consolidated balance sheet

Consolidated Balance Sheet Accounting of holding & Subsidiary Company Definition Holding Company: - A company is one which acquire all or a 50% or above equity share of any other company, which is called holding company. Holding Company: - any company obtains the right of appoint of director in other company, which is called holding company. Subsidiary Company: - Share of a company which is acquired by any other company & a company sold their rights to other company, which is called subsidiary company. Preparation of consolidated balance sheet:- Consolidated balance sheet as on 31 Mar 2009 For Mr. Ravi As per Schedule 6 Liabilities Assets 1. Share & Capital XX 1. Fixed Assets XX 2. Reserve & Surplus XX 2. Investment XX 3. Secured Loan XX 3. Current Assets, Loan & Advances a. Current Assets b. Loan & Advances XX 4. Unsecured Loan XX 4. Miscellaneous Assets XX 5. Current Liabilities & Provisions a. Current Liabilities b. Provisions XX 5. P&L Dr. (Balance) XX How to Calculate Holding Ratio of Holding Company? Holding % = Number of share acquired by holding company ---------------------------------------------------------- X 100 Total Share of Subsidiary Company Working Note – 1 Calculation of Pre & Post Part of P&L Pre Post Opening Balance (A) Closing Balance (B) XXX (C) Difference (Closing Balance – Opening Balance) Distribution (According To Month) XXX (D) XXX (E) ----------- ----------- XXX (F) XXX (G) ----------- ----------- Note: - Here Total of (F) = (A) + (D) & Total of (G) = (E) Working Note – 2 Calculation of Pre & Post Part of General Reserve Same as Calculation of Pre & Post Part of P&L Working Note – 3 Calculation of Net Worth:- Particular Pre Post Equity Share Capital Of Subsidiary Company XXX ----- Security Premium XXX ----- General Reserve XXX XXX Profit & Loss XXX XXX Other Reserve XXX ----- Less :- Miscellaneous Assets (XXX) ----- Total XXX (A) XXX (B) *Note: - Opening balance of P&L and general reserve will be added in pre profit. Net Wealth of Subsidiary Company = (A) + (B) Net Wealth = (A) + (B) % of Holding Company (C) % of Minority Interest (D) Holding % of (A) Holding 90 % of (B) Holding % of Post P&L Holding % of Post General Reserve Working Note – 4 Calculation of Goodwill & Capital Reserve Cost of investment of Holding Company (B/S – Assets) = XX Less: - Pre Part of analysis = (XX) ----------------------------------------------------------------- Goodwill / Capital reserve XXXX ----------------------------------------------------------------- If (+) then it will be added in goodwill If (-) then it will be added in capital reserve Working Note -5 Calculation of consolidated P&L Balance of P&L of holding company = XX Add: - Post P&L of analysis = XX ----------------------------------------------------------------- Consolidated P&L XXXX ----------------------------------------------------------------- Working Note -6 Calculation of Consolidated General Reserve Balance of General Reserve of holding company = XX Add: - Post General reserve of analysis = XX -------------------------------------------------------------------------- Consolidated General Reserve XXXX -------------------------------------------------------------------------- Working Note – 7 Adjustment for miscellaneous Assets Miscellaneous Assets  Preliminary Expenses  Discount on issue of share & Debenture  Underwriting Commission  Advertisement Expenses  Fictitious Assets All Miscellaneous assets Is to be deducted from pre part of analysis See Working note 3. Working Note- 8 Adjustment for revaluation of fixed assets URD (Upward Revaluation) DRD (Downward Revaluation) (Revised Value – Book Value) (Book Value – Revised Value) URD Additional Depreciation DRD Saving In Depreciation Add to Pre Part Deduct From Deduct From Add to Post Part Of Analysis Post Part of Analysis Pre Part of Analysis of Analysis See Working Note See