Preparation of Consolidated Balance Sheet under AS 21

Consolidated Balance Sheet presents the financial position of a holding company and its subsidiaries as if they were a single economic entity. AS 21 (Indian Accounting Standard) prescribes the principles and procedures for consolidation.

Key Steps:

  1. Identify Holding–Subsidiary Relationship
    • Holding company controls more than 50% of voting rights or has control over the board.
  2. Combine Assets & Liabilities of holding and subsidiary on a line-by-line basis.
  3. Eliminate:
    • Investment in subsidiary against the holding company’s share in subsidiary’s equity.
    • Intra-group balances (debtors/creditors, loans/advances).
    • Intra-group transactions (sales, purchases, interest, rent).
  4. Calculate and show:
    • Minority Interest (MI) = Subsidiary’s net assets × Minority % (presented in liabilities).
    • Capital Reserve / Goodwill = Cost of investment − Holding company’s share in net assets on acquisition date.
  5. Adjust for Pre-acquisition and Post-acquisition profits in reserves.
  6. Prepare the consolidated balance sheet in the statutory schedule format.

Format of Consolidated Balance Sheet (as per Schedule III):

Consolidated Balance Sheet of [Holding Co. Ltd. and its Subsidiary]

As at: DD/MM/YYYY (₹ in Lakhs)

Particulars Notes Figures as at current year Figures as at previous year
I. EQUITY AND LIABILITIES
1. Shareholders’ Funds
(a) Share Capital 1 XX XX
(b) Reserves and Surplus 2 XX XX
2. Minority Interest 3 XX XX
3. Non-current Liabilities
(a) Long-term borrowings 4 XX XX
(b) Other long-term liabilities 5 XX XX
(c) Long-term provisions 6 XX XX
4. Current Liabilities
(a) Short-term borrowings 7 XX XX
(b) Trade payables 8 XX XX
(c) Other current liabilities 9 XX XX
(d) Short-term provisions 10 XX XX
Total XXX XXX
II. ASSETS
1. Non-current Assets
(a) Fixed assets (Tangible/Intangible) 11 XX XX
(b) Non-current investments 12 XX XX
(c) Deferred tax assets 13 XX XX
(d) Long-term loans and advances 14 XX XX
2. Current Assets
(a) Inventories 15 XX XX
(b) Trade receivables 16 XX XX
(c) Cash and cash equivalents 17 XX XX
(d) Short-term loans and advances 18 XX XX
(e) Other current assets 19 XX XX
Total XXX XXX
  1. Goodwill / Capital Reserve is shown under Non-current Assets (Intangible).
  2. Minority Interest shown separately in Equity & Liabilities.
  3. Reserves & Surplus = Holding Co.’s reserves + Holding’s share of post-acquisition profits of subsidiary.
  4. Intra-group balances are fully eliminated.
  5. Unrealized profits in stock are eliminated from inventory and reserves.

Leave a Reply

error: Content is protected !!