Consolidated P&L and other comprehensive income

Question 1

P&L consolidation what should not be added togther

Answer 1

Remove any dividends received from subsidiary before consolidating

Question 2

P&L non contolling interest

Answer 2

After consolidation remove the non controlling interest to get parents attributable Profit for the period.

I.e if you own 80%

Profit = £13

Parent = £11
NCI = £2 (20%)

Question 3

Any sale between parent and sub (no matter who sells to whom)
Dr and Cr

Answer 3

Dr Group revenue - X
Cr Group cost of sales - X

X = value of sales, no matter if any profit on sale / if any goods are in inventories

Dr Cost of sales - Y
Cr  Inventories (statement of financial position) - Y

Y = Provision for Unrealised Profit (PUP x % of goods still in inventories), The inventories CR in statement of financial position is in the books of the company making the sale and is only if any of the goods are still in inventory

Question 4

P&L consolidation - mid year acquisition

Answer 4

Time apportion all revenue and expenditure - Cons. P&L only to include results from date of acquisition onwards

Question 5

Disposal of sub in P&L

Workings:
Parent company
Group

Answer 5

Include time apportioned revenue, expenditure and NCI to date of disposal in P&L. Plus calculate profit or loss on disposal.

Parent:
Sale proceeds - carrying amount of investment (cost or fair value)

Group:
Sale proceeds - (net assets at disposal + Goodwill at disposal - NCI at disposal)