a 39 Debentures: The subsidiary and the holding may have issued debentures at time of consolidation of Balance Sheet These will be added and continued to appear in the debenture account in the consolidated Balance Sheet However, if some portion of these debentures are held by the holding company or subsidiary company, this will be dedicated from the investment account on the asset side and the debentures account on the liabilities side at the time of consolidation. Goodwill: A goodwill account may appear in the books of Subsidiary and Holding at the time of consolidation. The aggregate goodwill be the total of these goodwill and will be adjusted for any goodwill or capital reserve that appear in the cost of control. Interim Dividend: When a dividend is paid in between an accounting year i.e, prior to completion of final accounts, it is termed as interim dividend. The general presumption with respect to this dividend is that it has been paid i.e, it has been adjusted for in the books of Holding and Subsidiary. No adjustment required with respect to minorities however, with respect to the Holding company, if capital profit have been employed for making dividend payment to the extent (wholly or partly) it will go to the cost of control from the P/L Account of Holding company A. PRELIMINARIES OF CONSOLIDATION Illustration 1: Analysis of Balances in Reserves Following are the balances in various reserves of P. Ltd., subsidiary of V Ltd. as on the date of controlling acquisition and the date of consolidation Accounts Date of Acquisition Date of Consolidation General Reserve 60,000 1,20,000 Profit and Loss Account 25,000 80,000 Capital Redemption Reserve 40,000 55,000 Securities Premium 45,000 45,000 Capital Reserve 5,000 25,000 Preliminary Expenses 5,000 1,000 Underwriting Commission 10,000 5,000 Additional information 1. One year after the date of controlling acquisition, Pushpak Ltd. had issued Bonus Shares for Rs.60,000 utilizing the balances in Capital Reserve and Capital Redemption Reserve in full, and sourcing the balance from General Reserve. The Director's did not utilize the balance in Securities Premium for this purpose. 2. In the intervening period, Preference Share Capital had been redeemed at a Premium of Rs. 12,000. For statutory Compliance, a sum of Rs.40,000 had been transferred to Capital Redemption Reserve and a further sum of Rs. 15,000 had been transferred upon redemption of Debentures, which were also redeemed at a Premium of Rs.10,000 3. To finance its redemption of Preference Capital, P Ltd. had issued Equity Capital at a Premium. The balance of Rs.5,000 against Underwriting Commission is incurred in this regard. The Company has been writing off balances in Underwriting Commission A/c and Preliminary Expenses against balance in Securities Premium Account. The balance in Preliminary Expenses as on consolidation date is the amount as on acquisition date not yet written off. 5. Pushpak Ltd. had declared Equity and Preference Dividend of Rs.20,000 out of its P&L A/c balance as on date of acquisition How would the above balances as on date of consolidation be analyzed and classified for the purposes of consolidation? 4