Total . a 47 Liabilities Rs. Assets Rs. Share Capital: Equity Share Capital 5,00,000 Fixed Assets 12% Pref. Share Capital 1,00,000 Goodwill (Purchased as per B/s) 1,00,000 Reserves and Surplus: Goodwill on Consolidation 1,56,000 General Reserve 1,48,000 Machinery (1,00,000 + 60,000) 1,60,000 P & L Account 1,82,000 Vehicles (1,80,000+ 70,000) 2,50,000 Minority Interest: 80,000 Furniture (50,000 + 30,000) 80,000 Current Liabilities: Current Assets, Loans & Advances Creditors (60,000 +70,000 - 20,000) 1,30,000 Stock (70,000 + 1,40,000 - Stock Res 4,000) 2,06,000 Income Tax (70,000 + 60,000) 1,30,000 Debtors (1,00,000 + 1,65,000 - 20,000 mutual) 2,45,000 Preferance Dividend Payable Sky Ltd. 12,000 Bank Balance (40,000 + 25,000) 65,000 Total 12,62,000 12,62,000 Notes: Stock Reservei.e. unrealized profits on Closing Stock have been eliminated in full against Holding Company's Profits, as it arose from downstream transaction (i.e. Holding to Subsidiary). Inter Company Owings have been eliminated in full. Illustration 20: Bonus Issue Not Recorded / Debenture Interest The following are the Balance Sheets of K Ltd. and P Ltd. as at 31.12.2005 - (Rs.000's) Liabilities K P Assets K P Authorized Issued & Paid-up Capital: Fixed Assets: 1,015 809 Equity Shares of Rs.100 each 800 400 Investments: In P Ltd. 12% Preference Shares of Rs.100 each 200 3,000 Equity Shares 450 Reserves & Surplus: 1,500 Preference Shares 180 General Reserve 360 200 25 10% Debentures 25 (Face Value) Profit & Loss Account 240 140 Current Assets: 260 480 Secured Loans: 10% Debentures of Rs.1,000 each 50 Current Liabilities & Provisions: Proposed Dividends on: -Equity Shares 120 60 Preference Shares 24 Debenture Interest accrued Trade Creditors 410 210 Total 1,930 1,289 Total 1,930 1,289 1. K Ltd. acquired its interest in P Ltd. on 01.01.2008, when the balance to the General Reserve Account of P Ltd. was Rs.1,80,000. 2. The balance in the Profit & Loss Account of P Ltd as at 31.12.2008 was arrived at as under- Rs. Rs. Balance on 01.01.2008 40,000 Add: Current Profits (including Dividends) 2,04,000 Deduct: Transfer to: General Reserve 20,000 2,44,000 Proposed Dividends 84,000 1,04,000 Balance as on 31.12.2008 1,40,000 3. 4. Balance to the P & L Account of P Ltd. as on 01.01.2008 was after providing for dividends on Preference Shares and 10% dividends on Equity Shares for the year ended 31.12.2008, these dividends were paid in cash by P Ltd. in May 2008. No entries have been made in the books of K Ltd. for debenture interest due or for proposed dividends of P Ltd, for the year ended 31.12.2008 Mutual indebtedness of Rs.24,000 is reflected in the balances shown in the Balance Sheets. In October 2008, P Ltd. issued fully paid up Bonus Shares in the ratio of one share for every four shares held by utilizing its General Reserve. This was not recorded in the books of both the Companies. 5. 6