Department of Commerce S. M. Joshi College, Hadapsar, Pune-28

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Presentation transcript:

Department of Commerce S. M. Joshi College, Hadapsar, Pune-28 HOLDING COMPANY Prof. A. B. Bhagwat Department of Commerce S. M. Joshi College, Hadapsar, Pune-28 S. Y. B. Com

INTRODUCTION & MEANING A company which acquires more than 50% or more equity shares of any company is known as holding company where as the company whose shares so acquired known as subsidiary company S. Y. B. Com

STEPS FOR PREPARING CONSOLIDATED BALANCE SHEET Calculation of ratio Statement of capital profit Statement of revenue profit Statement of minority interest Statement of goodwill/ cost of control Statement of unrealized profit S. Y. B. Com

CALCULATION OF RATIO For this purpose acquired shares are compared with the remaining shares with subsidiary company. total shares 2000 1500 500 3/4th 1/4th S. Y. B. Com

STATEMENT OF CAPITAL PROFIT Any profit earned by S-company before acquiring shares by holding company known as capital profit. Generally opening balance of general reserve, profit and loss account, reserve fund etc. straight way treated as capital profit. From capital profit minority interest should be deducted to arrive at holding company share of capital profit. S. Y. B. Com

STATEMENT OF REVENUE PROFIT Any profit which is earned by subsidiary company after acquiring the shares by the holding company is known as revenue profit. From this revenue profit minority interest will be deducted to arrive at holding company shares of revenue profit. S. Y. B. Com

STATEMENT OF MINORITY INTEREST It consist of the total of the following three items: Share in share capital …….. + Share in capital profit …….. + Share in revenue profit …….. Minority interest ………. Minority interest always shown on the liability side of consolidated balance sheet. S. Y. B. Com

STATEMENT OF GOODWILL/ COST OF CONTROL Cost or price of shares acquired ……… - Face value of shares acquired ………. Goodwill - Holding company share of ……... capital profit S. Y. B. Com

STATEMENT OF UNREALISED PROFIT When stock of H. Co. or S. Co. includes the certain goods purchased from either company then profit on such closing stock is called unrealized profit. From such unrealized profit H. Co. share is calculated and such amount is deducted from the total stock and profit on the liability side of the consolidated balance sheet. S. Y. B. Com

THANK YOU S. Y. B. Com