Answer 1:

Consolidated Account Accounting entries

Fixed assets 4,000 Particulars DR CR
Other assets 5,500 Share capital 500
9,500 RE 1500
Investments 2000
Share capital 2,000.0
Retained earnings 4,000.0
Liabilities 3,500.0
9,500

Answer 2:
Consolidated Account Accounting entries
Fixed assets 7,000 Particulars DR CR
Investments 1,000 Share capital 1,500
Other assets 6,000 RE 3,500
14,000 Investments 5,000

Share capital 3,000

Retained earnings 5,000
Liabilities 6,000
14,000

Answer 3:
Net Assets of Subsidary:
At Acq
Share capital 500
Retained earnings 2,000
Fv Adj Land 400 ( 1200 - 800 )
2,900

Goodwill:

Cosideration 3,500
Net Assets (2,900)
600
 Consolidated accounts Accounting entries
Land 2,200 Particulars DR CR
Building 4,700 Goodwill 600
Goodwill 600 Land 400
Other assets 5,500 Share capital 500
13,000 RE 2,000
Investments 3,500
Share capital 2,200
Retained earnings 4,000
Liabilities 6,800
13,000

Answer 4:
Net Assets of Subsidary:
At Acq At Rep Change Parent NCI
Share capital 500 500
Retained earnings 800 2000
Fv Adj Land 600 (1,200 - 600 ) 600 100% 0%
1,900 3,100 1,200 1,200 -

Goodwill:

Cosideration 3,500
Net Assets (1,900)
1,600

Group Reserves:
Retained earnings 4,000
Post acquistion 1,200
5,200

Consolidated accounts Accounting entries

Land 2,400 Particulars DR CR
Building 4,700 Goodwill 1,600
Goodwill 1,600 Land 600
Other assets 5,500 Share capital 500
14,200 RE 800
Investments 3,500
Share capital 2,200
Retained earnings 5,200
Liabilities 6,800
14,200
Answer 5:
Net Assets of Subsidary:
At Acq At Rep Change Parent NCI
Share capital 500 500
Retained earnings 800 2,000
Fv Adj Building 500 ( 3,000 - 2,500 ) 450 100% 0%
1,800 2,950 1,150 1,150 -

Goodwill:

Cosideration 3,500
Net Assets (1,800)
1,700

Group Reserves:
Retained earnings 4,000
Post acquistion 1,150
5,150

Consolidated accounts Accounting entries

Land 1,800 Particulars DR CR
Building 5,150 Goodwill 1,700
Goodwill 1,700 Land 500
Other assets 5,500 Share capital 500
14,150 RE 800
Investments 3,500
Share capital 2,200
Group reserves 5,150
Liabilities 6,800
14,150

Answer 6:
Net Assets of Subsidary:
At Acq At Rep Change Parent NCI
Share capital 1,200 1,200
Retained earnings 2,100 4,000
FV Adjustments
Land (200) (200)
Buidling 500 ( 3,200 - 2,700 ) 400
Equipment 700 ( 2,200 - 1,500 ) 630 100% 0%
Provision (1,200) -
3,100 6,030 2,930 2,930 -
Goodwill:

Cosideration 6,200
Net Assets (3,100)
3,100

Group Reserves:
Retained earnings 7,200
Post acquistion 2,930
10,130

Consolidated accounts Accounting entries

Land 1,600 Particulars DR CR
Building 5,100 Goodwill 3,100
Equipment 4,630 Building 500
Goodwill 3,100 Equipment 700
Investments 1,200 Share capital 1,200
Other Assets 5,500 RE 2,100
21,130 Provision 1,200
Land 200
Share capital 3,200 Investments 6,200
Group reserves 10,130
Liabilities 7,800
21,130

Answer 7:
Net Assets of Subsidary:
At Acq At Rep Change Parent NCI
Share capital 375,000 375,000
Retained earnings 200,000 600,000
FV Adjustments
Land 150,000 150,000
Buidling 156,250 140,625
Equipment 438,750 351,000 75% 25%
1,320,000 1,616,625 296,625 222,469 74,156

Goodwill:

Cosideration 1,350,000
Net Assets (990,000)
360,000
Group Reserves:
Retained earnings 1,200,000
Post acquistion 222,469
1,422,469