Working Note See Working Note See Working Note Working Note Particular Pre Post Equity Share Capital Of Subsidiary Company XXX ----- Security Premium XXX ----- General Reserve XXX XXX Profit & Loss XXX XXX Other Reserve XXX ----- Add:- URD XXX ----- Less:- Additional Depreciation ----- (XXX) Less:- DRD (XXX) ----- Add:- Saving in Depreciation ----- XXX Less :- Miscellaneous Assets (XXX) ----- Total XXX (A) XXX (B) Consolidated Assets = Assets Balance of holding company + Assets Balance of Subsidiary Company + URD –DRD – Additional Depreciation + Saving In Depreciation Working Note – 9 Adjustment of mutual transaction:- A) Inter Company Debtor’s & Creditor’s  In Assets side = Debtor’s of holding company + Debtor’s of subsidiary company - Mutual Debts  In Liabilities side = Creditor’s of holding company + Creditor’s of Subsidiary company – Mutual Debts B) Inter Company Bills Transaction’s  In Assets Side = B/R of holding company + B/R of Subsidiary company – Mutual Debts  In Liabilities Side = B/P if holding company + B/P Of Subsidiary Company – Mutual Debts C) Inter Company Loan Transaction’s  In Assets Side = Loan Amount Is Not To Be Shown.  In Liabilities Side = Loan Amount Is Not To Be Shown. Working Note – 10 Inter Company Stock Transaction’s A) When ROP is Given At Cost Price Profit = Stock Amount x ROP / 100 + ROP B) When ROP Is Given At Invoice Price Profit = Stock Amount x ROP / 100 Condition 1 When Holding Company Purchased Goods from Subsidiary Company Amount of profit % of holding company X Profit % of Minority Interest X Profit Deduct from Consolidated P&L Deduct from Minority interest Amount Condition 2 When Subsidiary Company Purchased Goods from Holding Company In this condition the entire amount of profit is to be deducted from Consolidated P&L In Balance sheet => Stock of Holding Company + Stock of Subsidiary Company – Amount of Profit Working Note 11 Adjustment for Dividend: 1. Dividend From Pre Profit 2. Interim Divided Deduct From Opening Balance Deduct from Working Note 4 Deduct from Working Note 5 Of P&L & after that we have to (Cost of investment) (Consolidated P&L) Calculate Pre & Post P&L Amount Amount (Dividend X H %) (Dividend X H %) Working Note 12 Adjustment of unclaimed or proposed dividend:- Add to closing balance of P&L & Deduct from working note 5 After that we have to calculate Pre & Post P&L (Consolidate P&L) (Dividend X H %) Working Note 13 Adjustment of dividend on preference share Deduct from working note 3 Add to working note 5 (Net Worth) According to month (Consolidated P&L) (Means it will dividend in to parts Pre month & Post month) Pre Post (Dividend X H %) Equity Share Capital XX --- General Reserve XX XX P&L XX XX Less:- Pref; Sh. Dividend (XX) (XX) -------- --------- XXX XXX -------- --------- Working Note 14 Adjustment of Preference share capital Having Investment Not Having Investment Prepare Separate New Worth Entire amount of preference share capital Will be add to minority interest Pre Post Preference Share Capital XX --- -------- --------- XXX XXX -------- --------- Effect of having investment Effect 1. Calculation of Goodwill or Capital Reserve Cost of investment of Holding Company (Equity + Preference) = XX Less: - Pre Part of analysis (Main Net Worth) = (XX) Less: - Pre Part of analysis (Separate Net worth of Preference Share) = (XX) ----------------------------------------------------------------- Goodwill / Capital reserve XXXX ----------------------------------------------------------------- Effect 2. Calculation of Minority Interest Minority of equity share capital or % Holding in main net worth (Working note 3) = XX Minority of Preference share capital or % Holding in Preference share capital = XX ---------------- XXXX ---------------- Working Note 15 Adjustment of Bonus Share At the time of calculation of Holding % of Holding Company number of bonus share is not considered.