ADVANCE ACCOUNTING PROJECT

Crescent Cotton Mills

Limited
Crescot Mills Limited
Submitted by:
Ammar Hassan
Shahzaib
Khaliq Younas

Section : H
Submitted to: Dr. Nayyer Zaidi
Lahore School of Economics

Table of Contents

Crescent Cotton Mills Limited

Introduction......................................................................................................................................3
Subsidiary........................................................................................................................................3
Intercompany Transactions..............................................................................................................4
Shares...........................................................................................................................................4
Dividends.....................................................................................................................................4
Income.........................................................................................................................................4
Intercompany Sales..........................................................................................................................5
Inventories...................................................................................................................................5
Bonds...........................................................................................................................................8
Plant Assets................................................................................................................................10
Consolidated financial statements (2012)......................................................................................11
Income Statement.......................................................................................................................11
Balance sheet.............................................................................................................................12
Cash flow...................................................................................................................................13
Consolidated financial statements (2013)......................................................................................14
Income statement.......................................................................................................................14
Balance sheet.............................................................................................................................15
Cash Flow..................................................................................................................................16
Conclusion.....................................................................................................................................17
References......................................................................................................................................18

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Crescent Cotton Mills Limited

Introduction
Crescent Cotton Mills Limited (formerly Crescent Sugar Mills & Distillery Limited) was
incorporated on March 07, 1959. The Company operated a Sugar and Distillery Unit and then
later on setup Spinning Units. Initially this company was a subsidiary of The Crescent Textile
Mills Limited and was separately listed on the Karachi Stock Exchange in 1965. Now the
Company is listed on all the three stock exchanges of the country.
Crescent Cotton Mills Limited is proud of its reputation, its honest treatment of customers,
directors and employees. The professionalism of management and employees of CSM and the
corporate principles and ethics abided by them continue to be an essential factor in the
development of the company. These factors continue to shape and strengthen its present position
in the business community. We believe that aCrescent Cotton Mills Limitederence to these
principles is key to a successful future for Crescent Cotton Mills Limited
Crescent Cotton Mills Limited has one subsidiary company Crescot Mills Limited

Subsidiary

Crescot Mills Limited is a spinning unit situated at B-10, SITE Kotri district Hyderabad.
Crescent Cotton Mills Limited holds 66.15 % of the equity of Crescot Mills Limited. Due to
heavy losses the company has ceased all production activities since August 2014 and has
disposed off some of its plant and machinery. The management of the Company is now
undergoing the process of getting the Company de-listed from Karachi Stock Exchange
(Guarantee) Limited, the sole stock exchange on which it is listed.

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Crescent Cotton Mills Limited

Intercompany Transactions
Shares
As the company is having more than 50% of voting stock i.e. 100% so equity method is used for
buying shares of the company. Crescent Cotton Mills Limited bought 10 million shares of
Crescot Mills Limited in 2012 @ 11.25 PKR. Following entry is made by Crescent Cotton Mills
Limited in 2012.
Debit (PKR)
Investment in CRESCOT
MILLS LIMITED
Cash

Credit
(PKR)

112500000
11250000
0

Dividends
Crescent Cotton Mills Limited also received dividend from the CRESCOT MILLS LIMITED of
205450000 PKR in 2012. However the company received no dividends from CRESCOT MILLS
LIMITED in 2011. Following entry is made by Crescent Cotton Mills Limited in 2013.
Debit (PKR)
Cash
Investment in
CRESCOT MILLS LIMITED

Credit
(PKR)

205450000
205450000

Income
Income of CRESCOT MILLS LIMITED in 2012 was 2,514,000,000 PKR and 2011 it was
2,060,000,000 PKR. As the company is having 100% interest in CRESCOT MILLS LIMITED
so following entries shall be made.
Entry for 2012 income is as follows. Whole income will be recorded, as CRESCOT MILLS
LIMITED is 100% wholly owned subsidiary of Crescent Cotton Mills Limited. Following entry
is made by Crescent Cotton Mills Limited.

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Crescent Cotton Mills Limited

Debit (PKR)
2,514,000,000

Credit (PKR)

Investment in
CRESCOT MILLS
LIMITED
Income from
2,514,000,000
CRESCOT MILLS
LIMITED
Entry for 2011 income is as follows. Whole income will be recorded, as CRESCOT MILLS
LIMITED is 100% wholly owned subsidiary of Crescent Cotton Mills Limited. Following entry
is made by Crescent Cotton Mills Limited.

However

Investment in
CRESCOT MILLS
LIMITED
Income from
CRESCOT MILLS
LIMITED

Debit (PKR)
2,060,000,000

Credit (PKR)

2,060,000,000

CRESCENT COTTON MILLS LIMITED did not buy any more shares in 2013. So, there are no
more entries for investment or buying any shares.

Intercompany Sales
Inventories
2011
The CRESCENT COTTON MILLS LIMITED-Fertilizers sold Rs. 5,340,294 of fertilizers to
Crescent Cotton Mills Limited that cost Rs. 2,512,476 31st December 2011. In 2012 Dawood
sold these fertilizers for Rs. 2,620,396. The reported net income of Dawood for 2012 is this The
Crescent Cotton Mills Limited fertilizer is a 100%owned subsidiary.
Work papers entries by Crescent Cotton Mills Limited
Inventory
Accounts Payables
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Debit (PKR)
5,340,294

Credit (PKR)
5,340,294

Crescent Cotton Mills Limited

Sales

2,620,396
Cash

2,620,396

Cost of Sales
Inventory

2,512,476
2,512,476

Work Paper entries by Dawood Hercules Fertilizers

Debit (PKR)
5,340,294

Accounts Receivables
Sales

Credit (PKR)
5,340,294

Cost of Sales
Inventory

2,512,476
2,512,476

Elimination Entries
Following are the elimination entries on 31st December 2011.
Debit (PKR)
5,340,294

