Note: Since adjustments (v) and (vii) of the question state that dividend has been declared by all the entities but no information is provided whether it has been paid or due. In this regard, it may be noted that since dividend is paid for the entire year 2023-2024, it is assumed as final dividend which is approved in the Annual General Meeting conducted at later point time from the reporting date. Accordingly, following assumptions are possible based on which alternative solutions have been provided: A. Ignored the adjustment for dividend completely as dividend has to be approved in the Annual General Meeting. B. Considered dividend as declared but not paid. C. Considered dividend as declared and paid. **Alternative A: Ignored the adjustment for dividend completely as it has to be approved in the AGM.** **Consolidated Balance Sheet of H Ltd. and its subsidiary S Ltd. and Associate A Ltd. as at 31st March, 2024**

Assets	₹
Non-current assets
Property, plant and equipment (5,50,000 + ₹4,80,000)	10,30,000
Goodwill (70,000- Impaired 70,000)	Nil
Financial assets
Investment in A Ltd. (W.N.1 (iii))	2,05,600
Current assets
Inventory (4,85,000+ ₹ 3,82,500)	8,67,500
Financial assets
Cash and cash equivalents (₹ 89,000 + ₹ 98,000)	1,87,000
Trade receivables (3,95,000+₹3,05,000)	7,00,000
Total	29,90,100
Equity and Liabilities
Equity
Share capital - Equity shares of 10 each	5,00,000
Other equity (W.N.4+ W.N.1(i))	11,10,600
Non-controlling interest (W.N.3)	2,85,000
Non-current liabilities
Financial liabilities
Borrowings-term loans (4,00,000 + ₹ 1,50,000)	5,50,000
Current Liabilities
Financial liabilities
Trade payables (₹3,79,000+₹ 1,65,500)	5,44,500
Total	29,90,100

**Working Notes:** 1. Computation of Investment in Associate A Ltd. as per Equity method (i) Capital reserve on the date of acquisition The cost of the investment is lower than the net fair value of the investee's identifiable assets and liabilities. Hence there is capital reserve calculated as follows:

	₹
Cost of acquisition of investment	1,00,000
H Ltd.'s share in fair value of net assets of A Ltd. on the date of acquisition [(1,00,000 + 1,75,000) x 40%]	(1,10,000)
Capital Reserve	10,000

Capital reserve is recorded directly in equity. (ii) Share in profit of A Ltd.

	₹
Share in post-acquisition profit of A Ltd. [(4,24,000 – 1,75,000) x 40%]	99,600

(iii) Closing balance of investment of Associate A Ltd. at the end of the year

	₹
Cost of acquisition of investment	1,00,000
Add: Capital reserve	10,000
Share in post-acquisition profit	99,600
Less: Unrealised gain on inventory [(60,000 x 20/120) x 40%]	(4,000)
Closing balance of investment	2,05,600

2. Analysis of Retained Earnings of S Ltd. (i) Retained Earnings (RE) of S Ltd.

	₹
Closing balance as on 31st March, 2024	7,50,000
Less: Pre-acquisition as on 31st October, 2023	(5,00,000)
Post-acquisition Profit	2,50,000

(ii) Computation of net worth (net identifiable assets) as on 31st October, 2023

	₹
Share Capital of S Ltd.	2,00,000
Pre-acquisition Retained Earnings	5,00,000
Net Identifiable assets	7,00,000

(iii) Computation of Goodwill on acquisition date of S Ltd.

