Model: Proposed dividend, received bonus shares, revaluation of assets, unrealized profit in stock and consolidation after some years of investment One 1 January 2008, A Ltd. acquired 16,000 shares of Rs.10 each of B Ltd. at Rs.1,80,000. The respective balance sheets as on 31 December 2010 are given as follows:

Liabilities

A Ltd.

B Ltd.

Assets

A Ltd.

B Ltd.

Share Capital (Rs. 10)

2,00,000

2,00,000

Fixed Assets

1,20,000

2,20,000

Reserve

80,000

52,000

Investments

2,00,000

30,000

Profit & Loss A/c

72,000

70,000

Debtors

50,000

40,000

Creditors

1,42,000

96,000

Stock

60,000

80,000

Bank

64,000

48,000

4,94,000

4,18,000

4,94,000

4,18,000

Additional information:

  1. At the time of acquiring shares, B Ltd. had Rs.48,000 in reserve and Rs.30,000 in profit & loss account.
  2. B Ltd. paid 10% dividends in 2008, 12% in 2009, 15% in 2010 for 2007, 2008 & 2009, respectively. All dividends received have been credited to P&L A/c of A Ltd.
  3. Proposed dividends of both the companies for 2010 is 10%.
  4. One bonus share for five fully paid shares held has been declared by B Ltd. Out of pre-acquisition reserves on 31 December 2010, no effect has been given to that in the above accounts.
  5. On 1 January 2008, Building of B Ltd. which stood in the books as Rs.1,00,000 was revalued as Rs.1,20,000. But no adjustment has been made in the books. Depreciation has been charged @ 10% p.a. or reducing balance method.
  6. In 2010, A Ltd. purchased from B Ltd. goods for Rs.20,000 on which B Ltd. made a profit of 20% on sales. 25% of such goods are lying unsold on 31 December 2010. You are required to prepare the consolidated balance sheet as 31 December 2010.