Holding companies

                                                                                     p & l a/c for the yr 31.3.2005

to bal b/d (on 1.4.04)                                          32000

(bal fig)

to div paid                                                             20000              

to bal c/d                                                               30000                by profit earned during yr                               82000       

                                                                               82000                                                                                            82000

calculation of cap profit & rev profit:

                                                                             cap profit                                  rev profit

op bal of p/l                                                          (32000)

profit earned during the yr  82000                    41000                                        41000

(6m : 6m)

total                                                                           9000                                        41000

less:

div paid                                                                   20000

total                                                                        (11000)                                       41000

holding co int (16000/20000)80%                   (8800)                                         32800              

minority int   20%                                                 (2200)                                          8200

calculation of goodwill/cap res

inv in s ltd                                                                                                                     340000

less:

share cap                                                               160000

cap profit                                                                   (8800)                                        151200

goodwill                                                                                                                        188800

the above solution is incorrect, the information in the ques. is not complete, Ques. says profit FOR THE YEAR is 82000/- whereas priya has taken it as P&L balance as on 31-03-2005. Please provide clear details.

thanks for  your reply arihant.

actually due to alighnment problem my p&l a/c does not appear clear . i hv also taken profit for the yr 04-05 is rs 82000 & apportioned it in between cap profit & rev profit rs 41000 respectivly. bal of p& l a/c as on 31.3.2005 is rs 30000.

i hv calculated bal of p&L a/c as on 1.4.2004 as such to add in cap profit

                                                                              p&l a/c for the yr ending 31.3.2005

to bal b/d                                                32000                             by profit earned during yr                        82000

(bal fig)

to div paid                                               20000

to bal c/d                                                 30000                                                                                                   .........

                                                                  82000                                                                                                 82000

• the bal fig rs 32000 of p&l a/c as on 1.4.2004 is loss
• even now my ans is wrong plz reply me the correct ans

Assumption: Dividend declared is out of pre-acquisition profit:

Pre-acquisition profit - 32000+ 41000  - 20000 = 53000 - H Ltd- 42400  S Ltd- 10600

Post acquisition profit =41000 - H Ltd-32800 S Ltd- 8200

Minority Interest- 40000+ 10600+ 8200 + 4000(Dividend) = 62800

Cost of Control - 340000 -16000 = 324000

                               160000 + 42400 =202400

Therefore, goodwill is 121600.

Correct me, if i am wrong.