NCI:
Share at Acq 330,000
Post Acquisition 74,156
404,156

Consolidated accounts Accounting entries

Prop, plant and Equip 2,779,125 Particulars DR CR
Goodwill 360,000 Goodwill 360,000
Investments 400,000 Land 150,000
Receivable 67,500 Building 156,250
Other Assets 53,550 Equipment 438,750
3,660,175 Share capital 375,000
Retained earnings 200,000
Share capital 750,000 NCI 330,000
Group reserves 1,422,469 Investments 1,350,000
Current Liab 180,000
NCI 404,156
Long term Liab 903,550
3,660,175

Answer 8:
Net Assets of Subsidary:
At Acq At Rep Change Parent NCI
Share capital 375,000 375,000
Retained earnings 450,000 600,000
FV Adjustments
Land 43,750 43,750
Buidling 31,250 25,000
Equipment 116,350 93,080
Contingency (74,500) - 60% 40%
941,850 1,136,830 194,980 116,988 77,992

Goodwill:

Cosideration 1,450,000
Net Assets (565,110)
884,890
Group Reserves:
Retained earnings 1,200,000
Post acquistion 116,988
1,316,988

NCI:
Share at Acq 376,740.00
Post Acquisition 77,992
454,732

Consolidated accounts Accounting entries

Prop, plant and Equip 2,236,680 Particulars DR CR
Goodwill 884,890Goodwill 884,890
Investments 400,000Land 43,750
Receivable 72,000Building 31,250
Other Assets 37,500Equipment 116,350
3,631,070Share capital 375,000
RE 450,000
Share capital 750,000 Provision 74,500
Group reserves 1,316,988 NCI 376,740
Current Liab 180,000 Investments 1,450,000
NCI 454,732
Long term Liab 929,350
3,631,070

Concept of full and partial goodwill

Shares
NA 200,000 20,000

Total FV Sh Price 25
Parent 325,000
NCI 175,000
500,000

Full Goodwill: Partial Goodwill: NCI GOODWILL:

Consideration parent 325,000 Con P 325,000 CON NCI 175,000
FV of NCI 175,000 NA (130,000) NA (70,000)
Net Assets (200,000) 195,000 105,000
300,000
 Full Goodwill Question
Answer 9:
Net Assets of Subsidary:
At Acq At Rep Change Parent NCI
Share capital 400,000 400,000
Retained earnings 450,000 650,000
FV Adjustments
Buidling 80,000 60,000 63% 38%
930,000 1,110,000 180,000 112,500 67,500

Goodwill:

Cosideration Parent 1,250,000

FV of NCI 375,000
Net Assets (930,000)
695,000

Group Reserves:
Retained earnings 1,758,000
Post acquistion 112,500
1,870,500

NCI:
FV of NCI 375,000.00
Post Acquisition 67,500
442,500

Consolidated accounts Accounting entries

Prop, plant and Equip 1,886,420 Particulars DR CR
Goodwill 695,000Goodwill 695,000
Receivable 922,900Building 80,000
Other Assets 385,830Share capital 400,000
3,890,150RE 450,000
NCI 375,000
Share capital 650,000 Investments 1,250,000
Group reserves 1,870,500
Current Liab 927,150
NCI 442,500 -
3,890,150
 Partial Goodwill Question

Answer 9:
Net Assets of Subsidary:
At Acq At Rep Change Parent NCI
Share capital 400,000 400,000
Retained earnings 450,000 650,000
FV Adjustments
Buidling 80,000 60,000 63% 38%
930,000 1,110,000 180,000 112,500 67,500

Goodwill:
Short GW
Cosideration Parent 1,250,000 375,000 FV of NCI
For Understanding
Net Assets (581,250) (348,750) Share
668,750 26,250

