G Ltd. and its subsidiary K Ltd. give the following information for the year ended 31 st March, 2025: Particulars G Ltd. K Ltd. Sales and other…

CA Intermediate · Advanced Accounting · MTP · September 2025
G Ltd. and its subsidiary K Ltd. give the following information for the year ended 31 st March, 2025: Particulars G Ltd. K Ltd. Sales and other Income 3000 750 Increase in Inventory 750 100 Raw material consumed 600 75 Wages and Salaries 600 50 Production expenses 100 50 Administrative expenses 75 25 Selling and Distribution expenses 100 30 Interest 75 30 Depreciation 75 The following information is also given: G sold goods of 200 crores (sale value) to K Ltd. at cost plus 25%. (1/5 th of such goods were still in inventory of K Ltd. at the end of the year)G Ltd. holds 75% of the Equity share capital of K Ltd. and the Equity share capital of K Ltd. is 800 crores on 01.04.2024 (date of acquisition of shares)Administrative expenses of K Ltd. include 5 crore paid to G Ltd. as consultancy fees. Also, selling and distribution expenses of G Ltd. include 20 crores paid to K Ltd. as commission. Prepare a consolidated statement of Profit and Loss of G Ltd. with its subsidiary K. Ltd. for the year ended 31 st March, 2025.

Suggested Answer and Working Notes:

Consolidated statement of profit and loss of G Ltd. and its subsidiary K Ltd. for the year ended on 31 st March, 2025 Particulars Note No. ₹ in Crores I. Revenue from operations 1 3,525 II. Total Income 3,525 III. Expenses Cost of material purchased/consumed 2 650 Changes of inventories of finished goods 3 (842) Employee benefit expense 4 675 Finance cost 5 105 Depreciation and amortization expense 6 105 Other expenses 7 225 Total expenses 918 IV. Profit before tax (II-III) 2,607 Notes to Accounts ₹ in Crores ₹ in Crores 1. Revenue from operations Sales and other income G Ltd. 3,000 K Ltd. 750 3,750 Less: Inter-company sales (200) Consultancy fees received by G Ltd. from K Ltd. (5) Commission received by K Ltd. from G Ltd. (20) 3,525 2. Cost of material purchased/consumed G Ltd. 600 K Ltd. 100 700 Less: Purchases by K Ltd. from G Ltd. (200) 500 Direct expenses (Production) G Ltd. 100 K Ltd. 50 150 650 3. Changes of inventories of finished goods G Ltd. 750 K Ltd. 100 850 Less: Unrealized profits 40crores × 25/125 (8) 842 4. Employee benefits and expenses Wages and salaries: G Ltd. 600 K Ltd. 75 675 5. Finance cost Interest: G Ltd. 75 K Ltd. 30 105 6. Depreciation G Ltd. 75 K Ltd. 30 105 7. Other expenses Administrative expenses G Ltd. 75 K Ltd. 50 125 Less: Consultancy fees received by G Ltd. from K Ltd. (5) 120 Selling and distribution Expenses: G Ltd. 100 K Ltd. 25 125 Less: Commission received by K Ltd. from G Ltd. (20) 105 225

Topics: AS 21

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