HOLDING COMPANY V/S SUBSIDIARY COMPANY – ACCOUNTING PERSPECTIVE  by :  DR. T.K. JAIN AFTERSCHO ☺ OL  centre for social ent...
My word..... My purpose here is to give overview regarding consolidation of accounts of holding and subsidiary company for...
What is a subsidiary company? Sec 4 : of company act : a company is a subsidiary of another if the other  1. controls the ...
What is a holding company ?  It is not defined, but from definition of subsidiary company, it is clear that holding compan...
Legal requirements : Sec. 212  Holding company must disclose the following along with its accounts :  1. balance sheet  of...
Part I & II of schedule VI regarding holding company  Part I : the holding company's balance sheet must merge the balance ...
Statement of interest  It is prepared by holding company  it shows the extent of interest in subsidiary company
What is minority interest ?  The share of equity held by other than holding company is called minority interest. It is cal...
How to do consolidation of accounts?  See investment account in holding company – it will show shares of subsidiary and ot...
Example of consolidation.... H is a holding company and gives following details : liabilities   assets  shares  1000 inves...
Accounts of S (subsidiary company )  S company and gives following details : liabilities   assets  shares  1200 Plant and ...
Consolidated balance sheet  : liabilities   assets  shares  1000  Plant & mach. 1400 Minority  233 creditors  450 debtors ...
NOTES... We have clubbed together all the heads. While clubbing, debtors and creditors were adjusted (for transactions bet...
What is preacquisition profit / loss?  Holding company acquires subsidiary on a particular date, the profit / loss before ...
What is capital profit / goodwill ?  If holding company pays less than the worth of the subsidiary, there is capital profi...
Download link.... http://www.scribd.com/people/documents/3704370 http://www.scribd.com/doc/28692491/How-to-Prepare-Final-A...
Download more resources  http://www.esnips.com/web/onlinespeeches
Download resources on entrepreneurship  http://www.esnips.com/web/bikanersocial123 http://www.esnips.com/web/pgpsepresenta...
DOWNLOAD MORE RESOURCES... http://www.esnips.com/web/afterschoool/ http://www.esnips.com/web/afterschool http://www.esnips...
Download more resources  http://www.esnips.com/web/GREATFLASHQUIZES http://www.esnips.com/web/AUDIOBIKANER123 http://www.e...
Download more material... http://www.scribd.com/doc/13094880/Economics-All http://www.scribd.com/doc/23407782/26-july-Econ...
http://www.scribd.com/doc/27851096/Economics-for-Entrepreneurs http://www.scribd.com/doc/6583898/5-July-Economics http://w...
Download more material .... http://www.scribd.com/doc/14646947/Accounting-amp-Economics-for-Business-4-November http://www...
THANKS.... GIVE YOUR SUGGESTIONS AND JOIN AFTERSCHOOOL NETWORK / START AFTERSCHOOOL SOCIAL ENTREPRENEURSHIP  NETWORK IN YO...
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Economic Environment For Entrepreneurs From India

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Economic Environment For Entrepreneurs From India

  1. 1. HOLDING COMPANY V/S SUBSIDIARY COMPANY – ACCOUNTING PERSPECTIVE by : DR. T.K. JAIN AFTERSCHO ☺ OL centre for social entrepreneurship sivakamu veterinary hospital road bikaner 334001 rajasthan, india FOR – CSE & PGPSE STUDENTS (CSE & PGPSE are free online programmes open for all, free for all) mobile : 91+9414430763
  2. 2. My word..... My purpose here is to give overview regarding consolidation of accounts of holding and subsidiary company for budding entrepeneurs. This is a basic information. For details read other books. Be entrepreneur, change the society, change the world. Go with positive spirit. Please pass this presentation to all those who might need it. Let us spread knowledge as widely as possible. I welcome your suggestions. I also request you to help me in spreading social entrepreneurship across the globe – for which I need support of you people – not of any VIP. With your help, I can spread the ideas – for which we stand....
  3. 3. What is a subsidiary company? Sec 4 : of company act : a company is a subsidiary of another if the other 1. controls the composition of its board of directors or 2. has more than half of its equity shares or voting rights
  4. 4. What is a holding company ? It is not defined, but from definition of subsidiary company, it is clear that holding company is the company which has majority shareholding in another company called subsidiary comapany
  5. 5. Legal requirements : Sec. 212 Holding company must disclose the following along with its accounts : 1. balance sheet of subsidiary 2. profit and loss statement of subsidiary 3. report of the board of directors of subsidiary 4. statement of interest in subsidiary and changes in interest during last year 5. auditor report of subsidiary and if any information is not available, details about that
  6. 6. Part I & II of schedule VI regarding holding company Part I : the holding company's balance sheet must merge the balance sheet of subsidiary Part II : the P & L account of holding company must merge P & L account of subsidiary * intercompany transactions between holding and subsidiary company must be eliminated * contingent liabilities will not have liabilities regarding subsidiary company
  7. 7. Statement of interest It is prepared by holding company it shows the extent of interest in subsidiary company
  8. 8. What is minority interest ? The share of equity held by other than holding company is called minority interest. It is calculated by following formula : Share in equity + share in reserve + share in profit from revaluation of assets+share in profit – share in losses – share in losses from revaluation.
