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 .
Naveen Fintech Pvt Ltd
Kolkata
CA Inter
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Gupta Sachdeva & Co. Chartered Accountants
New Delhi
CA Final
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