and cash equivalents -- 22500 12500
Total 310000 190000
Notes H ltd Sltd
1. Share capital: shares of Rs.10 each 250000 125000
2. Reserve and surplus :
General reserve 30000 25000
Profit and loss account 15000 20000
Total 45000 45000
3. Trade payable : Creditors 10000 7500
Bills payable 5000 12500
Total 15000 20000
4. Noncurrent investments
10000 shares in S ltd at cost 120000 --------
Govt securities 5000 40000
Total 125000 40000
5. Trade receivables : Debtors 20000 17500
Bills receivable 7500 7500
Total 27500 25000
Additional information:
a) When H ltd acquired the shares in S ltd the latter company had
Rs.10000 and Rs.7500 to the credit of general reserve and profit and
loss account respectively.
b) Bills payable of S ltd include Rs.2500 accepted in favour of H ltd.
c) The debtors of H ltd include Rs.2500 due from S ltd.
d) The stock of S Ltd includes Rs.6000 supplied by H ltd at cost plus
20%.
Prepare the consolidate balance sheet.
38
PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
16. The following are the balance sheets of H ltd and S ltd on 31-3-2015.
Note
Particulars H ltd S ltd
No’s
I. Equity and liabilities
Shareholders fund
Share capital 1 600000 300000
Reserve and surplus 2 170000 135000
Non Current liabilities :
Debentures -- -------- 80000
Current liabilities Trade payables 3 40000 35000
Total 810000 550000
II. Assets: Noncurrent assets
Tangible fixed assets 4 355000 345000
Noncurrent investments 5 300000 50000
Current assets: Inventories (stock) -- 80000 65000
Trade receivables (debtors) -- 40000 55000
Cash and cash equivalents -- 35000 35000
Total 810000 550000
Notes H ltd S ltd
1. Share capital: shares of Rs.10 each 600000 300000
2. Reserve and surplus :
General reserve 80000 60000
Profit and loss account 90000 75000
Total 170000 135000
3. Trade payable : Creditors 40000 25000
Bills payable -------- 10000
Total 40000 35000
4. Tangible fixed assets: Building 150000 150000
Machinery 205000 195000
Total 355000 345000
5. Noncurrent investments
24000 shares in S ltd at cost 300000 --------
Govt securities ------- 50000
Total 300000 50000
Other information
a) H ltd acquired 80% of shares in S ltd on 1-8-2014.
b) In the balance sheet of S ltd on 1-4-2012, the general reserve showed
a balance of Rs.15000 and to the credit of profit and loss account was
Rs.30000.
c) The bills accepted by S ltd were all in favour of H ltd.
39
PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS
DVDMT’S Smt.Kumudben Darbar College of Commerce, Science &
Management Studies, VIJAYAPUR
d) Machinery of S ltd was overvalued by Rs.2000.
e) The stock of H ltd includes Rs.5000 bought from S ltd which made a
profit of 20% on sales.
Prepare the consolidated balance sheet.
40
PROF.S.B.KUMBAR (9036545313) ACCOUNTING STANDARDS