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CS Executive · Corporate Accounting and Financial Management · Consolidation of Accounts

Under AS 21, P Ltd holds 70% of S Ltd. At the date of acquisition S Ltd's equity was Rs 4,00,000. At the balance sheet date S Ltd's equity is Rs 6,00,000. What is the minority interest in the consolidated balance sheet?

The minority interest is Rs 1,80,000. The minority holds 30% and its share is the equity at acquisition of 1,20,000 plus its share of post-acquisition increase of 60,000. Equivalently, 30% of the current equity of 6,00,000 is 1,80,000.

  1. ARs 1,20,000
  2. BRs 1,80,000Correct
  3. CRs 2,80,000
  4. DRs 60,000

Explanation

Minority interest consists of its share of equity at acquisition plus its share of post-acquisition movements. Minority share is 30%. 30% x 4,00,000 = 1,20,000 plus 30% x 2,00,000 = 60,000 gives 1,80,000. Rs 1,20,000 ignores post-acquisition movement.

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