	₹
Purchase consideration	5,60,000
NCI as per proportionate share method (7,00,000 x 30%)	2,10,000
	7,70,000
Less: Net worth or Net Identifiable Assets	(7,00,000)
Goodwill	70,000

3. Non-Controlling Interest as on 31st March, 2024

	₹
NCI (by proportionate share method) as on 31st October, 2023	2,10,000
Post-acquisition Retained Earnings (W.N.4)	75,000
NCI as on 31st March, 2024	2,85,000

4. Consolidated Retained Earnings

Particulars	H Ltd. ₹	S Ltd. ₹
Opening Balance of Retained Earnings	9,00,000
Post-acquisition Retained Earnings (W.N.2(i))		2,50,000
Less: Unrealised gain on downstream transaction with Associate A Ltd.	(4,000)
Less: Impairment of Goodwill on acquisition of S Ltd.	(70,000)
Add: Share of profit and loss in Associate A Ltd.	99,600
Less: Share of NCI in post-acquisition Retained Earnings [2,50,000 x 30%]		(75,000)
	9,25,600	1,75,000
Total Consolidated Retained Earnings	11,00,600

Note: Bonus issue by a subsidiary is a transaction with owner in their capacity as owner. Therefore, bonus issue is only a transfer from one component of equity to the other thereby not changing the equity. Accordingly, though bonus issue shall be accounted in the individual financial statements of subsidiary, the same shall not have any effect in consolidated financial statements of the Group. **Alternative B: Considered dividend as declared but not paid** **Consolidated Balance Sheet of H Ltd. and its subsidiary S Ltd. and Associate A Ltd. as at 31st March, 2024**

Assets	₹
Non-current assets
Property, plant and equipment (5,50,000 + ₹4,80,000)	10,30,000
Goodwill (70,000- Impaired 70,000)	Nil
Financial assets
Investment in A Ltd. (Refer W.N.1 (iii))	1,99,600
Current assets
Inventory (4,85,000 + ₹ 3,82,500)	8,67,500
Financial assets
Cash and cash equivalents (₹ 89,000+ ₹ 98,000)	1,87,000
Trade receivables (3,95,000+₹3,05,000)	7,00,000
Other Receivables (Dividend receivable from A Ltd. (₹ 15,000 x 40%)	6,000
Total	29,90,100
Equity and Liabilities
Equity
Share capital - Equity shares of ₹ 10 each	5,00,000
Other equity (W.N.4+W.N.1(i))	10,60,600
Non-controlling interest (W.N.3)	2,79,000
Non-current liabilities
Financial liabilities
Borrowings- term loans (4,00,000 + ₹ 1,50,000)	5,50,000
Current Liabilities
Financial liabilities
Trade payables (₹ 3,79,000+₹ 1,65,500)	5,44,500
Other payables [Dividend payable to NCI by S Ltd. (₹ 20,000 x 30%) ₹ 6,000+ Dividend payable by H Ltd. to its shareholders ₹ 50,000)	56,000
Total	29,90,100

	₹
Cost of acquisition of investment	1,00,000
Less: H Ltd.'s share in fair value of net assets of A Ltd. on the date of acquisition [(1,00,000 + 1,75,000) x 40%]	(1,10,000)
Capital Reserve	10,000

Capital reserve is recorded directly in equity. (ii) Share in profit of A Ltd.

	₹
Share in post-acquisition profit of A Ltd. [(4,24,000-1,75,000) x 40%]	99,600
Less: Dividend (1,00,000 x 15% x 40%)	(6,000)
Share in profit of A Ltd.	93,600

(iii) Closing balance of investment of Associate A Ltd. at the end of the year

	₹
Cost of acquisition of investment	1,00,000
Add: Capital reserve	10,000
Share in post-acquisition profit	93,600
Less: Unrealised gain on inventory [(60,000 x 20/120) x 40%]	(4,000)
Closing balance of investment	1,99,600

2. Analysis of Retained Earnings of S Ltd. (i) Retained Earnings (RE) of S Ltd.

	₹
Closing balance as on 31st March, 2024	7,50,000
Less: Pre-acquisition as on 31st October, 2023	(5,00,000)
Post-acquisition Profit	2,50,000

(ii) Computation of net worth (net identifiable assets) as on 31st October, 2023

	₹
Share Capital of S Ltd.	2,00,000
Add: Pre-acquisition Retained Earnings	5,00,000
Net Identifiable assets	7,00,000

(iii) Computation of Goodwill on acquisition date of S Ltd.

