B) Preparation of consolidated balance sheet

Problem 3
Balance sheet as at 31st March 20X1:-

Liabilities H Limited S Limited Assets H Limited S Limited

Equity 5,00,000 2,00,000 Sundry Assets 3,00,000 1,00,000

shares of 60% Shares in S Limited
Rs. 10
each fully
paid

1,62,400 --

Reserves 1,00,000 50,000 Current Assets

Creditors 80,000 60,000 2,77,600 2,45,000

Profit & 60,000 35,000

Loss
Account

7,40,000 3,45,000 7,40,000 3,45,000

H Ltd acquired the shares on 1st April 20X0 on which date General reserve and profit and
loss account of S limited showed balances of Rs. 40,000 and Rs. 8,000 respectively.
Prepare a consolidated balance sheet as on 31st March 20X1.
Problem 4
Balance sheet as at 31st March 20X1:-

Liabilities H Limited S Limited Assets H Limited S Limited

Equity shares 6,00,000 2,00,000 Sundry 3,70,000 1,45,000

of Rs. 10 each Assets
fully paid 70% Shares
in
 Reserves 1,50,000 70,000 S Limited at 2,60,000 --------

Creditors 90,000 60,000 cost

Profit and Stock 1,75,000 1,89,000

loss account 70,000 50,000 Debtors 55,000 30,000

Cash at

Bank 50,000 10,000

Preliminary ------- 6,000

expenses

9,10,000 3,80,000 9,10,000 3,80,000

H Ltd acquired the shares of S limited on 30th June 20X0. On 1st April 20X0, S limited’s
general reserve and profits and loss account stood at Rs 60,000 and Rs 20,000
respectively. No part of the preliminary expenses were written off during the year ended
31st March 20X1.
Prepare a consolidated balance sheet as on 31st March 20X1.
Problem 5
Balance sheet as at 31st March 20X1:-
H Ltd. S Ltd.
Particulars
R s. R s.
I. E QUI TY AND LI A B I LI TI ES
1 Sh areholders’ funds
(a) Share Capital
Equity shares of Rs. 10 each fully paid 1,000,000 200,000
(b) Reserves & Surplus
Other reserves (General reserves) 310,000 69,000
Surplus (P&L a/c) 150,000 40,000
2 C urrent liabilities
(a) Trade payables 230,000 -
TOTAL 1,690,000 309,000
II. A SSETS
1 Non -current assets
(a) Fixed Assets 1,162,000 180,000
(b) Non-current investments
(i) Trade Investment
Investment in equity instruments (60%
shares in S Ltd.) 142,000 -
2 C urrent Assets 386,000 124,000
(a) Other Current assets (Preliminary exps) - 5,000
TOTAL 1,690,000 309,000

H limited acquired the shares on 31st December 20X0. On 1st April 20X0 S Ltd’s Profit
and Loss account showed a debit balance of Rs 8,000. On date of control H limited
revalued the fixed assets of S Limited at Rs 2,00,000. S has charged 10% p.a. depreciation.
Prepare a consolidated balance sheet as on 31st March 20X1.
Problem 6
The balance sheets of H limited and S limited as at 31st March 2015 were as under:-
Shares were acquired by H limited on 1st October 2014. Bills receivable held by S limited
are all accepted by H limited. Included in sundry debtors of S limited is a sum of Rs. 6000
owing by H limited in respect of goods supplied.
Prepare the consolidated balance sheet as at 31st March 2015.
H Ltd. S Ltd.
P articulars
Rs. Rs.
I. EQUI T Y AND L I A BI LI T I ES
1 Shareholders’ funds
(a) Share Capital
Equity shares of Rs. 10 each fully paid 200,000 50,000
(b) Reserves & Surplus
General reserves 30,000 10,000
Surplus (P&L a/c)
Opening balance as at 1st April 2014 40,000 20,000
(+) Net Profit For the current year 2014-15 50,000 25,000
2 C urrent liabilities
(a) Short-term borrowings (Bank Overdraft) 20,000 -
(b) Trade payables 30,000 30,000
Bills Payable 15,000 -

