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CA Intermediate · Advanced Accounting · AS 21 Consolidated Financial Statements

Veda Ltd acquired 80% of the equity shares of Sutra Ltd on 1 April 2025. For the consolidated balance sheet as at 31 March 2026, Sutra Ltd's profit after tax for the year ended 31 March 2026 is ₹50,00,000, and the whole of it was earned after the date of acquisition. How much of this profit belongs to the minority (non-controlling) interest?

The minority interest in the profit is ₹10,00,000. Veda Ltd holds 80%, so outside shareholders hold 20%. Since all profit arose after acquisition, minority share is 20% of ₹50,00,000. The ₹40,00,000 figure is the parent's share, which goes to consolidated reserves.

  1. A₹10,00,000Correct
  2. B₹40,00,000
  3. C₹8,00,000
  4. D₹50,00,000

Explanation

Minority interest is 100% - 80% = 20%. 20% of ₹50,00,000 = ₹10,00,000. The figure of ₹40,00,000 is the parent's 80% share, not the minority's share.

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