CS Executive · Corporate Accounting and Financial Management · Consolidation of Accounts
Gamma Ltd holds 60% of Delta Ltd, acquired when Delta's reserves were ₹5,00,000. Delta's reserves are now ₹12,00,000 and Gamma's own reserves are ₹20,00,000 (excluding any Delta share). What is the consolidated reserves figure, ignoring other adjustments?
Consolidated reserves are ₹24,20,000. Only the parent's 60% share of Delta's post-acquisition reserves, ₹7,00,000 × 60% = ₹4,20,000, is added to Gamma's own reserves of ₹20,00,000. Pre-acquisition reserves are eliminated against the investment.
- A₹27,00,000
- B₹24,20,000Correct
- C₹32,00,000
- D₹26,20,000
Explanation
Post-acquisition reserves of Delta = 12,00,000 − 5,00,000 = 7,00,000. Parent's 60% share = 4,20,000. Consolidated reserves = 20,00,000 + 4,20,000 = ₹24,20,000. Option 3 adds the full movement and ignores the minority's share.
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