could be formed for the purpose, or one of the existing subsidiary companies could increase its share capital and acquire the assets of the relative departments of the other subsidiaries by issuing shares in exchange for them. Alternatively, one of the companies could purchase the assets held by the other companies for some other consideration which might be thought reasonable. The foregoing paragraphs are merely a brief outline of Section 55 of the Finance Act, 1927, and Section 42 of the Finance Act, 1930, in so far as they affect the acquisition or internal reorganisation by a holding company of its interests in subsidiary concerns, and the sections themselves with subsequent amendments should be referred to in considering any particular

case.

150

PRELIMINARY SUMMARY STATEMENT OF ASSETS AND
LIABILITIES OF SUBSIDIARY UNDERTAKINGS ONLY
DETAILED CONSOLIDATED BALANCE SHEET OF HOLDING
COMPANY AND SUBSIDIARY UNDERTAKINGS

154

PRELIMINARY DRAFT BALANCE (Drawn up to illustrate some of the

SHARE CAPITAL-
Authorised: £1,600,000 in Shares of £1 each ..
Issued: Ordinary Shares of £1 each, fully paid..
Issued in exchange for Ordinary Shares in
Subsidiary A.

(Includes 80,000 Shares held by Subsidiary B.)

5 per cent. Cumulative Preference Shares of
£1 each, fully paid..

5 PER CENT. FIRST MORTGAGE DEBENTURE STOCK
secured by a first floating charge on the Company's
Assets (includes £25,000 held by Subsidiary B.)
SUNDRY CREDITORS-

Amount owing to Subsidiary D. on Current A/c
Sundry Creditors and Provisions for Accruing
Expenses and Taxation

RESERVE (includes premium of £120,000 on issue of 30,000 Ordinary Shares in payment of 450,000 Ordinary Shares in Subsidiary A.)

PROFIT AND LOSS ACCOUNT as at commencement of year (after paying Final Dividends for previous

year)..

Add-Net profit, viz.:

Sub. B. Interim Dividend

£652,500

476,500

479,000

NOTE. On investigation the above Balance Sheet is altered and more accurately setting out the position.

SHEET, 31ST DECEMBER 1929

points referred to in this book)

GOODWILL (at Cost)

FREEHOLD AND LEASEHOLD LAND AND BUILDINGS

(at Cost, less Amounts written off)

PLANT, MACHINERY, FIXTURES, FITTINGS, &C.

(at Cost, less Depreciation)

Subsidiary A.—

an amended draft Balance Sheet prepared which is regarded as (See amended draft Balance Sheet on next page.)

£3,618,400

SHARE CAPITAL (Authorised and Issued)—
Ordinary Shares of £1 each

AMENDED DRAFT BALANCE (As altered from Preliminary

5 per cent. Cumulative Preference Shares of £1 each

NOTE.-80,000 of the Company's Ordinary
Shares are held by a Subsidiary Company.

5 PER CENT. FIRST MORTGAGE DEBENTURE STOCK
(Redeemable 1950)—

Secured by a first floating charge on the Company's Assets

AMOUNTS OWING TO SUBSIDIARY COMPANIES
Less-Company's own Debenture Stock included
therein

35,000

25,000

10,000

SUNDRY TRADE CREDITORS AND PROVISIONS FOR
ACCRUING Expenses AND TAXATION

309,400