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account of holding company

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Isha Nisha Johar

63 Points Joined February 2018

why share acquired of subsidiary company not shown in consolidated balance sheet of holding company under share holders fund?

Replies (2)

satish

teaching

2046 Points Joined February 2009

while preparation of consolidated financial statements, instead of investment in subsidiary company shares- holding company incorporate the subsidiary company assets and liabilities.

financial statement of subsidiary company

Equity and Liabilities	Amount	Assets	Amount

Equity share capital	500	Assets	1000
Liabilites	500
	1000		1000

if holding company invested 80% of shares in subsidiary company for Rs.400/-

net asset in subsidiary company is 500.

i.e. 80% of share is relevant to holding company and balance 20% shares is outers. (minority share holders)

Holding company balance sheet - before consolidation

Equity and Liabilities	Amount	Assets	Amount

		Investments in subsidiary co
		(80% shares)	400
			400

Consolidated financial statements - after consolidation

Equity and Liabilities	Amount	Assets	Amount

Minority share	100	Assets	1000
Liabilites	500
	600		1000

after consolidation - verify the difference of assets and lliabilities- i.e. investment in subsidiary company .

Divakar

Student CA Final

11857 Points Joined May 2015

Because investment is equal to net assets acquired and any goodwill or capital reserves.... We incorporate their net assets thats why investment is not shown and for balance portion minority shareholders is there in net assets