Group Reserves:
Retained earnings 1,758,000
Post acquistion 112,500
1,870,500

NCI:
Share of NCI 348,750
Post Acquisition 67,500
416,250

Consolidated accounts Accounting entries

Prop, plant and Equip 1,886,420 Particulars DR CR
Goodwill 668,750Goodwill 668,750
Receivable 922,900Building 80,000
Other Assets 385,830Share capital 400,000
3,863,900RE 450,000
NCI 348,750
Share capital 650,000 Investments 1,250,000
Group reserves 1,870,500
Current Liab 927,150
NCI 416,250 -
3,863,900
Answer 10:
Net Assets of Subsidary:
At Acq At Rep Change Parent NCI
Share capital 550,000 550,000
Retained earnings 300,000 750,000
FV Adjustments
Building 19,400 15,520
Land 20,000 20,000
Machinery 25,000 22,500 65.0% 35.0%
914,400 1,358,020 443,620 288,353 155,267

Goodwill:

Cosideration Parent 1,750,000

FV of NCI 400,000 (Share of net assets + goodwill)
Net Assets (914,400)
1,235,600

Group Reserves:
Retained earnings 1,785,000
Post acquistion 288,353
2,073,353

NCI:
Share of NCI 400,000 (Share of net assets + goodwill)
Post Acquisition 155,267
555,267

Consolidated accounts Accounting entries

Prop, plant and Equip 2,891,220 Particulars DR CR
Goodwill 1,235,600Goodwill 1,235,600
Receivable 1,332,400Land 20,000
Inventory 475,000Machinery 25,000
5,934,220Building 19,400
Share capital 550,000
Share capital 750,000 RE 300,000
Group reserves 2,073,353 NCI 400,000
Current Liab 2,555,600 Investments 1,750,000
NCI 555,267
5,934,220
 Concept of Intangible

On the books Off the books

Not Having Having

Having FV Having
FV Indefinite
Finite Life
life
Record
Additional if Derecognize 1 Seperately record
FV is in 2 Amortize Like Goodwill
excess of CA

Example: Example:
Software Unincorporated business goodwill

Intra Group Adjustments (Balance sheet)

1 Intra Group Receivable Payable

Case 1: Normal Adjustment:
Parent Subsidary
Receivable 50,000 Payable 50,000

Particulars DR CR
Payable 50,000
Receivable 50,000

Case 2: Cash in transit:

Parent Subsidary
Receivable 50,000 Payable 40,000

Particulars DR CR
Payable 40,000
Cash in Transit 10,000
Receivable 50,000

Case 3: Stock in Transit:

Parent Subsidary
Receivable 50,000 Payable 38,000
Particulars DR CR
Payable 38,000
Stock in transit 12,000
Receivable 50,000
Case 4: Investment and loan payable:
Parent Subsidary
Investment 50,000 Loan Payable 150,000
Particulars DR CR
Loan Payable 50,000
Investment 50,000

Case 5: Interest Receivable and Payable:

Parent Subsidary
5,000 Interest Payable 15,000
Interest Rec
Particulars DR CR
Interest Payable 5,000
Interest Receivable 5,000

2 Stock Adjustments:

A Full Disposal

Rs. 100 ka group mein Parent Subsidary

aaya Sales 132 150
COGS (100) (132)
32 18 Bahir group
se Rs. 50 ka
Group Profit = 50

B Partial Disposal or no disposal:

Rs. 100 ka group mein Parent Subsidary

aaya Sales 132 -
COGS (100) -
32 - Bahir nahi
gaya group
Group Profit = 32 se

Important: Ek cheez aayi 100 ki abh books mein report ho rahi hogi 132 ki. Tou Rs. 32 se over stated.
Abh ek kam karo seller ka profit kum karo or buyer ki inventory.

Particulars DR CR
RE/GR 32
Stock 32
 3 Disposal of PPE within the group:

Case 1: Disposal at year end:

In Parent books Sub books
Sold to Sub 50,000 100,000

Particulars DR CR
RE/GR 50,000
PPE 50,000

Sub books In Parent books

Sold to P 50,000 100,000

Particulars DR CR
RE of subsidary 50,000
PPE 50,000

Case 2: Disposal before year end:

In Parent books Sub books
Sold to Sub Remaining useful life at
50,000 100,000
On january 1 disposal is 5 years

