PROFIT ON REVALUATION OF ASSETS OF SUBSIDIARY COMPANY :

If there is any profit resulting from the revaluation of assets of the subsidiary company whether before or after the date of acquisition of shares by the holding company, the same must be shared both by the holding company and the minority shareholders in proportion to their respective holdings. The minority shareholders’ share of such profit should be added to the Minority interest. But the holding company’s share should be treated as capital profits and dealt with like pre-requisitions profit and reserve.

Further, adjustment for depreciation on the increases or decreases in the value of assets would be made in the profit and loss account of the subsidiary. For appreciation in the value of assets, depreciation charge would be increased proportionately and the same would be deducted from the revenue profits of the subsidiary company. On the other hand, for revaluation loss due to decrease in the value of assets, excess depreciation provision should be written back.