The Accountant Mr. Ramesh Kanna of 'H' Limited submitted to you the following Standalone Balance Sheet extracts as at 31st March 2024: Assets Amount…

Note: Since adjustments (v) and (vii) of the question state that dividend has been declared by all the entities but no information is provided whether it has been paid or due. In this regard, it may be noted that since dividend is paid for the entire year 2023-2024, it is assumed as final dividend which is approved in the Annual General Meeting conducted at later point time from the reporting date. Accordingly, following assumptions are possible based on which alternative solutions have been provided: A. Ignored the adjustment for dividend completely as dividend has to be approved in the Annual General Meeting. B. Considered dividend as declared but not paid. C. Considered dividend as declared and paid. Alternative A: Ignored the adjustment for dividend completely as it has to be approved in the AGM. Consolidated Balance Sheet of H Ltd. and its subsidiary S Ltd. and Associate A Ltd. as at 31st March, 2024 Assets ₹ Non-current assets Property, plant and equipment (5,50,000 +4,80,000) 10,30,000 Goodwill (70,000- Impaired 70,000) Nil Financial assets Investment in A Ltd. (W.N.1 (iii)) 2,05,600 Current assets Inventory (4,85,000+3,82,500) 8,67,500 Financial assets Cash and cash equivalents (₹ 89,000 +98,000) 1,87,000 Trade receivables (3,95,000+3,05,000) 7,00,000 Total 29,90,100 Equity and Liabilities Equity Share capital - Equity shares of 10 each 5,00,000 Other equity (W.N.4+ W.N.1(i)) 11,10,600 Non-controlling interest (W.N.3) 2,85,000 Non-current liabilities Financial liabilities Borrowings-term loans (4,00,000 +1,50,000) 5,50,000 Current Liabilities Financial liabilities Trade payables (₹ 3,79,000+1,65,500) 5,44,500 Total 29,90,100 Working Notes: 1. Computation of Investment in Associate A Ltd. as per Equity method (i) Capital reserve on the date of acquisition The cost of the investment is lower than the net fair value of the investee's identifiable assets and liabilities. Hence there is capital reserve calculated as follows: Particulars ₹ Cost of acquisition of investment 1,00,000 H Ltd.'s share in fair value of net assets of A Ltd. on the date of acquisition [(1,00,000 + 1,75,000) x 40%] (1,10,000) Capital Reserve 10,000 Capital reserve is recorded directly in equity. (ii) Share in profit of A Ltd. Particulars ₹ Share in post-acquisition profit of A Ltd. [(4,24,000 - 1,75,000) x 40%] 99,600 (iii) Closing balance of investment of Associate A Ltd. at the end of the year Particulars ₹ Cost of acquisition of investment 1,00,000 Add: Capital reserve 10,000 Share in post-acquisition profit 99,600 Less: Unrealised gain on inventory [(60,000 x 20/120) x 40%] (4,000) Closing balance of investment 2,05,600 2. Analysis of Retained Earnings of S Ltd. (i) Retained Earnings (RE) of S Ltd. Particulars ₹ Closing balance as on 31st March, 2024 7,50,000 Less: Pre-acquisition as on 31st October, 2023 (5,00,000) Post-acquisition Profit 2,50,000 (ii) Computation of net worth (net identifiable assets) as on 31st October, 2023 Particulars ₹ Share Capital of S Ltd. 2,00,000 Pre-acquisition Retained Earnings 5,00,000 Net Identifiable assets 7,00,000 (iii) Computation of Goodwill on acquisition date of S Ltd. Particulars ₹ Purchase consideration 5,60,000 NCI as per proportionate share method (7,00,000 x 30%) 2,10,000 7,70,000 Less: Net worth or Net Identifiable Assets (7,00,000) Goodwill 70,000 3. Non-Controlling Interest as on 31st March, 2024 Particulars ₹ NCI (by proportionate share method) as on 31st October, 2023 2,10,000 Post-acquisition Retained Earnings (W.N.4) 75,000 NCI as on 31st March, 2024 2,85,000 4. Consolidated Retained Earnings Particulars H Ltd. ₹ S Ltd. ₹ Opening Balance of Retained Earnings 9,00,000 Post-acquisition Retained Earnings (W.N.2(i)) 2,50,000 Less: Unrealised gain on downstream transaction with Associate A Ltd. (4,000) Less: Impairment of Goodwill on acquisition of S Ltd. (70,000) Add: Share of profit and loss in Associate A Ltd. 99,600 Less: Share of NCI in post-acquisition Retained Earnings [2,50,000 x 30%] (75,000) 9,25,600 1,75,000 Total Consolidated Retained Earnings 11,00,600 Note: Bonus issue by a subsidiary is a transaction with owner in their capacity as owner. Therefore, bonus issue is only a transfer from one component of equity to the other thereby not changing the equity. Accordingly, though bonus issue shall be accounted in the individual financial statements of subsidiary, the same shall not have any effect in consolidated financial statements of the Group. Alternative B: Considered dividend as declared but not paid Consolidated Balance Sheet of H Ltd. and its subsidiary S Ltd. and Associate A Ltd. as at 31st March, 2024 Assets ₹ Non-current assets Property, plant and equipment (5,50,000 +4,80,000) 10,30,000 