by 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:
- Identify Holding–Subsidiary Relationship
- Holding company controls more than 50% of voting rights or has control over the board.
- Combine Assets & Liabilities of holding and subsidiary on a line-by-line basis.
- 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).
- 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.
- Adjust for Pre-acquisition and Post-acquisition profits in reserves.
- 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 |
Important Adjustments in Consolidation under AS 21:
- Goodwill / Capital Reserve is shown under Non-current Assets (Intangible).
- Minority Interest shown separately in Equity & Liabilities.
- Reserves & Surplus = Holding Co.’s reserves + Holding’s share of post-acquisition profits of subsidiary.
- Intra-group balances are fully eliminated.
- Unrealized profits in stock are eliminated from inventory and reserves.
