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**Comprehensive Problem — Consolidated Balance Sheet Preparation (Marks: 8)** Om Retailers Ltd. acquired 80% equity shares in Subodh Industries Ltd. on 1st October 2023. The balance of Subodh Industries Ltd. as on 31st March 2024 showed: - Equity Share Capital: ₹38,400,000 (₹10 each) - General Reserve (as on 1st April 2023): ₹9,600,000 - Profit & Loss Balance on 1st April 2023: ₹4,800,000 - Profit for the financial year 2023-24 (accrued evenly): ₹19,200,000 Cost of acquisition incurred by Om Retailers Ltd. was ₹50,000,000. Included in trade receivables of Om Retailers Ltd. is ₹1,920,000 due from Subodh Industries Ltd. **You are required to prepare:** (a) Analysis of Profits of Subodh Industries Ltd. (Pre and Post acquisition). (b) Non-Controlling Interest statement. (c) Cost of Control / Goodwill calculation. (d) Elimination of mutual indebtedness.

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Detailed Solution & Explanation

### Suggested Solution — ICAI Advanced Accounting #### Working Note 1: Analysis of Profits of Subodh Industries Ltd. - Date of Acquisition: 1st October 2023 (6 months pre-acquisition, 6 months post-acquisition). - Opening P&L Balance (100% Pre-acquisition) = ₹4,800,000 - General Reserve as on 01.04.2023 (Pre-acquisition) = ₹9,600,000 - Profit of the Year (₹19,200,000): * Pre-acquisition (6 months) = ₹9,600,000 * Post-acquisition (6 months) = ₹9,600,000 - **Total Pre-acquisition Profit** = ₹4,800,000 + ₹9,600,000 + ₹9,600,000 = ₹24,000,000 - **Total Post-acquisition Profit** = ₹9,600,000 #### Working Note 2: Cost of Control (Goodwill / Capital Reserve): - Cost of Investment (80% shares) = ₹50,000,000 - Less: Parent's share in Paid-up Capital (80% of ₹38,400,000) = ₹30,720,000 - Less: Parent's share in Pre-acquisition Profits (80% of ₹24,000,000) = ₹19,200,000 - **Goodwill on Consolidation** = ₹80,000. #### Working Note 3: Non-Controlling Interest (20%): - 20% in Equity Capital = ₹7,680,000 - 20% in Pre-acquisition Profits = ₹4,800,000 - 20% in Post-acquisition Profits = ₹1,920,000 - **Total NCI** = ₹14,400,000. #### Working Note 4: Mutual Indebtedness: Common transaction of ₹1,920,000 will be eliminated by deducting from Consolidated Trade Receivables and Consolidated Trade Payables.

Key Concepts to Understand

Balance Sheet

A statement showing the financial position of a business at a particular date, listing all assets on one side and all liabilities and capital on the other side. It is not an account but a statement.

Goodwill

An intangible asset representing the good reputation, brand name, customer loyalty, and earning capacity of a business over and above its net tangible assets. It arises in accounting during partnership changes or business acquisitions.

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