Bulldozer Ltd. is engaged in the business of manufacturing of heavy bulldozers, which are mainly used to dismantle the buildings and concrete…

CA Final · Financial Reporting · MTP · January 2026
Bulldozer Ltd. is engaged in the business of manufacturing of heavy bulldozers, which are mainly used to dismantle the buildings and concrete structures. The company is willing to enter into the business of manufacturing of excavators for the purpose of digging the plain land. For this purpose, the company acquires 25% stake in HD Excavators Ltd. for 8,00,000 on 1st October, 20X1 and further 35% stake on 1st February, 20X2 for 12,25,000. Following is the summarized Balance Sheet of HD Excavators Ltd. as at 1st February, 20X2: ASSETS Carrying Value (₹) Fair Value (₹) Property, Plant and Equipment 15,50,000 22,50,000 Investment in Bonds 12,00,000 15,00,000 Trade Receivables 1,50,000 1,50,000 29,00,000 EQUITY AND LIABILITIES Share Capital 3,00,000 Reserves 16,50,000 Trade Payables 9,50,000 29,00,000 HD Excavators Ltd. sells the small excavators under the brand name 'Mini Shaktiman' which has a fair value of 4,50,000 as at 1st February, 20X2. This is a self-generated brand, therefore, HD Excavators Ltd. has not recognised the brand in its books of accounts. Following is the summarized separate Balance Sheet of Bulldozer Ltd. as at 1st February, 20X2: ASSETS ₹ Property, Plant and Equipment 40,50,000 Investment in HD Excavators Ltd. 20,25,000 Trade Receivables 2,40,000 Cash and Bank balances 15,60,000 78,75,000 EQUITY AND LIABILITIES Share Capital 15,00,000 Reserves 35,25,000 Short-term Loan 12,00,000 Trade Payables 9,00,000 Other Current Liabilities 7,50,000 78,75,000 In relation to the acquisition of HD Excavators Ltd., you are required to: (i) Pass the necessary journal entries in the books of Bulldozer Ltd. to give effect of business combination in accordance with Ind AS 103 as at acquisition date of 1st February, 20X2. NCI is measured by the entity at fair value. Provide working notes and ignore tax implications; and (ii) Prepare a Consolidated Balance Sheet of Bulldozer Ltd. as at 1st February, 20X2.

Suggested Answer and Working Notes:

Answers of Part – II: Descriptive Questions 1. (i) Journal Entries Particulars ₹ Property Plant and Equipment Dr. 22,50,000 Investment in bonds Dr. 15,00,000 Trade receivables Dr. 1,50,000 Brand value Dr. 4,50,000 Goodwill (balancing figure) Dr. 1,00,000 To Investment in HD excavators Limited 20,25,000 To Profit and loss account 75,000 To Trade payables 9,50,000 To Non-controlling interest 14,00,000 (Being assets and liabilities acquired at fair value and previous investment considered at fair value on the acquisition date) Consolidated Balance Sheet of Bulldozer Limited and its subsidiary HD Excavators Limited as at 1st February 20X2 Notes Amount ₹ ASSETS Non-current assets (a) Property Plant and Equipment 1 63,00,000 (b) Goodwill 1,00,000 (c) Other Intangible Assets 2 4,50,000 (d) Financial Assets (i) Investment in bonds 15,00,000 Current assets (a) Financial assets (i) Trade receivables 3 3,90,000 (ii) Cash and cash equivalents 4 15,60,000 Total 1,03,00,000 Notes to Accounts S.N. Particulars ₹ 1 Property Plant and Equipment Bulldozer Limited 40,50,000 HD Excavators Limited 22,50,000 63,00,000 2 Other Intangible Assets Brand value of HD excavators limited 4,50,000 3 Trade receivables Bulldozer Limited 2,40,000 HD Excavators Limited 1,50,000 3,90,000 4 Cash and cash equivalents Bulldozer Limited 15,60,000 5 Other equity - Reserves Bulldozer Limited 35,25,000 Add: Gain on Investment in HD Excavators Limited 75,000 36,00,000 6 Borrowings Short term loans of Bulldozer Limited 12,00,000 7 Trade payables Bulldozer Limited 9,00,000 HD Excavators Limited 9,50,000 18,50,000 8 Other current liabilities Bulldozer Limited 7,50,000 Working Notes 1. Calculation of gain or loss on fair value of shares on the acquisition date 1st February 20X2 Particulars ₹ 35% shares purchased on 1st February 20X2 fair value 12,25,000 25% shares purchased on 1st October 20X1 at 8,00,000 Fair value is equal to [(12,25,000 / 35%) x 25%] 8,75,000 Total consideration at fair value on acquisition date 21,00,000 Less: Cost of investment (8,00,000 + 12,25,000) (20,25,000) Gain recognised to profit or loss / OCI as appropriate 75,000 2. Measurement of non-controlling interest on fair value basis Share of NCI (100 - 25 – 35) 40% Taking fair value of shares on 1st February 20X2 as a base [(21,00,000/60%) x 40%] or [(12,25,000 x 40%) / 35%] 14,00,000

Topics: Ind AS 103

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