Model: Interim dividend by subsidiary company The following are the summarized balance sheets of H Ltd. and S Ltd. at 30 June 2010:
|
Liabilities |
H Ltd. |
S Ltd. |
Assets |
H Ltd. |
S Ltd. |
|
Share Capital: |
Freehold Premises |
7,68,000 |
2,70,000 |
||
|
Z10 Shares Each Fully |
Machinery |
1,80,000 |
2,43,900 |
||
|
paid |
9,00,000 |
4,50,000 |
|||
|
General Reserve |
5,70,000 |
18,000 |
Stock |
2,04,000 |
1,81,800 |
|
Profit & Loss Account |
4,80,000 |
3,24,000 |
Sundry Debtors |
1,68,000 |
1,42,200 |
|
Sundry Creditors |
90,000 |
1,44,900 |
Cash |
1,80,000 |
99,000 |
|
Investment in Shares of S |
|||||
|
Ltd at Cost |
5,40,000 |
– |
|||
|
20.40,000 |
9,36,900 |
20,40,000 |
9,36,900 |
H Ltd. acquired 36,000 shares of S Ltd on 1 July 2009 at a total cost of Rs.5,40,000. On scrutiny the balance sheet of H Ltd. as at 30 June 2010, the following details are obtained:
- Profit & loss A/c includes interim dividend at the rate of 10% p.a. free of tax from S Ltd.
- Stock includes Rs.18,000 of stock at cost purchased from S Ltd.
- Sundry creditors include Rs.54,000 for purchases from S Ltd. on which the latter company made a profit of Rs.13,500.
It is further stated that on 1 July 2009, the P&L A/c of S Ltd. stood at Rs.2,28,000 and the general reserve at Rs.13,500. No final dividends are yet proposed to be declared by S Ltd.