	₹
Purchase consideration	5,60,000
NCI as per proportionate share method (7,00,000 x 30%)	2,10,000
	7,70,000
Less: Net worth or Net Identifiable Assets	(7,00,000)
Goodwill	70,000

3. Non-Controlling Interest as on 31st March, 2024

	₹
NCI (by proportionate share method) as on 31st October, 2023	2,10,000
Post-acquisition Retained Earnings (W.N.4)	69,000
NCI as on 31st March, 2024	2,79,000

4. Consolidated Retained Earnings

Particulars	H Ltd. ₹	S Ltd. ₹
Opening Balance of Retained Earnings	9,00,000
Post-acquisition Retained Earnings (W.N.2(i))		2,50,000
Less: Unrealised gain on downstream transaction with Associate A Ltd.	(4,000)
Less: Impairment of Goodwill on acquisition of S Ltd.	(70,000)
Add: Share of profit and loss in Associate A Ltd.	93,600
Less: Dividend payable by H Ltd.	(50,000)
Add: Dividend Income receivable from S Ltd.	14,000	(20,000)
Add: Dividend income receivable from A Ltd.	6,000
Less: Share of NCI in post-acquisition Retained Earnings [(2,50,000 - 20,000) x 30%]		(69,000)
	8,89,600	1,61,000
Total Consolidated Retained Earnings	10,50,600

Note: Bonus issue by a subsidiary is a transaction with owner in their capacity as owner. Therefore, bonus issue is only a transfer from one component of equity to the other thereby not changing the equity. Accordingly, though bonus issue shall be accounted in the individual financial statements of subsidiary, the same shall not have any effect in consolidated financial statements of the Group. **Alternative C: Considered dividend as declared and paid** **Consolidated Balance Sheet of H Ltd. and its subsidiary S Ltd. and Associate A Ltd. as at 31st March, 2024**

Assets	₹
Non-current assets
Property, plant and equipment (5,50,000 + ₹4,80,000)	10,30,000
Goodwill (₹ 70,000- Impaired ₹ 70,000)	Nil
Financial assets
Investment in A Ltd. (Refer W.N.1 (iii))	1,99,600
Current assets
Inventory (4,85,000+ ₹ 3,82,500)	8,67,500
Financial assets
Cash and cash equivalents [(₹ 89,000 - ₹ 50,000 + ₹ 14,000 + ₹ 6,000) + (₹ 98,000 - ₹20,000)]	1,37,000
Trade receivables (3,95,000+₹3,05,000)	7,00,000
Total	29,34,100
Equity and Liabilities
Equity
Share capital - Equity shares of ₹ 10 each	5,00,000
Other equity (W.N.4+W.N.1(i))	10,60,600
Non-controlling interest (W.N.3)	2,79,000
Non-current liabilities
Financial liabilities
Borrowings- term loans (₹ 4,00,000 + ₹ 1,50,000)	5,50,000
Current Liabilities
Financial liabilities
Trade payables (₹ 3,79,000+₹ 1,65,500)	5,44,500
Total	29,34,100

	₹
Cost of acquisition of investment	1,00,000
Less: H Ltd.'s share in fair value of net assets of A Ltd. on the date of acquisition [(1,00,000 + 1,75,000) x 40%]	(1,10,000)
Capital Reserve	10,000

Capital reserve is recorded directly in equity. (ii) Share in profit of A Ltd.

	₹
Share in post-acquisition profit of A Ltd. [(4,24,000 – 1,75,000) x 40%]	99,600
Less: Dividend (1,00,000 x 15% x 40%)	(6,000)
Share in profit of A Ltd.	93,600

(iii) Closing balance of investment of Associate A Ltd. at the end of the year

	₹
Cost of acquisition of investment	1,00,000
Add: Capital reserve	10,000
Share in post-acquisition profit	93,600
Less: Unrealised gain on inventory [(60,000 x 20/120) x 40%]	(4,000)
Closing balance of investment	1,99,600

Financial Reporting