T OT A L 385,000 135,000
II. ASSET S
1 Non-current assets
(a) Fixed Assets
(i) Tangible assets
Land and bldgs 60,000 10,000
Plant & Mach 200,000 10,000
(b) Non-current investments
(i) Trade Investment
Investment in equity instruments (3000
shares in S Ltd. at cost) 65,000 -
2 C urrent Assets
(a) Inventories 40,000 85,000
(b) Trade receivables 10,000 10,000
Bills receivable - 10,000
(c) Cash and cash equivalents 10,000 10,000
T OT A L 385,000 135,000
Problem 7
H limited acquired as investment 15000 shares in S limited for Rs 1,55,000 on 1st July
20X0. The balance sheets of the two companies on 31st March 20X1 were as follows:-
H Ltd. S Ltd.
Particulars
Rs. Rs.
I. EQUI TY AND LI AB ILI TI ES
1 Shareholders’ funds
(a) Share Capital
Equity shares of Rs. 10 each fully 900,000 250,000
(b) Reserves & Surplus
Other Reserves (General reserves) 160,000 40,000
Surplus (P&L a/c) 80,000 25,000
2 Current liabilities
(a) Trade payables 50,000 30,000
Bills Payable 40,000 20,000

TOTAL 1,230,000 365,000

II. ASSETS
1 Non-current assets
(a) Fixed Assets
(i) Tangible assets
Plant & Mach 700,000 150,000
Furniture 100,000 70,000
(b) Non-current investments 155,000 -
2 Current Assets
(a) Inventories 100,000 50,000
(b) Trade receivables 60,000 35,000
Bills receivable 25,000 20,000
(c) Cash and cash equivalents 90,000 40,000
TOTAL 1,230,000 365,000

The following additional information is provided to you:-

 General reserve appearing in the balance sheet of S limited has remained
unchanged since 1st April 20X0.
 Profit earned by S limited for the year ended 31st March 20X1 amounted to Rs
20,000.
 On 1st February 20X1, H limited sold to S limited goods costing Rs 8000 for Rs
10,000, 25% of these goods remained unsold with S limited on 31st March 20X1.
Creditors of S limited include Rs 4000 due to H limited on account of these goods.
 Out of S limited’s acceptances, Rs 15000 are those which have been accepted in
favour of H limited. Out of these, H limited had endorsed by 31st March 20X1, Rs
8000 worth of bills receivable in favour of its creditors.
Prepare the consolidated balance sheet as at 31st March 20X1.
Problem 8
A Ltd acquired 16,000 shares of Rs 10 each in B Ltd on 1st July 20X0. The balance sheets
of the two companies as on 31st December 20X0 were as follows:
 A Ltd. B Ltd.
Particulars
R s. R s.
I. E QUI TY A ND LI A B I LI TI E S
1 Shareholders’ funds
(a) Share Capital
Equity shares of Rs. 10 each fully paid 500,000 200,000
(b) Reserves & Surplus
Other reserves (General reserves) 240,000 100,000
Surplus (P&L a/c) 57,200 82,000
2 C urrent liabilities
(a) Short-term borrowings (Bank Overdraft) 100,000 -
(b) Trade payables 69,800 20,000
Bills Payable - 13,000

TOTA L 967,000 415,000

II. A SSE TS
1 Non-current assets
(a) Fixed Assets
(i) Tangible assets
Land & Bldg 180,000 190,000
Plant & Mach 240,000 135,000
(b) Non-current investments -
(i) Trade Investment
Investment in equity instruments (in B
Ltd. at cost) 330,000 -
2 C urrent A ssets
(a) Inventories 144,000 42,000
(b) Trade receivables 44,000 40,000
Bills receivable 14,800 -
(c) Cash and cash equivalents 14,200 8,000
TOTA L 967,000 415,000

