Question 5 The Balance Sheets of Art Limited and Craft Limited as on 31 March 2024 are as below: Particulars Note No Art Limited (₹) Craft Limited…

Consolidated Balance Sheet of Art and Craft Ltd As on 31st March, 2024 Particulars Note no. ₹ I. Equity & Liabilities (1) Shareholders' fund (a) Share Capital 1 6,50,000 (b) Reserves & Surplus 2 3,73,460 (2) Minority Interest 3 1,26,740 (3) Current Liabilities (a) Short term borrowings 4 70,000 (b) Trade Payables (1,45,000 + 92,000) 2,37,000 Total 14,57,200 II. Assets (1) Non-current Assets (a) Property, Plant & Equipment 5 7,65,000 (2) Current Assets (a) Inventories 6 3,57,500 (b) Trade Receivables 7 3,03,500 (c) Cash & Cash Equivalents 8 31,200 Total 14,57,200 Notes to Accounts Sr. No. Particulars ₹ 1. Share Capital Issued, Subscribed & Paid-up Capital a) Equity Share Capital 6,500 Equity Shares of 100each 6,50,000 2. Reserves & Surplus Profit & Loss A/c (WN 5) 2,40,100 General Reserve (WN 5) 1,20,000 Capital Reserve (W.N. 3) 13,360 3,73,460 3. Minority interest in Craft Ltd. (W.N.4) 1,26,740 4. Short-term borrowings Bank Overdraft 70,000 5. Property, Plant & Equipment Land & Building Art Ltd. 1,90,000 Craft Ltd. 1,35,000 3,25,000 Plant & Machinery Art Ltd. 2,31,000 Craft Ltd. (2,25,000-17,500+1,500) 2,09,000 4,40,000 7,65,000 6. Inventories Art Ltd. 1,66,000 Craft Ltd. 2,05,000 Less: unrealized profit (13,500) 3,57,500 7. Trade Receivables Art Ltd. 1,33,500 Craft Ltd. 1,70,000 3,03,500 8. Cash & Cash Equivalents Art Ltd. 24,500 Craft Ltd. 6,700 31,200 Working Notes: 1. Shareholding Pattern Total 4,000 shares 3,200 shares 800 shares Art Ltd (80%) 20% Minority Interest 2. Analysis of Profit General reserve Profit and loss account Opening balance 40,000 58,700 Closing balance 40,000 2,08,000 Changes during the year 1,49,300 Analysis of Profit Particulars Pre acquisition profit (6 months) (₹) Post acquisition profit (6 months) (₹) Opening Balances (40,000 + 58,700) 98,700 Profit for 6 months (1,49,300 x 6/12) 74,650 74,650 Provision reversed (1,700) (W.N. 8) 850 850 Revaluation Loss (W.N. 6) (17,500) Savings in depreciation (W.N. 6) - 1,500 Total 1,56,700 77,000 Holding (80%) 1,25,360 61,600 Minority Interest (20%) 31,340 15,400 3. Cost of Control Particulars ₹ ₹ Cost of Investment (Given) 4,32,000 Less: Share in Net Assets: a) Share Capital (3,200 shares × ₹ 100) 3,20,000 b) Capital Profit (W.N. 2) 1,25,360 (4,45,360) Capital Reserve 13,360 4. Minority Interest Particulars ₹ Share Capital (800 shares × 100) 80,000 Capital Profit (W.N. 2) 31,340 Revenue Profit (W.N. 2) 15,400 Total 1,26,740 5. Consolidated Profit and General Reserve of Art Ltd Particulars Profit and loss account ₹ General reserve ₹ Balance as per Balance Sheet 1,92,000 1,20,000 Revenue Profit 61,600 Unrealized Profit (Downstream) (13,500) Total 2,40,100 1,20,000 6. Calculation of Revaluation Profit/Loss Particulars ₹ Balance as on 01.04.2023 (given) 2,50,000 Depreciation for 6 months (2,50,000 × 10% × 6/12) (12,500) WDV as on date of acquisition 2,37,500 Revalued amount 2,20,000 Revaluation Loss 17,500 7. Savings in Depreciation = Depreciation Provided for 6 months – Depreciation Should be = 12,500 – (2,20,000 × 10% × 6/12) = 1,500 8. Calculation of provision reversed Trade Receivable (Given) = 1,68,300 it is after provision i.e 99% So, 100% will be 1,70,000 therefor provision will be 1,700 As per para 20 and 21 of AS 21, Consolidated financial statements: Consolidated financial statements should be prepared using uniform accounting policies for like transactions and other events in similar circumstances. If it is not practicable to use uniform accounting policies in preparing the consolidated financial statements, that fact should be disclosed together with the proportions of the items in the consolidated financial statements to which the different accounting policies have been applied.