X Ltd. purchased 70 percent of the shares of Y Ltd. at a price of ₹ 1,00,000. Share capital of Y Ltd.…
Minority interest is the outside shareholders' share of the subsidiary's net assets on the date of consolidation: 30% of (share capital ₹70,000 + accumulated profits…
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X Ltd. purchased 70 percent of the shares of Y Ltd. at a price of ₹ 1,00,000. Share capital of Y Ltd. was of ₹ 70,000 and its accumulated profits amounted to ₹ 90,000. What would be the amount of Minority Interest in the consolidated Balance Sheet ?
Answer and explanation
Correct answer D
Minority interest is the outside shareholders' share of the subsidiary's net assets on the date of consolidation: 30% of (share capital ₹70,000 + accumulated profits ₹90,000) = 30% of ₹1,60,000 = ₹48,000. The price X Ltd. paid, ₹1,00,000, decides only goodwill or capital reserve (here a capital reserve of ₹1,12,000 − ₹1,00,000 = ₹12,000), not minority interest. Under Ind AS 110 the same amount is now called non-controlling interest.
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UGC NET Commerce