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CA Intermediate · Advanced Accounting · AS 21 Consolidated Financial Statements

Rao Ltd holds 75% of Sen Ltd, acquired on 1 April 2025 when Sen Ltd's equity share capital was Rs 8,00,000 and its general reserve was Rs 2,00,000. On 31 March 2026, Sen Ltd's general reserve is Rs 6,00,000 (no change in share capital). What is the minority interest in Sen Ltd on 31 March 2026, assuming there is no other item in its equity?

Minority interest is Rs 3,50,000. It is the minority's 25% share in the subsidiary's total equity at the balance sheet date, that is 25% of Rs 14,00,000 made up of share capital Rs 8,00,000 and reserves Rs 6,00,000, covering both pre-acquisition and post-acquisition amounts.

  1. ARs 3,50,000
  2. BRs 2,50,000Correct
  3. CRs 1,50,000
  4. DRs 2,00,000

Explanation

Total equity of Sen Ltd at 31 March 2026 = 8,00,000 + 6,00,000 = Rs 14,00,000. Minority share is 25%, so 25% x 14,00,000 = Rs 3,50,000. Check: the minority's share of the pre-acquisition equity is 2,50,000 and of post-acquisition reserves is 25% x 4,00,000 = 1,00,000, total 3,50,000.

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