  9. 9. How to do consolidation of accounts? See investment account in holding company – it will show shares of subsidiary and other investments. From this remove shares of subsidiary. Remove share capital of subsidiary company add all assets and liabilities (removing inter company transactions ) and find minority interest and consolidate the two accounts.
  10. 10. Example of consolidation.... H is a holding company and gives following details : liabilities assets shares 1000 investments in S 1000 creditors 200 debtors 400 profit 200 (debtors inclucinding S (100))
  11. 11. Accounts of S (subsidiary company ) S company and gives following details : liabilities assets shares 1200 Plant and machine 1400 creditors 400 debtors 400 profit 200 (debtors include H: 50)
  12. 12. Consolidated balance sheet : liabilities assets shares 1000 Plant & mach. 1400 Minority 233 creditors 450 debtors 650 profit 367 TOTAL 2050 TOTAL 2050
  13. 13. NOTES... We have clubbed together all the heads. While clubbing, debtors and creditors were adjusted (for transactions between holding and subsidiary company) thus these figures are not simple additions but they have been adjusted.
  14. 14. What is preacquisition profit / loss? Holding company acquires subsidiary on a particular date, the profit / loss before that date is called pre-acquisition profit / loss it is shown separately in the holding company's balance sheet. Suppose profit for the year was 100. Holding company acquired subsidiary in middle of the year (on 1/10/09) so pre-acquisition profit is 50.
  15. 15. What is capital profit / goodwill ? If holding company pays less than the worth of the subsidiary, there is capital profit if holding company pays more than the worth of the subsidiary, there is goodwill. Example : If the price of equity of subsidiary is 100, but holding company pays Rs. 120. There is goodwill of 20.
  16. 16. Download link.... http://www.scribd.com/people/documents/3704370 http://www.scribd.com/doc/28692491/How-to-Prepare-Final-Accounts-of-Public-Limited-Companies http://www.scribd.com/doc/28442846/Accounting-for-Entrepreneurs http://www.scribd.com/doc/28013426/Accounting-for-Public-Companies http://www.scribd.com/doc/27560955/Accounting-for-Entrepreneurs http://www.scribd.com/doc/27239762/How-to-Set-Up-a-Company
  17. 17. Download more resources http://www.esnips.com/web/onlinespeeches
  18. 18. Download resources on entrepreneurship http://www.esnips.com/web/bikanersocial123 http://www.esnips.com/web/pgpsepresentations http://www.esnips.com/web/audiobikaner http://www.esnips.com/web/entrepreneurship-articles http://www.esnips.com/web/ONLINESPEECH http://www.esnips.com/web/entrepreneurship-casestudies http://www.esnips.com/web/AUDIOBIKANER123 http://www.esnips.com/web/communication-skills
  19. 19. DOWNLOAD MORE RESOURCES... http://www.esnips.com/web/afterschoool/ http://www.esnips.com/web/afterschool http://www.esnips.com/web/AUDIOLECTURESAFTERSCHOOOL http://www.esnips.com/web/pgpsestudymaterial123 http://www.esnips.com/web/inspiringlectures123 http://www.esnips.com/web/fleshquizesforcs123
  20. 20. Download more resources http://www.esnips.com/web/GREATFLASHQUIZES http://www.esnips.com/web/AUDIOBIKANER123 http://www.esnips.com/web/ONLINESPEECH http://www.esnips.com/web/audiobikaner
  21. 21. Download more material... http://www.scribd.com/doc/13094880/Economics-All http://www.scribd.com/doc/23407782/26-july-Economics-for-business http://www.scribd.com/doc/23393466/10-July-Economics http://www.scribd.com/doc/6584113/Business-Economics-6-Sept http://www.scribd.com/doc/6683895/Economics-for-Management-13-September http://www.scribd.com/doc/14676180/Accounting-Economics-and-Business-11-Nov
  22. 22. http://www.scribd.com/doc/27851096/Economics-for-Entrepreneurs http://www.scribd.com/doc/6583898/5-July-Economics http://www.scribd.com/doc/14646951/Accounting-amp-Economics-for-Business-5-November-II http://www.scribd.com/doc/14646963/Accounting-amp-Economics-for-Business-7-November http://www.scribd.com/doc/14633486/ACCOUNTING-ECONOMICS-AND-BUSINESS-12-NOV-III http://www.scribd.com/doc/14646994/Accounting-amp-Economics-for-Business-8-November
  23. 23. Download more material .... http://www.scribd.com/doc/14646947/Accounting-amp-Economics-for-Business-4-November http://www.scribd.com/doc/14676195/Accounting-Economics-and-Business-12-Nov-II http://www.scribd.com/doc/14676185/Accounting-Economics-and-Business-11-Nov-II http://www.scribd.com/doc/14630181/Accounting-Law-amp-Economics-28-November1 http://www.scribd.com/doc/27183173/World-Wide-Recession-and-the-Road-Map-for-Economic-Revival
  24. 24. THANKS.... GIVE YOUR SUGGESTIONS AND JOIN AFTERSCHOOOL NETWORK / START AFTERSCHOOOL SOCIAL ENTREPRENEURSHIP NETWORK IN YOUR CITY / CONDUCT WORKSHOP ON SOCIAL ENTREPRENEURSHIP IN YOUR COLLEGE / SCHOOL / CITY [email_address] JOIN OUR NETWORK TO PROMOTE SOCIAL ENTREPRENEURSHIP
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