Exe Ltd. acquires 70% of equity shares of Zed Ltd. as on 31st March, 2024 at a cost of 70 lakhs. The following information is available from the…

Cost of Control Sr. No. Particulars Computation ₹ A] Cost of Investments Given 70,00,000 Less: Dividend out of Pre Acquisition Dividend (3.5 Lacs × ₹ 10 (FV) × 20%) (No of Shares = 70 Lacs/20= 3.5 Lacs) (7,00,000) Subtotal A 63,00,000 B] Share in Net Assets of Zed Ltd. (1,38,50,000 × 70%) 96,95,000 C] Goodwill / (Capital Reserve) (A - B) 33,95,000 W.N. 1: Calculation of Net Assets Sr. No. Particulars ₹ A] Assets - Property, Plant & Equipment (120+20%) 1,44,00,000 - Investment (55 – 10%) 49,50,000 - Current Assets 70,00,000 - Loans & Advances 15,00,000 Subtotal A 2,78,50,000 B] Liabilities - 15% Debentures 90,00,000 - Current Liabilities 50,00,000 Subtotal B 1,40,00,000 C] Net Assets (A – B) 1,38,50,000 W.N. 2: No of shares acquired Cost of investment = 70,00,000 / Purchase price share = 20 shares = 3,50,000 shares Revalued net assets of Zed Ltd. as on 31.03.2024 Particulars ₹ in lakhs ₹ in lakhs Property Plant & Equipment [120 × 120%] 144.0 Investments [55 × 90%] 49.5 Current Assets 70.0 Loans & Advances 15.0 Total Assets after revaluation 278.5 Less: 15% Debentures 90.0 Current Liabilities 50.0 (140.0) Equity / Net Worth 138.50 Exe Ltd.'s share of net assets (70% of 138.50) 96.95 Exe Ltd.'s cost of acquisition of shares of Zed Ltd. 63.00 (70lakhs – 7 lakhs*) Capital Reserve 33.95 *Total Cost of 70% Equity of Zed Ltd.70 lakhs Purchase Price of each share - 20 Number of shares purchases(70 lakhs/20) 3.50 lakhs Dividend @ 20% i.e.2/share 7lakhs Since, dividend received is for pre-acquisition period, it has been reduced from the cost of investment in the subsidiary company.