Consolidated stmt of Profit or Loss

Question 1

What is the method for compiling a consolidated stmt P/L?

Answer 1

All line from revenue to profit for year
- add P + 100% S to represent what is controlled

Profit attributable to: (ownership reconciliation)
Owners of Parent Balancing figure Group profit- NCI
NCI - Subs PFY xNCI%

Question 2

What is the approach to producing a consolidated stmt P/L?

Answer 2

1. group structure
2. add 100% P & S revenue to PFY (pro rata if mid year acqn)
3. cancel any intra group revenue/cost of sale
4. remove unrealised profit on any inventories held at end of year from intra trading
5. exclude dividends received from sun
6. find NCI in subs PFY
7. complete ownership reconciliation

Question 3

What is the proforma for working out NCI in subs PFY?

Answer 3

PFY of sub per question (pro rata if mid yr acqn)
(PUP on sales made by S)
x NCI %

Question 4

What is the double entry to eliminate intra group transactions for a sale?

Answer 4

DR group revenue
CR group CoS

must be adjusted regardless of if any goods are still in inventories at year end

Question 5

What is the double entry to eliminate unrealised profit on goods still held in inventories from intra group transactions?

Answer 5

For Seller:
DR Cost of sales
CR Inventories

Also will need to follow through into FP
DR sellers RE
CR Closing Inventories

adjust NCI in PFY if sub is seller

Question 6

How does a provision for unrealised profit on inventories affect P/L lines?

Answer 6

will be added to Cost of Sales
as:
- reduces closing inventories
- and then reduces Gross Profit

Question 7

What assumption is made when a mid year acqn has happened?

Answer 7

• assume revenue and expenses accrue evenly accords yr unless told otherwise