Particulars DR CR
RE/GR 50,000
PPE 50,000

Particulars DR CR
PPE 10,000
RE/GR 10,000

Cummulative basis:
Asset CA 80,000
Asset CA Req 40,000
40,000 Reversal Net
 Concept of intangibles
Answer 11:
Net Assets of Subsidary:
At Acq At Rep Change Parent NCI
Share capital 250,000 250,000
Retained earnings 210,000 669,600
FV Adjustments
Land 50,000 60,000
Equipment 60,000 42,000
Brand 45,000 30,000
Goodwill - (40,000) 80.0% 20.0%
615,000 1,011,600 396,600 317,280 79,320

Goodwill:

Cosideration Parent 692,000

Net Assets (492,000)
200,000

Group Reserves:
Retained earnings 1,364,550
Post acquistion 317,280
1,681,830

NCI:
Share of NCI 20% 123,000
Post Acquisition 79,320
202,320

Consolidated accounts Accounting entries

Prop, plant and Equip 2,242,000 Particulars DR CR
Intangibles (Incl GW) 625,000Goodwill 200,000
Receivable 195,000Brand 45,000
Inventory 650,000Equipment 60,000
3,712,000Land 50,000
Share capital 250,000
Share capital 1,200,000 RE 210,000
Group reserves 1,681,830 NCI 123,000
Current Liab 627,850 Investments 692,000
NCI 202,320
3,712,000
Answer 12:
Net Assets of Subsidary:
At Acq At Rep Change Parent NCI
Share capital 300,000 300,000
Retained earnings 300,000 775,000
FV Adjustments
Land 70,000 70,000
Software 42,000 21,000
Equipment 100,000 30,000
Customer List 48,000 31,200
Goodwill (35,000) (25,000) 70.0% 30.0%
825,000 1,202,200 377,200 264,040 113,160

Goodwill:

Cosideration Parent 692,000

Net Assets (577,500)
114,500

Group Reserves:
Retained earnings 1,764,550
Post acquistion 264,040
2,028,590

NCI:
Share of NCI 30% 247,500
Post Acquisition 113,160
360,660

Consolidated accounts Accounting entries

Prop, plant and Equip 2,270,000 Particulars DR CR
Intangibles (Incl GW) 1,091,700 Goodwill 114,500
Investments 10,000 Customer list 48,000
Receivable 316,250 Software 42,000
Inventory 528,750 Equipment 100,000
4,216,700 Land 70,000
Share capital 300,000
Share capital 1,200,000 RE 300,000
Group reserves 2,028,590 Goodwill 35,000
Current Liab 627,450 NCI 247,500
NCI 360,660 Investments 692,000
4,216,700
Answer 13:
Net Assets of Subsidary:
At Acq At Rep Change Parent NCI
Share capital 125,000 125,000
Retained earnings 160,000 552,400
FV Adjustments
PPE Adjustments - (32,000) (40,000 - ( 40,000/2.5*6/12))
URP - Inventory adj - (6,250) 80.0% 20.0%
285,000 639,150 354,150 283,320 70,830

Goodwill: (50,000/100 * 25 * 50%)

Cosideration Parent 435,000

Net Assets (228,000)
207,000

Group Reserves:
Retained earnings 612,500
URP Adjustment (5,000) (50,000/100*25*40%)
PPE Adjustment (30,000) (60,000 - (60,000/2)
Post acquistion 283,320
860,820

NCI:
Share of NCI 20% 57,000
Post Acquisition 70,830
127,830

Consolidated accounts Accounting entries

Prop, plant and Equip 403,500 Particulars DR CR
Goodwill 207,000 Goodwill 207,000
Investments 232,500 Share capital 125,000
Receivable 6,650 RE 160,000
Cash 269,000 NCI 57,000
Inventory 218,750 Investments 435,000
1,337,400

Share capital 300,000

Group reserves 860,820
Liabilities 48,750
NCI 127,830
1,337,400
 Investment Concepts

Case 1: Cash Payament

Rs. 500,000 Sh
Parent 500 shares

Subsidary

Individual books mein entry yeh parent ki:

Particulars DR CR
Investment 500,000
Cash 500,000

Ab subsidary ki books mein no entry as shares subsidary se nahi share holder se khareedey hain

