6.5 Consolidated statement of financial position

Question 1

What are the steps for consolidating the statement of financial position?

Answer 1

1 Combine line by line
2 Eliminate investment in the subsidiaries (include Goodwill)
3 Eliminate intra-group items
4 Eliminate share capital and premium balances of subsidiary
5 Eliminate pre-acquisition profit of subsidiaries
6 Disclose NCI at foot of the SoFP

Question 2

What is the calculation for elimination of pre-acquisition profits of subsidiaries?

Answer 2

(Group retained earnings) = (100% of Parent’s retained earnings) + (Parent’s % of subsidiaries post-acquisition earnings)