Sales
Cost of Sales

Credit (PKR)
5,340,294

Elimination Of Intercompany transaction Accounts

Following are the elimination entries for intercompany transaction on 31st December 2012.
Debit (PKR)
2,827,818

Cost of Sales
Inventory

Credit (PKR)
2,827,818

(Unrealized Gain)
31st December 2012
Accounts Payables
Accounts Receivables
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Debit (PKR)
5,340,294

Credit (PKR)
5,340,294

Crescent Cotton Mills Limited

In 2012 Crescent Cotton Mills Limited was liable to pay Rs. 5340294 in thousands to Crescent
Cotton Mills Limited fertilizers, but on consolidated balance sheet because of intercompany
transactions accounts payable of Crescent Cotton Mills Limited and accounts receivable of
CRESCENT COTTON MILLS LIMITED-fertilizers was eliminated.
In the end of 2012 company reported unrealized gain on consolidation by increasing the cost of
goods sold which decrease the consolidated income and by Debit (PKR)ing the inventory which
in turn decrease the final inventory on consolidated balance sheet.
In the beginning of 2013 the unrealized gain will be realized by increasing the investment of
parent company in subsidiary company CRESCENT COTTON MILLS LIMITED-fertilizers.
And by decreasing the cost of Goods sold on consolidated income statement.
2012
The CRESCENT COTTON MILLS LIMITED-Fertilizers sold Rs. 2,718,411 of fertilizers to
Crescent Cotton Mills Limited that cost Rs. 1,820,437 on 31st December 2012. In 2013 Dawood
sold these fertilizers for Rs. 3056808. The reported net income of Dawood for 2013 is this The
CRESCENT COTTON MILLS LIMITED fertilizer is a 100%owned subsidiary.
Work papers entries by Crescent Cotton Mills Limited
Inventory
Accounts Payables
Sales

Debit (PKR)
2,718,411

Credit (PKR)
2,718,411

3,056,808
Cash

Cost of Sales
Inventory

3,056,808
1,820,437
1,820,437

Work Paper entries by Dawood Hercules Fertilizers

Accounts Receivables
Sales
Cost of Sales
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Debit (PKR)
2,718,411

Credit (PKR)
2,718,411

1,820,437

Crescent Cotton Mills Limited

Inventory

1,820,437

Elimination Entries
Following elimination entry was made on 1st January 2013 for realizing the gain.
Investment in CRESCENT COTTON MILLS
LIMITED-fertilizers
Cost of Sales
(Realization of gain at the Beginning of new year
2013)

Debit (PKR)
2,827,818

Credit (PKR)

2,827,818

Following entry was on 1st January 2013

Debit (PKR)
2,718,411

Sales
Cost of Sales

Credit (PKR)
2,718,411

Elimination of Intercompany sales

31st December 2013
Debit (PKR)
236,371

Cost of Sales
Inventory

Credit (PKR)
236,371

(Unrealized Gain)
31st December 2013
Accounts Payables
Accounts Receivables

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Debit (PKR)
2,718,411

Credit (PKR)
2,718,411

Crescent Cotton Mills Limited

Plant Assets
Crescent Cotton Mills Limited sold Machinery to its wholly owned subsidiary Crescot Mills
Limited on December 30, 2012. The undepreciated cost of machinery is Rs. 1,440,000 i.e., cost:
Rs. 1,500,000 and accumulated depreciation: Rs. 60,000. This machinery was sold to Crescot
Mills Limited for Rs. 1,940,000.
To record the unrealized gain in the parents books, the investment income for 2012 was adjusted
for the full amount of the unrealized gain which was Rs. 500,000.
The consolidation adjustment shows a Debit (PKR) in gain on sale of machinery at Rs. 500,000
and Credit (PKR)s machinery for the same amount. Crescent Cotton Mills Limited should show
the depreciated cost of machinery in the consolidated balance sheet at Rs. 1,440,000 instead of
showing gain on machinery in the consolidated income statement.
Elimination entries for worksheet in 2012
DOWNSTREAM SALE OF DEPRECIABLE PLANT ASSETS
Debit
(PKR)
Crescent Cotton Mills Limited books:
Cash
Accumulated Depreciation
Machinery
Gain on sale of machinery
Crescot Mills Limited books:
Machinery
Cash
Crescent Cotton Mills Limited books:
Income from Crescot Mills Limited
Investment in Crescot Mills Limited
Gain on sale of machinery
Machinery

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Credit
(PKR)

1,940,000
60,000
1,500,000
500,000
2,000,000
2,000,000
500,000
500,000
500,000
500,000

Crescent Cotton Mills Limited

Consolidated financial statements (2012)
Income Statement

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Crescent Cotton Mills Limited

Balance sheet

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Crescent Cotton Mills Limited

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Crescent Cotton Mills Limited

Cash flow

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Crescent Cotton Mills Limited

Consolidated financial statements (2013)

Income statement

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Crescent Cotton Mills Limited

Balance sheet

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Crescent Cotton Mills Limited

Cash Flow

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Crescent Cotton Mills Limited

Conclusion
After making the eliminations we came up with the consolidated statement for Crescent Cotton
Mills Limited and it can be concluded by looking at its net income that the company is profit
making company and is doing well and can have more income in future. In short company is
financially performing well and is financially stable. There are no liquidity or solvency risk
issues for this Company. As far as cash in hand is concern company needs to have more cash to
be more liquid.

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Crescent Cotton Mills Limited

References
1.
2.
3.
4.

Annual report of Crescent Cotton Mills Limited

Annual report of Crescot Mills Limited Limited
Crescent Cotton Mills Limited Website
Crescot Mills Limited Limited Website

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