Rose Ltd. holds 80% share in Marigold Ltd., its subsidiary. Share capital of Marigold Ltd. is ₹25,00,000 and reserves being ₹5,00,000 on the date of…

As per AS 21 “Consolidated Financial Statements”, the losses applicable to the minority in a consolidated subsidiary may exceed the minority interest in the equity of the subsidiary. The excess, and any further losses applicable to the minority, are adjusted against the majority interest except to the extent that the minority has a binding obligation to, and is able to, make good the losses. If the subsidiary subsequently reports profits, all such profits are allocated to the majority interest until the minority's share of losses previously absorbed by the majority has been recovered. Accordingly, Year Details Minority Interest (MI) (20%) Minority's Share of losses borne by Rose Ltd. Balance Minority Interest at the time of acquisition i.e. on 31.3.2026 6,00,000 (W.N.) 2026-2027 (15,00,000 x 20%) (3,00,000) 3,00,000 on 31.3.2027 3,00,000 2027-2028 (20,00,000 x 20%) (4,00,000) (1,00,000) Loss amounting ₹1,00,000 of minority borne by majority shareholders on application of AS 21 (1,00,000) 1,00,000 on 31.3.2028 Nil 1,00,000 2028-2029 (4,00,000 x 20%) 80,000 80,000 On application of AS 21, profit transferred to majority shareholders (80,000) (80,000) on 31.3.2029 Nil 20,000 2029-2030 (5,00,000 x 20%) 1,00,000 1,00,000 On application of AS 21, profit transferred to majority shareholders to the extent earlier loss was borne by majority share holders (20,000) (20,000) on 31.3.2030 80,000 Nil Working Note: Calculation of Minority Interest as on 31.3.2026 Total Amount (100%) (₹) Minority Interest (20%) (₹) Share Capital (20%) 25,00,000 5,00,000 Add: Share in Reserves (20%) 5,00,000 1,00,000 6,00,000