Answer :
To prepare a consolidated balance sheet for M Ltd and C Ltd, we need to combine both companies' assets and liabilities, while accounting for the minority shareholders' interest. Let's go step-by-step:
### Initial Liabilities and Assets
#### Liabilities:
- M Ltd Liabilities:
- Share capital of Rs. 10 each: 150,000
- Reserves: 20,000
- Creditors: 25,000
- Profit and Loss account: 30,000
- Profit for the year: 25,000
- C Ltd Liabilities:
- Share capital of Rs. 10 each: 30,000
- Creditors: 9,500
- Profit and Loss account: 4,500
- Profit for the year: 6,000
#### Assets:
- M Ltd Assets:
- Sundry assets: 140,000
- 2,000 shares in C Ltd: 27,000
- Current assets: 58,000
- C Ltd Assets:
- Sundry assets: 40,000
- Current assets: 10,000
### Consolidated Liabilities Calculation
1. Share capital of Rs. 10 each:
[tex]\[ 150,000 (M Ltd) + 30,000 (C Ltd) = 180,000 \][/tex]
2. Reserves:
[tex]\[ 20,000 (M Ltd) + 0 (C Ltd) = 20,000 \][/tex]
3. Creditors:
[tex]\[ 25,000 (M Ltd) + 9,500 (C Ltd) = 34,500 \][/tex]
4. Profit and Loss account:
[tex]\[ 30,000 (M Ltd) + 4,500 (C Ltd) = 34,500 \][/tex]
5. Profit for the year:
[tex]\[ 25,000 (M Ltd) + 6,000 (C Ltd) = 31,000 \][/tex]
### Consolidated Assets Calculation
1. Sundry assets:
[tex]\[ 140,000 (M Ltd) + 40,000 (C Ltd) = 180,000 \][/tex]
2. Current assets:
[tex]\[ 58,000 (M Ltd) + 10,000 (C Ltd) = 68,000 \][/tex]
3. 2,000 shares in C Ltd:
[tex]\[ 27,000 (M Ltd only) \][/tex]
### Minority Interest Calculation
- The minority interest is calculated as the difference between the share capital of C Ltd and the value of shares in C Ltd owned by M Ltd:
[tex]\[ Minority Interest = 30,000 (C Ltd Share Capital) - 27,000 (Value of 2,000 shares in C Ltd) = 3,000 \][/tex]
### Consolidated Balance Sheet
#### Consolidated Liabilities
[tex]\[ \begin{array}{|c|} \hline \textbf{Consolidated Liabilities} \\ \hline \text{Share capital of Rs. 10 each} & 180,000 \\ \hline \text{Reserves} & 20,000 \\ \hline \text{Creditors} & 34,500 \\ \hline \text{Profit and Loss account} & 34,500 \\ \hline \text{Profit for the year} & 31,000 \\ \hline \text{Minority Interest} & 3,000 \\ \hline \end{array} \][/tex]
#### Consolidated Assets
[tex]\[ \begin{array}{|c|} \hline \textbf{Consolidated Assets} \\ \hline \text{Sundry assets} & 180,000 \\ \hline \text{Current assets} & 68,000 \\ \hline \text{2,000 shares in C Ltd} & 27,000 \\ \hline \end{array} \][/tex]
These calculations represent a bird’s-eye view of M Ltd and C Ltd's financial status after the consolidation. The interests of the minority shareholders are properly accounted for as a separate item in the liabilities.
### Initial Liabilities and Assets
#### Liabilities:
- M Ltd Liabilities:
- Share capital of Rs. 10 each: 150,000
- Reserves: 20,000
- Creditors: 25,000
- Profit and Loss account: 30,000
- Profit for the year: 25,000
- C Ltd Liabilities:
- Share capital of Rs. 10 each: 30,000
- Creditors: 9,500
- Profit and Loss account: 4,500
- Profit for the year: 6,000
#### Assets:
- M Ltd Assets:
- Sundry assets: 140,000
- 2,000 shares in C Ltd: 27,000
- Current assets: 58,000
- C Ltd Assets:
- Sundry assets: 40,000
- Current assets: 10,000
### Consolidated Liabilities Calculation
1. Share capital of Rs. 10 each:
[tex]\[ 150,000 (M Ltd) + 30,000 (C Ltd) = 180,000 \][/tex]
2. Reserves:
[tex]\[ 20,000 (M Ltd) + 0 (C Ltd) = 20,000 \][/tex]
3. Creditors:
[tex]\[ 25,000 (M Ltd) + 9,500 (C Ltd) = 34,500 \][/tex]
4. Profit and Loss account:
[tex]\[ 30,000 (M Ltd) + 4,500 (C Ltd) = 34,500 \][/tex]
5. Profit for the year:
[tex]\[ 25,000 (M Ltd) + 6,000 (C Ltd) = 31,000 \][/tex]
### Consolidated Assets Calculation
1. Sundry assets:
[tex]\[ 140,000 (M Ltd) + 40,000 (C Ltd) = 180,000 \][/tex]
2. Current assets:
[tex]\[ 58,000 (M Ltd) + 10,000 (C Ltd) = 68,000 \][/tex]
3. 2,000 shares in C Ltd:
[tex]\[ 27,000 (M Ltd only) \][/tex]
### Minority Interest Calculation
- The minority interest is calculated as the difference between the share capital of C Ltd and the value of shares in C Ltd owned by M Ltd:
[tex]\[ Minority Interest = 30,000 (C Ltd Share Capital) - 27,000 (Value of 2,000 shares in C Ltd) = 3,000 \][/tex]
### Consolidated Balance Sheet
#### Consolidated Liabilities
[tex]\[ \begin{array}{|c|} \hline \textbf{Consolidated Liabilities} \\ \hline \text{Share capital of Rs. 10 each} & 180,000 \\ \hline \text{Reserves} & 20,000 \\ \hline \text{Creditors} & 34,500 \\ \hline \text{Profit and Loss account} & 34,500 \\ \hline \text{Profit for the year} & 31,000 \\ \hline \text{Minority Interest} & 3,000 \\ \hline \end{array} \][/tex]
#### Consolidated Assets
[tex]\[ \begin{array}{|c|} \hline \textbf{Consolidated Assets} \\ \hline \text{Sundry assets} & 180,000 \\ \hline \text{Current assets} & 68,000 \\ \hline \text{2,000 shares in C Ltd} & 27,000 \\ \hline \end{array} \][/tex]
These calculations represent a bird’s-eye view of M Ltd and C Ltd's financial status after the consolidation. The interests of the minority shareholders are properly accounted for as a separate item in the liabilities.
