Consolidated Financial Statements Steps to be undertake while solving the problems related on Consolidated Financial Statements. 1.

Find out Basic Information: 2. Bifurcation of Reserves and Profit and Loss Account into Pre-Acquisition and Post-Acquisition 3. Make separate working for Revaluation of Fixed Asset 4. Make analysis of Net Worth Analysis of Subsidiary Co 5. Care must be taken when there is Chain Holding 6. Calculate the amount of Goodwill // Capital Reserve arising out of Acquisition of Subsidary 7. Now calculate Consolidated General Reserve and Consolidated Profit and Loss account 8. Now Prepare a Consolidated Financial Statement. 1. Basic Information: Holding Company (%) Subsidiary Co. (%) 2. Analysis of General Reserve // Profit and Loss Account of Subsidiary Co. a. Profit and Loss Account Balance as on .. xxxxxx Add: Abnormal Loss xxxxxx ______ Balance xxxxxx Less: Pref Divi. Xxxxxx ______ Corrected Balance xxxxxx

On the Date of Acq. Less: Bonus Issue Less: Dividend Paid Capital Profit

xxxxx After Date of Acquisition xxxxx xxxxx xxxxx Revenue Profit

xxxxx

xxxxx

b. General Reserve Balance as on .. Less: Bonus Issue Corrected Balance

xxxxxx Xxxxxx ______ xxxxxx

On the Date of Acq. Less: Bonus Issue Capital Profit

xxxxx After Date of Acquisition xxxxx xxxxx Revenue Profit

xxxxx

xxxxx

c. Preliminary Expenses Balance as on ..

xxxxxx

On the Date of Acq.

xxxxx After Date of Acquisition xxxxx

xxxxx xxxxx

3. Gain / Loss on Revaluation of Fixed Assets Particulars Revalued As on ..(Generally it is Date of Acquisition) (say it is 1.10.12) (A) Amount(Rs.) Amount(Rs.) xxxxxxxxx

Book Value as on 01.04.12 Less : Dep. On book Value for 6 Months Balance Value as on 01.10.12 (B) Gain / Loss on Revaluation (C= (A-B))

xxxxxxxxx xxxxxxxxx xxxxxxxxx xxxxxxxxx

Computation of Depreciation on Revaluation Gain / Loss Particulars Depreciation on Revalued Plant for 6 Months Depreciation already Provided on Book Value Revenue Loss Amount(Rs.) xxxxxxxxx (xxxxxxxxx) xxxxxxxxx

Assumed : Year ends on 31st March Acquisition made on 01.10

4. Analysis of Net Worth of Subsidiary Co. By doing this we will get "Minority Interest"

5. Calculation of Cost of Capital Particulars Cost of Investment (As per Holding Companys' Balance Sheet) Less: Dividend received out of "Pre Acquisition Profit" and H Ltd has credited to P & L Account Corrected Balance of Cost of Investment (A) Pre Acquisition Shares in "S" Ltd * Paid Up Value of Share Capital * Share in Pre Acquisition Profit Amount (Rs.) xxxxx

xxxxx xxxxx

xxxxx xxxxx

Total (B) Good will // Capital Reserve (A-B)

xxxxx xxxxx

6. Consolidation of Reserve and Profit & Loss Account Particulars Balance as per "H" Companys' Balance Sheet Adjustments : Pre Acquisition Dividend Wrongly credited Share in Post Acquisition Dividend of "S" Ltd Stock Reserve on Unrealised Profit [ Only H's Share in case of Upstream Transaction] Stock Reserve on Unrealised Profit [ Full - Downstream Transaction] Gain/Loss on Elimination of Debentures [ Full - Downstream Transaction] Gain/Loss on Elimination of Debentures [ Only H's Share in case of Upstream Transaction] Transfer to General Reserve Debenture Interest Received Proposed Dividend by "H" Limited Proposed Pref. Dividend by "H" Limited Revenue Profit / Reserve of "S"limited General Reserve Profit and Loss Account Capital Red Res Account Securities Premium Unrealised Profit on Sale of Machinery to S Ltd Consolidated Balance 7. Consolidated Financial Statement

Now prepare a Consolidated Financial Statement keeping in mind the requirement of Revised Schedule VI as per Companies Act,1956 While preparing CFS, care must be taken to eliminate Intra Company holding like, Vendor Account of Holding in Subsidiary and same way Debtor Account of Subsidiary Company in Holding Company.

Amount (Rs.) Amount (Rs.) xxxxxxxxxxx

(xxxxxxxxx) xxxxxxxxx (xxxxxxxxx) (xxxxxxxxx) (xxxxxxxxx) (xxxxxxxxx) (xxxxxxxxx) xxxxxxxxx (xxxxxxxxx) (xxxxxxxxx) xxxxxxxxx xxxxxxxxx xxxxxxxxx xxxxxxxxx

xxxxxxxxx xxxxxxxxx xxxxxxxxx

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