Case 2: Deferred Payment

Deffered Payment = Rs. 200,000 in 3 years
Cash Payment = Rs. 500,000 Sh
Parent

Subsidary
Individual books mein entry yeh parent ki:
Particulars DR CR
Investment 650,263
Payable 150,263 (200,000/1.1^3)
Cash 500,000

Case 3: Share exchange (FV of consideration given)

Sh
Parent 500 Share
1 for 2 new shares 25 Fv of subsidary share
FV of Parent Share = Rs. 60 Subsidary
Individual books mein entry yeh parent ki:
Particulars DR CR
Investment 15,000
Sh Cap + Premium 15,000 (500/2 x 60)
Case 4: Contingent Consideration
Sh
Parent 500 Shares
Cash Rs. 500,000
We Said Rs. 2 million more will be given if Subsidary
profit reaches 30 million.

Individual books mein entry yeh parent ki:

Particulars DR CR
Investment 1,000,000
Cash 500,000
Payable 1,000,000 Fair value as per factoring company.

Case 4: Deffered Shares consideration

Sh
Parent 500 Shares
500 shares MV prevailing at Rs. 60 / share MV= 50/share
Subsidary
To be paid after 1 year

After, 1 year MV. Rs. 70

Particulars DR CR
Investment 30,000 500 x 60
Resrerve for issuance 30,000

After 1 year entry:

Particulars DR CR
Reserve for issuance 30,000
Share capital 30,000

Case 5: Non-financial asset

Asset given Sh
Parent 500 Shares
Cash = Rs. 500,000 MV= 50/share
Book value = Rs. 460,000 Subsidary
FV= 510,000 of asset given
Particulars DR CR
galat hoga as we don’t know
Asset 50,000
revaluation or cost model
Revaluation surplus 50,000
Particulars DR CR Recorded at fairvalue
Investment 1,010,000
Cash 500,000
Asset 460,000
Gain on disposal 50,000
 Components of investment
Answer 1:
Cash 100
Payable 82.64 ( 100 / 1.1^2 )
Shares 327.75 ( 28.5 x 11.5 )
Land 54.00 Carrying amount + Gain on disposal (becomes fair valiue)
564.39

Particulars DR CR
Investment 564.39
Cash 100
Payable 82.64
Res for issuance of sh 327.75
Land 46.00
Gain on disposal 8.00

Income Statement Adjustments

1 Intra Group Income and Expenses

Case 1: Normal Adjustment:
Parent Subsidary
Interest
Income Interest Exp
500.00 1,560
Donu ko sett off kar do rather than income or expense dikhaun apney he accounts mein.
Particulars DR CR
Interest income 500
Interest expense 500

Case 2: Dividend income

Parent Subsidary
Dividend Dividend
Income decalred
50,000 62,500

Dividend income parent ki katao and statement of changes in equity se.

Because Subsidary ka expense nahi appropriation of profit hai tou us ki books mien expense nahi.
Case 3: Depreciation expesne - due to FV Adjustment
Parent
BV = 100,000
FV = 150,000 Remainign life = 5 years
Excess = 50,000

Dep normal = 100,000/5 = 20,000 As per Console = 150,000/5 = 30,000

Additional depreciation to be booked = 10,000

Kyun k yeh book nahi hua hoga.

Case 4: Goodwill Impairment

Goodwill not recorded in individual books. Therefore, if there is impairment it is required to be recorded in
consolidated P&L as no impairment impact would have been taken in individual books as goodwill is not allowed
to be recorded in individual books.

2 Stock Adjustments:

A Full Disposal

Rs. 100 ka group mein Parent Subsidary

aaya Sales 132 150
COGS (100) (132)
32 18 Bahir group
se Rs. 50 ka
Group Profit = 50

Particulars DR CR
Sales 132
Cost of sales 132

B Partial Disposal or no disposal:

Rs. 100 ka group mein Parent Subsidary

aaya Sales 132 -
COGS (100) -
32 - Bahir nahi
gaya group
Group Profit = 32 se

Important: Ek cheez aayi 100 ki abh books mein report ho rahi hogi 132 ki. Tou Rs. 32 se over stated.
Abh ek kam karo seller ka profit kum karo or buyer ki inventory.
 Particulars DR CR
Sales 132
Cost of sales 132

Particulars DR CR
COGS 32
Stock 32