 The profit and loss account of B Ltd showed a balance of Rs. 30,000 on 1st January
20X0 out of which a dividend of 10 % was paid on 1st August. The dividend was
credited by A Ltd to its profit and loss account. Profits may be assumed to have
accrued evenly throughout the year.
 The Plant and machinery of B Ltd which stood at Rs 1,50,000 on 1st January, 20X0
was considered as worth Rs 1,80,000 on the date of acquisition by A Ltd. Plant and
Machinery is depreciated at 10 %.
Prepare the consolidated balance sheet of A Ltd and its subsidiary as at 31st December
20X0.
Problem 9
Following are the balance sheets of H Ltd and S Ltd as at 31st March 20X1:-
H L td. S L td.
P articu lars
R s. R s.
I. E QUI T Y A ND L I A B I L I T I E S
1 Sh areholders’ fu nds
(a) Share Capital
Equity shares of Rs. 100 each 500,000 200,000
(b) Reserves & Surplus
Other reserves (General reserves) 100,000 60,000
Surplus (P&L a/c) 140,000 90,000
2 C urrent li ab ilities
(a) Trade payables 80,000 50,000
Bills Payable - 40,000
T OT A L 820,000 440,000
II. A SSE T S
1 Non -current a ssets
(a) Fixed Assets
(i) Tangible assets 360,000 220,000
(ii) Intangible assets (Goodwill) 40,000 30,000
(b) Non-current investments
(i) Trade Investment
Investment in equity instruments
(1500 shares in S Ltd. at cost) 240,000 -
2 C urrent A ssets
(a) Inventories 100,000 90,000
(b) Trade receivables 20,000 75,000
(c) Cash and cash equivalents 60,000 25,000
T OT A L 820,000 440,000

H L td. S L td.
Particulars
Rs. Rs.
I. EQUI TY AND LIA BI LI TI ES
1 Shareholders’ funds
(a) Share Capital
Equity shares of Rs. 100 each 500,000 200,000
(b) Reserves & Surplus
Other reserves (General reserves) 100,000 60,000
Surplus (P&L a/c) 140,000 90,000
2 C urrent liabilities
(a) Trade payables 80,000 50,000
Bills Payable - 40,000
TOTAL 820,000 440,000
II. ASSETS
1 Non-curren t assets
(a) Fixed Assets
(i) Tangible assets 360,000 220,000
(ii) Intangible assets (Goodwill) 40,000 30,000
(b) Non-current investments
(i) Trade Investment
Investment in equity instruments
(1500 shares in S Ltd. at cost) 240,000 -
2 C urrent Assets
(a) Inventories 100,000 90,000
(b) Trade receivables 20,000 75,000
(c) Cash and cash equivalents 60,000 25,000
TOTAL 820,000 440,000

