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Holding and subsidiary

Prateek Jotwani (student) (201 Points)

11 October 2011

7.5 % pref share capital 100000

no additional information given in the question. tell the treatment according to para 27

date of acquisition 1.10 .2010 .

will half of the pref divindend be deducted from capital profits.

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4 Replies

CA Rachit Gupta (Chartered Accountant) (1315 Points)
Replied 11 October 2011

Hi prateek...I think the solution is as follows..

Deduct Rs.3750 from capital profits and Rs.3750 from revenue profits

Then Calculate holding and minority share for each of Rs.3750 in preference holding ratio

Suppose 80% holding and 20% minority's share...Then Rs.3000 (80% of 3750) is added to COC and Rs.3000 added to CPL

& Rs.1500 will be shown in Balance sheet as Minority's share as proposed dividend liability.

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priyatambika ( ca final student) (323 Points)
Replied 12 October 2011

according to infmn provided by you it cant be find out that how much of pref share issued by subsidiary is held by holding co.....if holding co does not hold any pref share then nothing will be deducted from cap profit or rev profit .....but if it suppose held 80% of pref sh issued by subsidiary and pref div has been paid, then such rs 7500 will be first added to profit earned during yr and thereafter deducted according to period of holding means rs 3750 from cap profit & rs 3750 from rev profit .here no further treatmt of such pref div.

sivaram (Asst Mgr-Taxation) (6918 Points)
Replied 12 October 2011

Originally posted by : priyatambika
	according to infmn provided by you it cant be find out that how much of pref share issued by subsidiary is held by holding co.....if holding co does not hold any pref share then nothing will be deducted from cap profit or rev profit .....but if it suppose held 80% of pref sh issued by subsidiary and pref div has been paid, then such7500 will be first added to profit earned during yr and thereafter deducted according to period of holding means3750 from cap profit &3750 from rev profit .here no further treatmt of such pref div.

Agree with the above View even preference dividend is paid or not Pref shares presumed as cumulative and accordingly it has to be dealt with based on date of acquistion provided holding co holds preference shares in subsidary

ur village (Owner) (22 Points)
Replied 29 October 2011

x company is into real estate and they have started few more companies as subsidaries to X company. The activities are in constrution, health care. Since X company is parent company, can we name him as X holding without attracting any NBFC rules, otherwise what is best name to show as holding co w/o attracting NBFC