Goodwill (70,000- Impaired 70,000) Nil Financial assets Investment in A Ltd. (Refer W.N.1 (iii)) 1,99,600 Current assets Inventory (4,85,000 +3,82,500) 8,67,500 Financial assets Cash and cash equivalents (₹ 89,000+98,000) 1,87,000 Trade receivables (3,95,000+3,05,000) 7,00,000 Other Receivables (Dividend receivable from A Ltd. (₹ 15,000 x 40%) 6,000 Total 29,90,100 Equity and Liabilities Equity Share capital - Equity shares of 10each 5,00,000 Other equity (W.N.4+W.N.1(i)) 10,60,600 Non-controlling interest (W.N.3) 2,79,000 Non-current liabilities Financial liabilities Borrowings- term loans (4,00,000 +1,50,000) 5,50,000 Current Liabilities Financial liabilities Trade payables (₹ 3,79,000+1,65,500) 5,44,500 Other payables [Dividend payable to NCI by S Ltd. (₹ 20,000 x 30%) ₹ 6,000+ Dividend payable by H Ltd. to its shareholders - 50,000) 56,000 Total 29,90,100 Working Notes: 1. Computation of Investment in Associate A Ltd. as per Equity method (i) Capital reserve on the date of acquisition The cost of the investment is lower than the net fair value of the investee's identifiable assets and liabilities. Hence there is capital reserve calculated as follows: Particulars ₹ Cost of acquisition of investment 1,00,000 Less: H Ltd.'s share in fair value of net assets of A Ltd. on the date of acquisition [(1,00,000 + 1,75,000) x 40%] (1,10,000) Capital Reserve 10,000 Capital reserve is recorded directly in equity. (ii) Share in profit of A Ltd. Particulars ₹ Share in post-acquisition profit of A Ltd. [(4,24,000-1,75,000) x 40%] 99,600 Less: Dividend (1,00,000 x 15% x 40%) (6,000) Share in profit of A Ltd. 93,600 (iii) Closing balance of investment of Associate A Ltd. at the end of the year Particulars ₹ Cost of acquisition of investment 1,00,000 Add: Capital reserve 10,000 Share in post-acquisition profit 93,600 Less: Unrealised gain on inventory [(60,000 x 20/120) x 40%] (4,000) Closing balance of investment 1,99,600 2. Analysis of Retained Earnings of S Ltd. (i) Retained Earnings (RE) of S Ltd. Particulars ₹ Closing balance as on 31st March, 2024 7,50,000 Less: Pre-acquisition as on 31st October, 2023 (5,00,000) Post-acquisition Profit 2,50,000 (ii) Computation of net worth (net identifiable assets) as on 31st October, 2023 Particulars ₹ Share Capital of S Ltd. 2,00,000 Add: Pre-acquisition Retained Earnings 5,00,000 Net Identifiable assets 7,00,000 (iii) Computation of Goodwill on acquisition date of S Ltd. Particulars ₹ Purchase consideration 5,60,000 NCI as per proportionate share method (7,00,000 x 30%) 2,10,000 7,70,000 Less: Net worth or Net Identifiable Assets (7,00,000) Goodwill 70,000 3. Non-Controlling Interest as on 31st March, 2024 Particulars ₹ NCI (by proportionate share method) as on 31st October, 2023 2,10,000 Post-acquisition Retained Earnings (W.N.4) 69,000 NCI as on 31st March, 2024 2,79,000 4. Consolidated Retained Earnings Particulars H Ltd. ₹ S Ltd. ₹ Opening Balance of Retained Earnings 9,00,000 Post-acquisition Retained Earnings (W.N.2(i)) 2,50,000 Less: Unrealised gain on downstream transaction with Associate A Ltd. (4,000) Less: Impairment of Goodwill on acquisition of S Ltd. (70,000) Add: Share of profit and loss in Associate A Ltd. 93,600 Less: Dividend payable by H Ltd. (50,000) Add: Dividend Income receivable from S Ltd. 14,000 Add: Dividend income receivable from A Ltd. 6,000 Less: Share of NCI in post-acquisition Retained Earnings [(2,50,000 - 20,000) x 30%] (69,000) 8,89,600 1,61,000 Total Consolidated Retained Earnings 10,50,600 Note: Bonus issue by a subsidiary is a transaction with owner in their capacity as owner. Therefore, bonus issue is only a transfer from one component of equity to the other thereby not changing the equity. Accordingly, though bonus issue shall be accounted in the individual financial statements of subsidiary, the same shall not have any effect in consolidated financial statements of the Group. Alternative C: Considered dividend as declared and paid Consolidated Balance Sheet of H Ltd. and its subsidiary S Ltd. and Associate A Ltd. as at 31st March, 2024 Assets ₹ Non-current assets Property, plant and equipment (5,50,000 +4,80,000) 10,30,000 Goodwill (₹ 70,000- Impaired - 70,000) Nil Financial assets Investment in A Ltd. (Refer W.N.1 (iii)) 1,99,600 Current assets Inventory (4,85,000+3,82,500) 8,67,500 Financial assets Cash and cash equivalents [(₹ 89,000 -50,000 +14,000 +6,000) + (₹ 98,000 -20,000)] 1,37,000 Trade receivables (3,95,000+3,05,000) 7,00,000 Total 29,34,100 Equity and Liabilities Equity Share capital - Equity shares of 10each 5,00,000 Other equity (W.N.4+W.N.1(i)) 10,60,600 Non-controlling interest (W.N.3) 2,79,000 Non-current liabilities Financial liabilities Borrowings- term loans (₹ 4,00,000 +1,50,000) 5,50,000 Current Liabilities Financial liabilities Trade payables (₹ 3,79,000+1,65,500) 5,44,500 Total 29,34,100