 The profit and loss account of S Ltd showed a balance of Rs 50,000 on 1st April
20X0.
  A dividend of 15 % was paid on 15th October 20X0 for the earlier year. The
dividend was credited by H Ltd to its profit and loss account.
 H Ltd acquired the shares on 1st October 20X0.
 The bills payable of S Ltd were all issued in favour of H Ltd which company got the
bills discounted, Included in the creditors of S Ltd are Rs 20,000 for goods supplied
by H Ltd.
 The stock of S Ltd includes goods to the value of Rs 8,000 which were supplied by
H Ltd at a profit of 33.33 % on cost.
Prepare consolidated balance sheet of H Ltd and its subsidiary S Ltd as on 31st March
20X1. Give all your workings notes clearly.
Problem 10
P Ltd. acquired 12,000 shares in F Ltd, for Rs. 1,70,000 on April 1, 20X4. The balance
sheets of the two companies on 31st December 20X4 were as follows:
P L td. F Ltd.
Particu lars
R s. Rs.
I. EQUIT Y AND LI ABI LI TI ES
1 Sh areholders’ funds
(a) Share Capital
Equity shares of Rs. 10 each 1,000,000 300,000
(b) Reserves & Surplus
Other reserve (General reserve) 420,000 50,000
Surplus (P&L a/c) 260,000 85,000
2 Current Liabilities
(a) Short-term borrowings
Loans & advances from related
parties (Loan from F Ltd. inc.
interest) 57,500 -
(b) Trade payables 182,500 42,000
Bills Payable 80,000 60,000
TOT AL 2,000,000 537,000
II. ASSET S
1 Non-cu rrent assets
(a) Fixed Assets
(i) Tangible assets
Land & bldgs 400,000 100,000
Plant & Machinery 500,000 100,000
(ii) Intangible assets (Goodwill) 300,000 70,000
(b) Non-current investments 170,000 -
2 Current A ssets
(a) Inventories 200,000 40,000
(b) Trade receivables 300,000 85,000
Bills receivable 50,000 30,000
(c ) Cash & cash equivalents 80,000 62,000
(d) Short term borrowings
Loans & advances to related parties
(Loan to P Ltd.) - 50,000
TOT AL 2,000,000 537,000

Problem 11

DEF Ltd. acquired 100% ordinary shares of ₹ 100 each of XYZ Ltd. on 1st October 20X1.
On March 31, 20X2 the summarised Balance Sheets of the two companies were as given
below:

DEF Ltd. XYZ Ltd.

Assets
Property Plant Equipment
Land & Buildings 15,00,000 18,00,000
Plant & Machinery 24,00,000 13,50,000
Investment in XYZ Ltd. 34,00,000 -
Inventory 12,00,000 3,64,000
Financial Assets
Trade Receivable 5,98,000 4,00,000
Cash 1,45,000 80,000
Total 92,43,000 39,94,000
Equities & Liabilities
Equity Capital (Shares of ₹ 100 each fully 50,00,000 20,00,000
paid)
Other Equity
Other reserves 24,00,000 10,00,000
Retained Earnings 5,72,000 8,20,000
Financial Liabilities
Bank Overdraft 8,00,000 -
Trade Payable 4,71,000 1,74,000
Total 92,43,000 39,94,000
The retained earnings of XYZ Ltd. showed a credit balance of ₹ 3,00,000 on 1st April
20X1 out of which a dividend of 10% was paid on 1st November; DEF Ltd. has
recognised the dividend received to profit or loss account; Fair Value of P& M as on
1st October 20X1 was ₹20,00,000. The rate of depreciation on plant & machinery is 10%.
Following are the increases on comparison of Fair value as per respective Ind AS with
Book value as on 1st October 20X1 which are to be considered while consolidating the
Balance Sheets.

Liabilities Amount Assets Amount

Trade Payables 1,00,000 Land & Buildings 10,00,000
Inventories 1,50,000
Note:
1. It may be assumed that the inventory is still unsold on balance sheet date and
the Trade Payables are also not yet settled.
2. Also assume that the Other Reserves of both the companies as on 31st March
20X2 are the same as was on 1st April 20X1.
3. All fair value adjustments have not yet started impacting consolidated post-
acquisition profits.
Prepare consolidated Balance Sheet as on March 31, 20X2.

Problem 12
Ram Ltd. acquired 60% ordinary shares of ₹ 100 each of Krishan Ltd. on 1st October 20X1.
On March 31, 20X2 the summarised Balance Sheets of the two companies were as given
below:

Ram Ltd. Krishan Ltd.

