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Consolidation of Accounts – 10 MCQs !

Consolidation of Accounts

There are various ways of carrying on business. Company is a very popular form. There are  various classes in which we can classify various companies according to the conditions provided.

A company can be a holding company or subsidiary company as the case may be.

As per section 2(46) “holding company”, in relation to one or more other companies, means a company of which such companies are subsidiary companies; AND

As per Section 2(87) of the Companies  Act, 2013 “subsidiary company” or “subsidiary”, in relation to any other company (that is to say the holding company), means a company in which the holding company— (i) controls the composition of the Board of Directors; or (ii) exercises or controls more than one-half of the total share capital either at its own or together with one or more of its subsidiary companies: Provided that such class or classes of holding companies as may be prescribed shall not have layers of subsidiaries beyond such numbers as may be prescribed.

Explanation.—For the purposes of this clause,— (a) a company shall be deemed to be a subsidiary company of the holding company even if the control referred to in sub-clause (i) or sub-clause (ii) is of another subsidiary company of the holding company; (b) the composition of a company’s Board of Directors shall be deemed to be controlled by another company if that other company by exercise of some power exercisable by it at its discretion can appoint or remove all or a majority of the directors; (c) the expression “company” includes any body corporate; (d) “layer” in relation to a holding company means its subsidiary or subsidiaries;

The final accounts of the company need to be consolidated, it is to be fulfilled mandatorily. Here is a quiz on consolidation of accounts of holding and subsidiary company. Test your knowledge!

 

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