Can you please send the detailed step wise guide for Consolidation of Accounts of Holding & Subsidiary, involving calculation method for Minority Interest, Goodwill, Unrealised Profit etc.
02 December 2009
1. Calculate pre-acquisition profits/reserves and post-acquisition/revenue profits of subsidiary company. 2. Calculate share of profit of minority in both the profits above. 3. While calculating minority interest which both types of above profits are considered same because they have right in the earned and retained earnings. 4. Cost of control is the price paid in excess of actual assets acquired at the time of taking control of subsidiary. Again calculate share of minority. 5. Unrealiased profit included in stock of Subsidiary company (which is sold by holding company) should be eliminated.
6. Add the total of minority interest as calculated above.
7. While preparing consolidated balance sheet; remove the capital of subsidiary company because total assets and liabilities have been merged of that company in the holding company.
CAclubindia
