1 Groups and consolidation: an overview

'profit for the year' 
the 
whole 
of S Co's results is included without reference to 
group share or NCI share. Profit for the year is then split between the group and the NCI. 
(b) 
The NCI's share ($17,000 

25% = $4,250) of S Co's 
retained earnings
brought forward is 
excluded from group retained earnings
. This means that the carried forward figure of $126,750 
is the figure which would appear in the statement of financial position for group retained earnings. 
BPP Tutor Toolkit Copy

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PART G: PREPARING SIMPLE CONSOLIDATED FINANCIAL STATEMENTS 
 
446
 
This last point may be clearer if we construct the working for group retained earnings.
 
Group retained earnings
 
 
 P Co 
 S Co 
$ 
$ 
Per 
question 
108,000 
25,000 
Pre-acquisition retained earnings 
– 
25,000 
Group share of post-acq'n retained earnings: 
S Co (75% 

25,000) 
18,750 
Group retained earnings 
126,750 
Notice that a consolidated statement of profit or loss 
links up 
with a consolidated statement of financial 
position exactly as in the case of an individual company's accounts. Now try the following question. 
QUESTION 
Consolidated statement of profit or loss
 
The following information relates to the Wheeler group for the year to 30 April 20X7. 
Wheeler Co 
Brookes Co 
$'000 
$'000 
Revenue 
1,100 
500 
Cost of sales 
630 
300 
Gross profit 
470 
200 
Administrative expenses 
105 
150 
Profit before tax 
365 
50 
Income taxes 
65 
10 
Profit for the year 
300 
40