State whether the following statements are true or false:

1. Every holding company is required to present a consolidated balance sheet under the companies
act, 195. !alse
". #inirity interest shown in the consolidated balance sheet is the equity held by the outsiders in the
subsidiary company. $rue
%. &ost of control is the e'ces price paid for investment over and above proportionate share of net
assets acquired by the holding company. $rue
(. $here is no need to show inter company dividends in the consolidated profit and loss account. $rue
5. )rofit on revaluation of !i'ed assets is a capital profit and depreciation on such amount is a
revenue loss. $rue
. $he financial year of holding and subsidiary company must be the same. !alse
*. +ividends paid out of pre,acquisition profits must be credited to investment in shares of the
subsidiary account. $rue
-. +ividends paid out of post,acquisition profits must be credited to profit and loss account. $rue
9. !or calculating minority interest there is need to distinguish between capital and revenue profits of
the subsidiary. !alse
1.. !or calculating cost of control there is no need to distinguish between capital and revenue profits
of the subsidiary. !alse
11. /nly e'ternal &ontingent liabilities are shown as footnote in the consolidated balance sheet but
internal contingent liabilities are not shown in consolidated balance sheet. $rue
1". 0ssue of bonus shares out of pre acquisition profit or reserves will have no effect on the
consolidated balance sheet. $rue
1%. 0ssue of bonus share out of post acquisition profits by the subsidiary company has the effect of
increasing the paid up value of shares and reducing the cost of goodwill of the holding company.
$rue
1(. 1o company can become the subsidiary of another company. !alse
15. 2 company has to acquire more than 5.3 shares of another company in order to become a
holding company. $rue
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0ndicate the correct answer:
1. )reparation of consolidated 4alance Sheet of 5olding &o. and its subsidiary company as per
a. 2s 11
b. 2S 6 ""
c. 2S "1
d. 2S 6 "%
". $he share of outsiders in the 1et 2ssets in subsidiary company is 7nown as under :
a. outsiders liability
b. 2ssets
c. subsidiary company8s liability
d. #inority 0nterest
%. )re,acquisition profit in subsidiary company is considered as :
a. 9evenue profit
b. &apital profit
c. :oodwill
d. 1on of the above
(. E'cess of cost of investment over paid up value of the shares is considered as:
a. :oodwill
b. &apital 9eserve
c. #inority 0nterest
d. 1on of above
5. E'cess of paid up value of the shares over cost of investment is considered as:
a. :oodwill
b. &apital 9eserve
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c. #inority 0nterest
d. 1on of above
. )rofit earned before acquisition of share is treated as
a. &apital profit
b. 9evenue profit
c. :eneral 9eserve
d. 9evaluation ;oss
*. )rofit earned after acquisition of share is treated as
a. &apital profit
b. 9evenue profit
c. :eneral 9eserve
d. 9evaluation ;oss
-. )reparation of consolidated statement as per 2S "1 is
a. /ptional
b. #andatory for listed &ompanies
c. #andatory for )vt. ;td.
d. &ompanies ;td. partnership firm
9. 5olding &o. share in capital profits of subsidiary company is ad<usted in :
a. &ost of control
b. Shown on 2ssets side of 4alance sheet
c. 9evenue profit
d. 1one of above
1.. 5olding &o. share in revenue profits of subsidiary company is ad<usted in :
a. a. &ost of control
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b. Shown on 2ssets side of 4alance sheet
c. )rofit and loss account
d. 1one of above
11. . =nrealised profit on goods sold and included in stoc7 is deducted from :
a. &apital )rofit
b. 9evenue )rofit
c. !i'ed 2ssets
d. #inority interest
1". !ace value debentures of subsidiary co. held by 5olding &ompany is deducted from :
a. +ebentures
b. &ost of control
c. #inority interest
d. +ebentures in consolidated balance sheet
1%. >hich of the following statement is true:
a. $here is no change in the amount of capital reserve before and after issue of bonus share of the
issue is made from out of pre,acquisition profit.
b. $here is change in the amount of capital reserve before and after issue of bonus share of the issue is
made from out of post,acquisition profit.
c. $here is change in the amount of capital reserve before and after issue of bonus share of the issue is
made from out of pre,acquisition profit.
d. $here is no connection between the issue of bonus shares and the calculation of capital reserve.
1(. &onsolidated financial statements are prepared on the principle:
a. 0n form the companies are one entity? in substance they are separate.
b. 0n form the companies are separate? in substance they are one.
c. 0n form and substance the companies are one entity.
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d. 0n form and substance the companies are separate.
15. #inority 0nterest includes :
a. Share in share capital
b. Share in &apital profit
c. Share in 9evenue profit
d. 2ll of the above
1. $he $ime interval between the date of acquisition of shares in subsidiary company and date of
4alance Sheet of 5olding &ompany is 7nown as :
a. )re,acquisition period
b. )ost,acquisition period
c. )re,commencement period
d. )re,incorporation period.
1*. )re,acquisition dividend received by 5olding company is credited to
a. profit @ loss 2Ac
b. &apital profit
c. 0nvestment 2Ac
d. non of the above
1-. )ost 2cquisition dividend received by 5olding &ompany is debited to :
a. 4an7 2Ac
b. profit @ loss 2Ac
c. +ividend 2Ac
d. 0nvestment 2Ac
19. >hich E'change rate will be considered for conversion of share capital of subsidiary company.
a. /pening 9ate
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b. closing rate
c. 2verage 9ate
d. 9ate of which date share acquired BactualC
".. 2 subsidiary company shall be e'cluded from consolidation when:
a. &ontrol is intended to be temporary
b. 0t operates under severe long,term restrictions which significantly impair its ability to transfer
funds to the parent
c. 2lways included for consolidation
d. 4oth a and b.
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