A cement industry have invested in many other business like this cement

This is an interesting scenario involving a cement industry that has diversified investments in other businesses (milk dairy, rental cab services, hotel, etc.) under the same firm, and now the owner wants to withdraw (or "draw") these subsidiary businesses.

Here’s a breakdown of the accounting treatment and journal entries for both the industry's books and the owner's books:

1. Understanding the situation

• The main firm (cement industry) initially invested ₹1 crore in starting the cement business.

• Later, the firm invested in other businesses (milk dairy, hotel, rental cabs) under the same firm's name.

• Now the owner wants to withdraw these subsidiary businesses from the main firm.

2. Accounting treatment

a) If the subsidiaries are separate legal entities:

• The main firm holds investments in these subsidiaries as investment in subsidiaries (financial assets).

• To "withdraw" or "transfer" these businesses to the owner, the firm can either sell the shares or transfer assets/liabilities.

• The transaction will be recorded as a sale or transfer of investment/assets at fair value or agreed price.

• The proceeds or value will be credited to owner’s capital/drawings account.

b) If subsidiaries are just divisions/business segments within the same legal entity:

• The firm is simply reorganizing its business.

• Owner withdrawing the divisions means transferring assets/liabilities related to those businesses to the owner.

• The owner’s capital or drawings account will be adjusted accordingly.

3. Journal entries in Firm's books

Case 1: Transfer of subsidiary business to owner at agreed value

• To record transfer of business (say milk dairy business) valued at ₹X

• If liabilities related to business are transferred as well:

• If the transfer price differs from the book value, adjust the difference to Capital account or Profit & Loss account as per circumstances.

4. Journal entries in Owner’s books

• When the owner receives the business assets/liabilities from the firm:

• If owner assumes liabilities:

5. Additional points to consider:

• Valuation of businesses: The assets and liabilities of subsidiaries/business segments should be fairly valued to record accurate journal entries.

• Legal implications: If subsidiaries are separate legal entities, proper sale agreements, share transfer deeds, and regulatory compliance (ROC filings, etc.) will be required.

• Tax implications: Transferring business assets to owner may have capital gains tax or other tax consequences.

• Accounting standards: Follow applicable accounting standards (e.g., AS 26 or Ind AS 105 on business combinations or discontinuing operations).

Summary: