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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)
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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.

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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)
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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

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Querist : Anonymous

Querist : Anonymous (Querist)

11 November 2010 Thanks Ma'am!!!

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