CS Executive · Corporate Accounting and Financial Management · Consolidation of Accounts
Alpha Ltd acquired 80% of Beta Ltd on 1 April. On that date Beta's equity share capital was ₹10,00,000 and its reserves were ₹4,00,000. At 31 March the reserves are ₹9,00,000. Share capital is unchanged. What is the minority interest in net assets at 31 March?
Minority interest is ₹3,80,000. Beta's equity at 31 March is ₹19,00,000, and the minority holds 20%. This equals 20% of the acquisition-date equity of ₹14,00,000 plus 20% of the ₹5,00,000 increase in reserves since acquisition.
- A₹2,80,000
- B₹3,80,000Correct
- C₹2,00,000
- D₹1,80,000
Explanation
Minority share is 20%. Total equity at 31 March = 10,00,000 + 9,00,000 = 19,00,000. 20% of 19,00,000 = ₹3,80,000. Check: 20% of date-of-investment equity 14,00,000 = 2,80,000 plus 20% of reserve movement 5,00,000 = 1,00,000 gives 3,80,000. Option 1 omits the movement.
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