Comprehensive Workings in Group Accounts Consolidated Balance Sheet

<< GROUP ACCOUNTS: Inter Co. Trading (when there is unrealized profit)

Advance Financial Accounting (FIN-611)

LESSON # 45

GROUP ACCOUNTS

Comprehensive Workings in Group Accounts

Consolidated Balance Sheet

W-

Number of ordinary shares of S Co

acquired by P Co

x 100 = %

Total number of ordinary shares in S Co

100 - H% =

MI%

MI%

W-

Analysis of equity of S Co for pre and

post acquisition

Post-

Pre-acquisition

acquisition

All

Nil

Ordinary share capital

on the date of

after the date

acquisition

of acquisition

Reserves

All

Nil

Fair value adjustment

Total

H% of total

Parent's share

Minority's

MI% of total

Minority's share

W-

Calculation of

Goodwill

Rs.

Costo fo investment in S Co's ordinary

*****

less Dividend received out of the

*****

237

Advance Financial Accounting (FIN-611)

preacquisition profits

*****

Pre-acquistion fair value of net assets (owners' equity) of S Co

x H%

*****

Goodwill

*****

less Impairment

loss

(****)

Goodwill to be presented in consolidated balance sheet

*****

W-

Calculation of Group

Reserves

Reserves of Parent Co

All

add Post acquisition equity of S Co to the extent of H%

*****

less Un-realized profit (if intra group sale

from P to S)

(All)

less Un-realized profit (if intra group sale from S to P) to the

extent of H%

(****)

less depreciation effect on fair vale adjustment to the extent of

(****)

less impairment loss of

goodwill

(****)

*****

W-

Calculation of

Minority Interest

Owners' equity of S Co

All

add Fair value Adjustment

All

less URP (incase of intra group sale from S

to P)

(All)

less Depreciation effect on fair value

adjustment

(All)

Total value

Total

Minority

Interest =

Total x MI%

Calculations specific to the

scenario

238

Advance Financial Accounting (FIN-611)

Scenario

Action

Intra group loans

To be cancelled

To be cancelled and

balance if any to be shown

Intra group current

as goods in transit or cash

accounts

in transit, as the case may

be.

To be cancelled to the

extent of H%, the balance

Intra group

to be shown in the

dividend

consolidated balance sheet

as payable to Minority

To be added in the group

Negative goodwill

reserve

Reserves as on the

opening date of the year in

which the S Co was

During the year acquisition of S Co

acquired + profit for the

and calculation fo pre acquisition

year in which the S Co

reserves

was acuired to the extend

of the number of months

remained in the group's

acquisition

Consolidated Income Statement

W-

Calculation of opening balance of group's

retained profits

Opening balance of Retained profits of P Co

All

add Post acquisition opening balance of retained profits of S

Co x H%

*****

less Goodwill imapirment

loss

(****)

*****

W-

Calculation of

Minority Interest

Profit after tax of S Co.

*****

less Un-realized profit (if intra group sales

from S to P)

(****)

Net/Total

*****

239

Advance Financial Accounting (FIN-611)

Net/Total amount x MI% =

Minority Interest

Calculations specific to the

scenario

To be cancelled. TIP: All amount

of dividend paid by the S Co will

Intra group

be eliminated only the amount of

dividend

dividend paid by the P Co will

appear in the Consolidated

Income Statement

Deduct the same amount from the

sales and also from the cost of

Intra group trading

goods sold in the consolidated

income statement

Add in the cosolidated cost of

goods sold and subtract from the

profit after tax of S Co before

applying MI% to

calculate

Unrealized profits

Minority interest (only when the

intra group trading is from S to P)

If it is intra group trading from P

to S then do nothin for Minority

Interest calculation

240

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