query

Save Share

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

08 November 2010 Co A having Assets worth Rs. 100 Cr; share capital Rs. 1 Cr & Loan liability Rs. 99 Cr.

Co B acquired all the shares of Co A.

Now they have shown the Investment of Rs. 1 Cr in their balance sheet.

My question is that....
Can Co B create any asset & Reserve in their balance sheet in asset side & liability side respectively, against the loan liability of Rs. 99 Cr of subsidiary company???

If yes, confirm with support...

Thanks

CA Shailesh Kumar Bhagat

CA Shailesh Kumar Bhagat (Expert)
Follow

08 November 2010 In consolidated balance sheet just add the assets with assets and loan with loan. since the investment and capital amount is same Rs. 1 crore. nothing has to be shown as reserve.

Message likes : 1 times

Querist : Anonymous

Querist : Anonymous (Querist)

10 November 2010 Thanks for your comment sir...

however my question is for considering the individual balance sheet of Co B

not for Consolidated Balance sheet...

The main concern is that while acquiring a co in Rs. 1 Cr, a liability of Rs. 99 Cr of said Co arises, can we disclose this liability in purchasing company's balance sheet in any sense or not???

shakuntala chhangani

shakuntala chhangani (Expert)
Follow

11 November 2010 Hi, u have not given the purchase price of shares which will be shown as invt. in individual balance sheet as per AS 13 (w.e.f. 1.4.2011 covered under AS 30, 31, 32). B Ltd. will not show any Goodwill or capital Reserve in individual Balance sheet. The difference between purchase price and net worth of acquiree appears as G/w or CR only in consolidated balance sheet.
Regards, CA Shakuntala Chhangani

Message likes : 1 times

Querist : Anonymous

Querist : Anonymous (Querist)

11 November 2010 Thanks Ma'am!!!

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now