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CA Intermediate · Advanced Accounting · AS 21 Consolidated Financial Statements

Anand Ltd holds 70% of Bharat Ltd. At the date of acquisition, Bharat Ltd had equity share capital of Rs 5,00,000 and reserves of Rs 3,00,000. At the balance sheet date, Bharat Ltd's reserves were Rs 7,00,000 (including the pre-acquisition Rs 3,00,000), and share capital was unchanged. What is the minority interest in the consolidated balance sheet?

Minority interest is Rs 3,60,000. It is the minority's 30% share of the subsidiary's total equity at the balance sheet date, being share capital of Rs 5,00,000 plus reserves of Rs 7,00,000, i.e. Rs 12,00,000. It includes both pre- and post-acquisition amounts.

  1. ARs 3,60,000Correct
  2. BRs 2,40,000
  3. CRs 3,00,000
  4. DRs 2,70,000

Explanation

Total equity of Bharat Ltd at balance sheet date = 5,00,000 + 7,00,000 = 12,00,000. Minority share is 30% x 12,00,000 = 3,60,000. Rs 2,40,000 is 30% of the equity at acquisition only, ignoring post-acquisition profit, and is therefore wrong.

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