Consolidation of accounts

This query is : Resolved

rajat kuchal (Querist)
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20 July 2012 Dear All,
I have a problem related to investment value in case of consolidation of accounts of subsidiaries. I am requesting to all of you, kindly give your valuable guidance and opinion for the same.

Facts:
X Ltd is presently holding company of Y Ltd. X Ltd have 100% share holding in Y Ltd. X Ltd. acquire shares of Y Ltd. as per the scheme of restructuring. As per the scheme all shares of Y Ltd. transferred to X Ltd. from its originally holding company Z Ltd. Z Ltd. acquired shares of Y Ltd. at face value at cost of Rs. 5 lacs. Whereas share of Y Ltd. transferred to X Ltd. by Ztd. without taking any purchase consideration.
Shares of Y Ltd. is unquoted.

Query:
My query is that in consolidation of account of X, What would be the investment value for shares of Y Ltd. And Any goodwill or capital reserve would be arise?

Sanjay Chauhan (IFRS)

Sanjay Chauhan (IFRS) (Expert)
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21 July 2012 If X ltd has paid Zero consideration, then then the net assets will be added to Capital Reserve in Consolidation.

If you follow AS 14, then you may follow pooling of interest method and consolidate Y ltd at its book values.