Assets
Property, Plant and Equipment
Land & Buildings 3,00,000 3,60,000
Plant & Machinery 4,80,000 2,70,000
Investment in Krishan Ltd. 8,00,000 -
Inventory 2,40,000 72,800
Financial Assets
Trade Receivables 1,19,600 80,000
Cash 29,000 16,000
Total 19,68,600 7,98,800
Equity & Liabilities
Equity Capital (Shares of ₹ 100 each fully 10,00,000 4,00,000
paid)
Other Equity
Other Reserves 6,00,000 2,00,000
Retained earnings 1,14,400 1,64,000
Financial Liabilities
Bank Overdraft 1,60,000 -
Trade Payable 94,200 34,800
Total 19,68,600 7,98,800
The Retained earnings of Krishan Ltd. showed a credit balance of ₹ 60,000 on 1st April
20X1 out of which a dividend of 10% was paid on 1st November; Ram Ltd. has credited
the dividend received to its Retained earnings; Fair Value of P& M as on 1st October 20X1
was ₹ 4,00,000; The rate of depreciation on plant & machinery is 10%.
Following are the increases on comparison of Fair value as per respective Ind AS with
book value as on 1st October 20X1 which are to be considered while consolidating the
Balance Sheets.

Liabilities Amount Assets Amount

Trade Payables 20,000 Land & Buildings 2,00,000
Inventories 30,000
Note:
1. It may be assumed that the inventory is still unsold on balance sheet date and
the Trade Payables are also not yet settled.
2. Also assume that the Other Reserves as on 31st March 20X2 are the same as
was on 1st April 20X1.
Prepare consolidated Balance Sheet as on March 31, 20X2.

Problem 13
Summarised Balance Sheets of PN Ltd. and SR Ltd. as on 31st March, 2018 were given as
below:
(Amount in ₹)
Particulars PN Ltd. SR Ltd.
Assets
Land & building 4,68,000 5,61,600
Plant & Machinery 7,48,800 4,21,200
Investment in SR Ltd. 12,48,000 -
Inventories 3,74,400 1,13,600
Trade Receivables 1,86,500 1,24,800
Cash & Cash equivalents 45,200 24,900
Total Assets 30,70,900 12,46,100
Equity & Liabilities
Equity Share Capital (Shares of ₹ 100 each fully paid) 15,60,000 6,24,000
Other Reserves 9,36,000 3,12,000
Retained Earnings 1,78,400 2,55,800
Trade Payables 1,46,900 34,300
Short-term borrowings 2,49,600 20,000
Total Equity & Liabilities 30,70,900 12,46,100
i. PN Ltd. acquired 70% equity shares of ₹ 100 each of SR Ltd. on 1st October, 2017.
ii. The Retained Earnings of SR Ltd. showed a credit balance of ₹ 93,600 on 1st April,
2017 out of which a dividend of 12% was paid on 15th December, 2017.
iii. PN Ltd. has credited the dividend received to its Retained Earnings.
iv. Fair value of Plant & Machinery of SR Ltd. as on 1st October, 2017 was ₹ 6,24,000.
The rate of depreciation on Plant & Machinery was 10% p.a.
v. Following are the increases on comparison of Fair Value as per respective Ind AS
with book value as on 1st October, 2017 of SR Ltd. which are to be considered
while consolidating the Balance Sheets:
a. Land & Buildings ₹ 3,12,000
b. Inventories ₹ 46,800
c. Trade Payables ₹ 31,200.
vi. The inventory is still unsold on Balance Sheet date and the Trade Payables are not
yet settled.
vii. Other Reserves as on 31st March, 2018 are the same as was on 1st April, 2017.
viii. The business activities of both the company are not seasonal in nature and
therefore, it can be assumed that profits are earned evenly throughout the year.
Prepare the Consolidated Balance Sheet as on 31st March, 2018 of the group of entities
PN Ltd. and SR Ltd. as per Ind AS.

Problem 14

Raja Ltd. purchased 60% shares of Ram Ltd. paying ₹ 525 lakh. Number of issued capital
of Ram Ltd. is 1 lakh. Fair value of identifiable assets of Ram Ltd. is ₹ 640 lakh and that of
liabilities is ₹ 50 lakh. As on the date of acquisition, market price per share of Ram Ltd. is
₹ 775. Find out the value of goodwill.