According to the Companies Act 2013, under what conditions can a company be classified as a subsidiary?

A company can be classified as a subsidiary.

• Controlled board composition.

• Holding company owns majority.

• Subsidiary of a subsidiary.

What is the difference between capital profits and revenue profits?

Capital profits differ from revenue profits.

• Capital profits are non-recurring.

• Revenue profits come from core sales.

• Understanding helps in financial analysis.

Explain the concept of minority interest in the context of consolidated financial statements.

Minority interest indicates outsider equity.

• Represents non-controlling equity.

• Reflects outsiders' share in assets.

• Listed as liability in balance sheet.

Fill in the blank: The cost of control is recognized when a holding company purchases shares of a subsidiary at a price that is ___ its actual value.

Higher than

True or False: In India, it is mandatory for holding companies to prepare a consolidated balance sheet.

False. In India, it is not mandatory for holding companies to prepare a consolidated balance sheet.

How are unrealized profits on stock treated in a consolidated balance sheet?

Unrealized profits on stock reduce assets.

• Deduct from asset side.

• Reduces reported profits.

• Adjusts for intercompany transactions.

What is the effect of issuing bonus shares from revenue profits on the consolidated balance sheet?

Issuing bonus shares boosts shareholder value.

• Enhances share value for holders.

• Increases capital reserves effectively.

• Does not impact minority interests.

Fill in the blank: Capital profits are also known as ___ or ___ because they arise from transactions that are not part of regular business operations.

Pre-acquisition profits; capital gains

Explain how revaluation of assets affects the consolidated balance sheet during an acquisition.

Revaluation affects balance sheet significantly.

• Adjusts asset values upward/downward.

• Impacts goodwill and capital reserves.

• Affects minority interest calculations.

What defines a subsidiary company according to Sec 2(87) of the Companies Act 2013?

A subsidiary company is controlled.

• Defined by ownership structure.

• Majority equity shares required.

• Board composition control essential.