Following is the Balance Sheets of M Itd. and N Ltd. of two different dates: M Ltd. (As on 31.3.20X2) ₹ N Ltd. (As on 31.12.20Χ1) ₹ ASSETS…

Consolidated Balance Sheet of M Ltd and its subsidiary N Ltd. as at 31 st March 20X2 I. ASSETS A. Non-Current Assets 1. Property, Plant and Equipment (6,50,000 + 4,05,000) 10,55,000 2. Goodwill (W.N.7) 4,05,000 B. Current Assets 1. Inventories (W.N.8) 6,05,000 2. Financial Assets a. Trade Receivables (W.N.9) 3,55,000 b. Cash and cash equivalents (80,000 + 1,05,000 + 15,000 Insur. claim) 2,00,000 Total 26,20,000 II. EQUITY AND LIABILITIES A. Equity 1. Equity Share Capital Issued, subscribed and fully paid up 1,00,000 equity shares of 10each 10,00,000 2. Other Equity Retained Earnings (W.N.10) 5,09,000 3. Non-Controlling Interest (W.N.6) 2,11,000 B. Liabilities 1. Non-Current Liabilities a. Financial Liabilities Borrowings [13% Debentures (2,000 X 100)] 2,00,000 2. Current liabilities a. Financial Liabilities Trade Payables (W.N.9) 4,60,000 b. Other Current liabilities (2,00,000 + 40,000) 2,40,000 Total 26,20,000 Working Notes: 1. Shareholding pattern Particulars Number of Shares % of holding M Ltd. 40,000 80% Non-Controlling interest 10,000 20% 2. Analysis of Retained Earnings of N Ltd. Particulars ₹ Closing balance as on 31.3.20X1 2,05,000 Pre-acquisition Profits (75,000) Post-acquisition Profits 1,30,000 Less: Loss of inventory by fire (W.N.3) (5,000) Add: Profit from sale of goods purchased from M Ltd. (W.N.4) 30,000 1,55,000 3. Loss of inventory by fire Particulars ₹ Cost of goods destroyed by fire 20,000 Less: Insurance Claim received (20,000 × 75/100) (15,000) Loss of inventory by fire 5,000 4. Profit from Sale of goods Particulars ₹ Cost of goods sold by M Ltd. 1,50,000 Add: Profit by M Ltd. (1,50,000 × 20%) 30,000 Invoice price of M Ltd. (i.e., Cost to N Ltd.) 1,80,000 Cost of goods sold back by N Ltd. to M Ltd. (1,80,000 × 50%) 90,000 Net payable (given in the question) 60,000 Sale value of goods sold by N Ltd. to M Ltd. (1,80,000 - 60,000) 1,20,000 Profit on sale by N Ltd. to M Ltd. (1,20,000 – 90,000) 30,000 5. Apportionment of profits of N Ltd. Particulars Pre-acquisition Post-acquisition Retained Earnings (W.N.3) 75,000 1,55,000 M Ltd - 80% 1,24,000 NCI - 20% 31,000 6. Non-Controlling Interest as per fair value method Particulars ₹ Share capital / Fair Value of shares held by NCI (10,000 Shares × ₹ 18) 1,80,000 Share of post-acquisition retained earnings (W.N.5) 31,000 Total 2,11,000 7. Computation of Goodwill Particulars ₹ Cost of investment 8,00,000 Add: Fair Value of Shares held by Non-Controlling Interest (10,000 Shares × ₹ 18) 1,80,000 9,80,000 Less: Fair value of net identifiable assets or net worth Share capital of N Ltd. 5,00,000 Pre-acquisition retained earnings 75,000 (5,75,000) Goodwill 4,05,000 8. Computation of Inventory to be shown in CBS Particulars ₹ Aggregate value of inventory (2,00,000 + 3,50,000) 5,50,000 Add: Invoice price of goods purchased from M Ltd 1,80,000 Less: Cost of goods resold to M Ltd (90,000) Less: Loss of inventory by fire (20,000) 6,20,000 Less: Unrealised profit (90,000 x 20/120) (15,000) Net Inventory for CBS 6,05,000 9. Computation of Consolidated Trade Receivables and Trade Payables Particulars Trade Receivables ₹ Trade Payables ₹ Aggregate balance 4,15,000 4,60,000 Less: Inter-company owings (60,000) (60,000) Net for CBS 3,55,000 4,60,000 10. Retained Earnings for CBS Particulars ₹ M Ltd. Balances 4,50,000 Add: M Ltd.'s share of post-acquisition profits (W.N.5) 1,24,000 Less: Unrealised profit on inventory (W.N.8) (15,000) Less: Loss on cancellation of debentures (50,000) Net for CBS 5,09,000