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Case 1 : Purchased investment for 1 lac. Its value as on 31st March14 Rs.90000. Next year 2015 Its value increase to 1.05 lac. Pass the entries

Investment        a/c        Dr.  1lac                                   

To Bank                                  1 Lac       


Investment      a/c         Dr.  10000

To   P&L                                       10000

No entry for increase of Rs.5000/-


P&L                          a/c    Dr.  10000

To Investment                           10000

Case 2 : Asset purchased for Rs.1 lac. Value at 31st March 2014 Rs.108 Lacs. 31st March 2015 Rs.93000

Investment       A/c       Dr.  100000

To bank                                    100000

No entry on 31st March 2014 for increase in value


P&L                  A/c        Dr. 7000

To   investment                           7000

Case 3 :  Company purchased shares of a subsidiary company for Rs.1 lac . value declined at Rs.80000 as on 31 march 2014. Next year Its value increased to Rs.1.07 lac because of temporary boom. Entries ?

Investment                A/c        Dr. 100000

To Bank                                                      100000

P&L                            A/c        Dr.  20000

To Investment                                         20000

Increase is temporary so it will not put any effect

Sale of Investment

Case1 : The company purchased 10000 shares of 10 each. Company sold 6000 shares at Rs.9 each. Entries ?

Investment         a/c   Dr.  100000 

To Bank                                  100000


Bank      a/c        Dr. 54000

P&L       a/c        Dr.    6000

To Investment                     60000

Investment purchased cum Dividend

Case1 : Purchased shares for Rs.1 lac, on which Rs.10000 dividend has been declared but received one month later

Investment       A/c        Dr.  1Lac                              

To Bank                                  1Lac                                

Bank               a/c           Dr.  10000

To Investment                              10000

Note : Pre-acquisition benefits should be lessed from investment cost (investment a/c to be credited)  , if declared on or before purchases the investment.

Case 2 : Purchased 10000 debentures of 10 each . Rate of interest is 12%. On 1 oct company declared and paid interest in Dec. For the whole year. Pass the entries ?

12% Debentures      A/c      Dr.  1 Lac                                       

To  Bank                                     1 Lac                                    


Bank                     A/c    Dr.  12000

To 12% Debentures                   9000

To interest on debenture        3000

Note : In case of debentures, interest for before acquisition period should be lessed from debentures cost

Investment purchase cum right

Case 1 : Company purchased 10000 shares of Rs.10 each. These shares were acquired cum right i.e. investment has right to purchase 1000 shares more at a discount price of Rs.8 . the investment exercise the option.

Investment          a/c       Dr. 100000                                            

To Bank                                         100000             


Investment         a/c   Dr.  8000

To Bank                                  8000

Case 2 : Suppose in previous case the investment did not exercise the option but sold right share entitlement of 1000 shares at 1 rupee per share


Investment          a/c       Dr. 100000                                                                                  

To Bank                                         100000                                               


Bank        A/c           Dr. 1000

To investment                 1000

Case 3 : Solve last question assuming right was declared after purchasing the shares

It will be treated as profit

Bank    A/c      Dr. 1000

To investment income   1000


  1. Accounts and Finance
  2. Accounts Theory
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CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 8 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .