H plc and S plc

Balance sheets as on 31.12.2020

H plc S plc
Equity share capital 800,000 200,000
General reserve 150,000 70,000
Profit and Loss 90,000 55,000
Creditors 120,000 80,000
1,160,000 405,000
Represented by:
Fixed assets 550,000 100,000
75% shares at cost 280,000
Inventory 105,000 177,000
Other current assets 225,000 128,000
1,160,000 405,000

H plc acquired the shares on 30th April 2020.

S plc earned a profit of shs 45,000 during the year ended 31.12.2020
In September 2020, S plc sold goods costing shs 15,000 to H plc for shs 20,000. By the
close of the year, 31.12.2020, H plc still had half of the goods lying in store (Unsold)
Required: Prepare the consolidated balance sheet

Mutual owings
H plc acquired as investment 150,000 shares of S plc for shs 1,550,000 on 1st April,
2020. The balance sheets of the two companies were as below on 31st December, 2020

H plc S plc
Share capital:
Shares of sh 10 each 9,000,000 2,500,000
General reserve 1,600,000 400,000
Profit and loss 800,000 250,000
Bills payable 400,000 200,000
Creditors 500,000 300,000
12,300,000 3,650,000
Represented by:
Machinery 7,000,000 1,500,000
Furniture 1,000,000 700,000
Investment 1550,000
Inventory 1000,000 500,000
Debtors 6600,000 350,000
Bills receivable 250,000 200,000
Cash at bank 900,000 400,000
12,300,000 3,650,000

H plc acquired the shares on 1st April 2020

General reserves appearing in the books of S plc remained unchanged from January
2020
Profit earned by S plc during the year amounted to shs 200,000
On 1st November 2020 H plc sold to S plc goods costing shs 80,000 for shs 100,000.
25% of the goods remained unsold with S plc on 31.12.2020. Creditors of S plc
include shs 40,000 due to H plc on account of these goods
Out of H plc acceptances shs 150,000 are those which have been accepted in favour
of S plc. Out of these H plc had endorsed shs 80,000 worth of bills receivable in
favour of its creditors by 31.12.2020
Required: Draw the consolidated balance sheet
If the values of fixed assets of the subsidiary company change with retrospective
effects, after depreciation has been provided for full year, depreciation amount in
respect of decrease or increase has to be adjusted as a revenue loss or profit.
500,000 equity shares of shs 10 each 5,000,000
100,000, 14% preference shares of shs 10 each 1,000,000
General reserve 1,500,000
Profit and loss: 1.1.2020 300,000
31.12.2020 900,000 1,200,000
Creditors 800,000
9,500,000
Land and buildings 2,500,000
Machinery: 1.1.2020 2,500,000
Less: depreciation 375,000 2,125,000
Furniture and fittings – net 810,000
Inventory at cost 1,565,000
Debtors 1,110,000
Cash at bank 1,000,000
Preliminary expenses 400,000
9,500,000

As on the date of acquisition H plc found that land and buildings was undervalued
by shs 500,000 while Machinery was valued at shs 2000,000. H plc has decided to use
the new values and to eliminate preliminary expenses.
From the Balance sheet of S plc above, Work out capital profits, revenue profits and
minority interest.