Question

Answer the following questions: 8. The Statement of assets and liabilities of H.Ltd. and its subsidiary S.Ltd. as at 31.03.2020 stood as follows. 16 Particulars Notes No H.Ltd ₹ S. Ltd ₹ L Equity and Liabilities 1. Shareholder's Fund (a) Equity Share Capital (10 each fully paid) 5,00.000 1.50,000 (b) Reserves and Surplus General Reserves 2.00.000 130.000 (ii) Profit & Loss Balance 2.50.000 100.000 2. Non-Current Liabilities 3. Current Liabilities (a) Trade Payable 2.80,000 1.70.000 TOTAL 12,30,000 5,50,000 II. Assets 1. Non-Current Assets (a) Property, Plant and Equipment (i) Land and Building 5.50.000 2.20.000 (ii) Plant and Machinery 2.00.000 1,00,000 (b) Non-Current Investment (i) Investment in shares of S.Ltd. 1,80,000 2. Current Assets (a) Inventory 1.10.000 1.40.000 (b) Trade Receivables 1.60.000 80,000 c) Cash and Cash Equivalent 30,000 10.000 TOTAL 12.30,000 5.50,000 The following information is also available: (a) H.Lid. acquired 12,000 equity shares of S. Ltd. on 01.04.2019 at a cost of 31,80.000. (b) On 01.04.2019, balance of General Reserve of S.Lid. was 70.000 and the balance in the Profit and Loss was 240.000. (c) Debtors of H.Ltd, includes 320,000 for goods sold to S.Ltd. You are required to prepare Consolidated Balance Sheet of H.Ltd. with its subsidiary Sed as at 31.03.2020. Or, What is a Consolidated Balance Sheet? Why is it necessary to prepare Consolidated Balance Sheet in case of Holding Company? How would you treat unrealised profit on stock in case of consolidation of balance sheet?
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Answer 1

Answer:

H Ltd. holds the entire share capital of S Ltd. which made a loss of Rs 50,000 in its first year and a profit of Rs 1,10,000 in its second year. In the second year S Ltd. paid a dividend of Rs 40,000. Show journal entries in the books of the holding company assuming that the latter company brings into account all the losses and profits of the subsidiary company.