Problem-3:

1. Pre-acquisition Profit or Purchased profit or capital profit:

Profit or reserve and surplus when we acquire the subsidiary company

2. Post-acquisition profit or Earned profit or Operating profit or Revenue profit:

Profit or reserve and surplus after acquiring the subsidiary company.

Q-3: The following are the balance sheets of H Ltd. and Slid, as on 31.03.2018: Liabilities H Ltd. S Lid. Assets Hid. S Lid. Share Capital (100-cach) 50,00.000 10,00,000 Building 30,00,000 8,00,000 Reserve and Surplus 2,00,000 1,00,000 Machinery 14,00,000 4,50,000 12% Debentures 10,00,000. 4,00,000) Investments 12,00,000 Creditors 5,00,000 3,00,000 Stock 4,00,000 3,00,000 Bils Payable 3,00,000 2,00,000| Debtors 4,50,000 2,50,000 Bills Receivables 3,50,000 1,50,000 Cash and Bank 2.00,000 2.50,000 70,00,000 20,00,000 70,00,000 20,00,000 On the above mentioned date. H Ltd. aquired 8.000 shares of S Ltd. for considration of Rs. 9.50.000. Other informations are given below: (a) S Ltd. had accepted bills of Rs.50.000 in favour of H Ltd., from which bills of Rs.20.000 had been discounted by the later company from the bank. (b) Debtors of H Ltd, includes Rs.1,00.000 due on S Ltd. but Creditors of S Ltd. includes only Rs.90.000 due to H Ltd. (c) Investments of H Ltd. includes purchase Rs.1,00.000: 12 Debentures of S Ltd. alpar. (d) HLtd had sold costing Rs.2.00.000 at Rs.2.50.000 to S Ltd. during the year ended 31.03.2018. 1/5th of which is still in the stock of Slid as remain unsold. Q-3: The following are the balance sheets of H Ltd. and Slid, as on 31.03.2018: Liabilities H Ltd. S Lid. Assets Hid. S Lid. Share Capital (100-cach) 50,00.000 10,00,000 Building 30,00,000 8,00,000 Reserve and Surplus 2,00,000 1,00,000 Machinery 14,00,000 4,50,000 12% Debentures 10,00,000. 4,00,000) Investments 12,00,000 Creditors 5,00,000 3,00,000 Stock 4,00,000 3,00,000 Bils Payable 3,00,000 2,00,000| Debtors 4,50,000 2,50,000 Bills Receivables 3,50,000 1,50,000 Cash and Bank 2.00,000 2.50,000 70,00,000 20,00,000 70,00,000 20,00,000 On the above mentioned date. H Ltd. aquired 8.000 shares of S Ltd. for considration of Rs. 9.50.000. Other informations are given below: (a) S Ltd. had accepted bills of Rs.50.000 in favour of H Ltd., from which bills of Rs.20.000 had been discounted by the later company from the bank. (b) Debtors of H Ltd, includes Rs.1,00.000 due on S Ltd. but Creditors of S Ltd. includes only Rs.90.000 due to H Ltd. (c) Investments of H Ltd. includes purchase Rs.1,00.000: 12 Debentures of S Ltd. alpar. (d) HLtd had sold costing Rs.2.00.000 at Rs.2.50.000 to S Ltd. during the year ended 31.03.2018. 1/5th of which is still in the stock of Slid as remain unsold