Please help..

i dnt know abt praveen sir book

upstrem trancation mean where the material /(anything ) from subsidary to holding company get transfer

now  devide it into two parts

profit on sale is suppose to be reduce  if the balance is there in stock of holding company

reduce value of stock of holding company

second profit should be devided should be reduce from the gernal reserve  for currunt year

its have a effect at 3 places

1. stock value of holding company

2. currunt year profit

3. reserves in the balance sheet

to be specific u need to nulify all the inter company trasaction

bt since subsidiary ahs sold it, the unrealised profit is recorded in subsidiary books, it should b reduced from subsidiary p&l balance??

as u r saying cuurrent year profit, whose current year profit??

first o f all the profit which u realise by selling it should be reduce from the subsidary books

second stock in holding should be reduce

third the minority intrest should be adjuted

forth the currunt year reserves to be reduce

currunt profit of the subsidary is bound to get reduce as it incuded the profit on the unsold stock of holding company

bt as per the practice manual, they r only reducing consolidated p&l a/c??

u might be getting confused page number bolo practical  manual ka

Q NO.5 of practice manual?? 

let me check

first of all the profit of  20000

now 40 % is in stock

so 40% of 20000=8000

reduce 8000 profit from profit of  hockey

consolidated stock should be reduce by 8000

reserves are reduce by 8000

u have rightly said for stock.. bt why they have reduced consolidated p&l a/c abl with 8000??it should have been reduced from that of subsidiary??

yes they will reduce from subsidary only  when u present it in consolidted balance sheet

what u do

profit of subsidary + profit of holding

what ever u do the consolidated balance sheet will show the reduce profit of 8000 only

Originally posted by : ramsinghania
	yes they will reduce from subsidary only  when u present it in consolidted balance sheet what u do profit of subsidary + profit of holding what ever u do the consolidated balance sheet will show the reduce profit of 8000 only

it will show reduced profit of 8000 in both cases.. bt i didnt understood the concept of reducing from consolidated [profit nd loss  a/c