🔷 Problem 1 – Wholly Owned Subsidiary (With Goodwill)
Question
The following are the Balance Sheets of Sun Ltd. and Moon Ltd. as on 31-03-2025:
Balance Sheet (₹)
|
Liabilities |
Sun Ltd. |
Moon Ltd. |
|
Equity Share Capital (₹10 each) |
6,00,000 |
3,00,000 |
|
General Reserve |
1,20,000 |
60,000 |
|
Profit & Loss A/c |
80,000 |
40,000 |
|
Current Liabilities |
1,00,000 |
50,000 |
|
Total |
9,00,000 |
4,50,000 |
|
Assets |
Sun Ltd. |
Moon Ltd. |
|
Fixed Assets |
5,00,000 |
2,50,000 |
|
Investment in Moon Ltd. |
3,60,000 |
— |
|
Current Assets |
40,000 |
2,00,000 |
|
Total |
9,00,000 |
4,50,000 |
Additional Information:
- Sun Ltd. acquired 100% shares of Moon Ltd. on 01-04-2024.
- Moon Ltd.’s reserves on acquisition date:
- General Reserve ₹40,000
- P&L ₹20,000
Prepare the Consolidated Balance Sheet.
🔹 Solution
Step 1: Pre-acquisition Profit
Total reserve on acquisition:
₹40,000 + ₹20,000 = ₹60,000
Step 2: Net Assets at Acquisition
Share Capital = ₹3,00,000
Pre-acquisition profit = ₹60,000
Total Net Assets = ₹3,60,000
Step 3: Cost of Control
Investment = ₹3,60,000
Net Assets = ₹3,60,000
👉 No Goodwill / No Capital Reserve
Step 4: Post-acquisition Profit
Current reserves = ₹60,000 + ₹40,000 = ₹1,00,000
Pre-acquisition = ₹60,000
Post-acquisition = ₹40,000
Holding share = 100% → ₹40,000 added to group profit
🔷 Consolidated Balance Sheet
as on 31-03-2025
Liabilities
|
Particulars |
Amount (₹) |
|
Share Capital (Sun Ltd.) |
6,00,000 |
|
General Reserve (1,20,000 + 40,000) |
1,60,000 |
|
P&L (80,000 + 40,000) |
1,20,000 |
|
Current Liabilities (1,00,000 + 50,000) |
1,50,000 |
|
Total |
10,30,000 |
Assets
|
Particulars |
Amount (₹) |
|
Fixed Assets (5,00,000 + 2,50,000) |
7,50,000 |
|
Current Assets (40,000 + 2,00,000) |
2,40,000 |
|
Total |
9,90,000 |
(Investment cancelled)
🔷 Problem 2 – Partly Owned Subsidiary (With Minority Interest & Goodwill)
Question
The Balance Sheets of Alpha Ltd. and Beta Ltd. as on 31-03-2025 are:
|
Liabilities |
Alpha |
Beta |
|
Equity Share Capital |
8,00,000 |
4,00,000 |
|
General Reserve |
2,00,000 |
1,00,000 |
|
P&L A/c |
1,20,000 |
60,000 |
|
Creditors |
1,00,000 |
40,000 |
|
Total |
12,20,000 |
6,00,000 |
|
Assets |
Alpha |
Beta |
|
Fixed Assets |
7,00,000 |
3,50,000 |
|
Investment in Beta |
4,20,000 |
— |
|
Current Assets |
1,00,000 |
2,50,000 |
|
Total |
12,20,000 |
6,00,000 |
Additional Info:
- Alpha Ltd. acquired 75% shares in Beta Ltd.
- Reserves at acquisition:
- General Reserve ₹80,000
- P&L ₹40,000
Prepare Consolidated Balance Sheet.
🔹 Solution
Step 1: Pre-acquisition Profit
₹80,000 + ₹40,000 = ₹1,20,000
Step 2: Net Assets at Acquisition
Share Capital = ₹4,00,000
Pre-acquisition = ₹1,20,000
Total = ₹5,20,000
Holding share (75%) = ₹3,90,000
Step 3: Cost of Control
Investment = ₹4,20,000
Share of Net Assets = ₹3,90,000
👉 Goodwill = ₹30,000
Step 4: Post-acquisition Profit
Total reserve now = ₹1,00,000 + ₹60,000 = ₹1,60,000
Pre-acquisition = ₹1,20,000
Post-acquisition = ₹40,000
Holding share (75%) = ₹30,000
Minority share (25%) = ₹10,000
Step 5: Minority Interest
Share Capital (25%) = ₹1,00,000
Pre-acquisition (25%) = ₹30,000
Post-acquisition (25%) = ₹10,000
Total Minority Interest = ₹1,40,000
🔷 Consolidated Balance Sheet
Liabilities
|
Particulars |
Amount (₹) |
|
Share Capital (Alpha) |
8,00,000 |
|
Reserves (2,00,000 + 30,000) |
2,30,000 |
|
P&L (1,20,000 + 30,000) |
1,50,000 |
|
Minority Interest |
1,40,000 |
|
Creditors |
1,40,000 |
|
Total |
14,60,000 |
Assets
|
Particulars |
Amount (₹) |
|
Fixed Assets |
10,50,000 |
|
Goodwill |
30,000 |
|
Current Assets |
3,50,000 |
|
Total |
14,30,000 |
🔷 Problem 3 – Inter-Company Debt Elimination
Question
Omega Ltd. holds 80% shares in Sigma Ltd.
Sigma Ltd. shows ₹50,000 as Debtors from Omega Ltd.
Omega Ltd. shows ₹50,000 as Creditors to Sigma Ltd.
Explain treatment.
🔹 Solution
Since it is an internal transaction, it must be eliminated:
Debtors ₹50,000
Creditors ₹50,000
Both cancelled in consolidation.
🔷 Problem 4 – Inter-Company Bills
Delta Ltd. accepted a bill for ₹30,000 drawn by its subsidiary.
Treatment?
Solution
Bills Receivable (subsidiary) = ₹30,000
Bills Payable (holding) = ₹30,000
Both cancelled.
🔷 Problem 5 – Capital Reserve Case
If investment cost is ₹2,00,000 and share in net assets is ₹2,40,000:
Capital Reserve = ₹40,000
Shown on liabilities side.
📚 Declaration
These problems and solutions have been independently created for academic use by referring to standard textbooks and official university study materials. Figures, company names, and data are newly structured to avoid copyright infringement. The accounting principles applied are based on prescribed Corporate Accounting syllabus.
📖 References (APA 7th Edition)
Institute of Company Secretaries of India. (2019). Corporate accounting and financial management: Study material (Executive Programme). ICSI.
Rajasekaran, V., & Lalitha, R. (2011). Corporate accounting. Pearson Education.
Garg, S. K. (n.d.). Corporate accounting (BCOM 301). Guru Jambheshwar University.
Jahfarali, T. H. (2026). Advanced corporate accounting. University of Calicut.
Sathrukanbabu, R. (n.d.). Corporate accounting. Manonmaniam Sundaranar University.