Analysis of Profit and Loss Account Balance as given on 31.12.2008 33,800 Less: Pre-Acqn. Dividend from M Ltd. (7,500) (to credit Investment in Maya A/e) Less: Proposed Dividend for 2008 (15,000) Add: Excess Provision to be written back 1,700 (to debit Outstanding Expenses A/e) Corrected Balance as at 31.12.2008 13,000 a40 From Profit 900) 01.01.2007 Profit for 2007 10,000 Dividend for 2007 Profit for 2008 Rs.6,000 Add: Abnormal Loss 900 Rced. by A 9,600 for 80% Rs.9,000 Capital Profit without Total Dividend = 9,600 + 80% = (bal. figure) Revenue abnormal losses 10,900 (Rs. 12,000) (1,30-Opg. 60- PA for 2004 1,00+ Dividend 1,20) 1.7.2007 to 1.1.2007 to From Opg From Profit 1.7.2007 31.12.2007 Bal. for 1.1.07 to for 1.7.07 5.450 5,450 (bal. figure) 1.7.07 to 31.12.07 Less: Abnormal Loss Revenue (Rs.2,000) (Rs.4,550) (Rs.5,450) Bal. Capital Profit 4,550 Capital Capital Revenue Total Capital Profit: 6,000 + 4,550 - 2,000 - 4,550 - Rs.4,000; Total Revenue Profit: 9,000 + 5,450 - 5,450 = Rs.9,000 Abnormal Loss = Stock Loss in Riots Rs.1,550 Less Insurance Claim received Rs.650 = Rs.900 Notes: It has been assumed that the Profits arose evenly throughout the year. Dividend declared for 2004 = Rs. 12,000, but profit for 20x07 is Rs. 1,00,000. So it is presumed that balance of Rs.2,000 has been declared from the opening reserve. Illustration 3: Cost of Investment - Share Split A Ltd. acquired 5,000 Shares of S Ltd. at Rs.48 per Share cum-Dividend constituting 62.50% holding in the latter. Immediately after purchase, S Ltd. declared and distributed a dividend at Rs.4 per Share, which S Ltd.credited to its Profit and Loss Account One year later, S Ltd, declared a Bonus of 1 fully paid Equity Share of Rs.10 cach for every 5 Shares held. Later on, S Ltd. proposed to raise funds and made a Rights issue of 1 Share for 5 held at Rs 36 per Share. A Ltd. exercised its right After some time, at its AGM, S Ltd. had decided to split its Equity Share of Rs.10 into Two Equity Shares of Rs.5 each. The necessary resolutions were passed and share certificates issued to all its existing shareholders. To increase its stake in S Ltd. to 80%, A Ltd. acquired sufficient number of shares at Rs.30 each. Ascertain the Cost of Control as on 31" December if Sreesha's share in Capital Profits (duly adjusted for purchase in lots) as on that date was Rs.3,15,000