Acca financial Accounting (FA) Study Text ac ca (FA)

2 

The basic principles 

The consolidated statement of profit or loss presents the financial performance 

of all group entities (i.e. parent and subsidiaries under common control) in one 

statement. 

The consolidated statement of profit or loss follows the same basic principles as 

the consolidated statement of financial position. There are fewer adjustments, 

and they often reflect the profit or loss perspective of adjustments already dealt 

with for the consolidated statement of financial position.  

 

 

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Chapter 22 

KAPLAN PUBLISHING

 

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The steps for consolidating the statements of profit or loss are as follows: 

1 

Add together the revenues and expenses of the parent and the subsidiary 

on a line

­

by

­

line basis and, if the subsidiary is acquired part

­

way through 

the year, time

­

apportion the results of the subsidiary. 

2 Eliminate 

intra

­

group sales and purchases. 

3 

Eliminate unrealised profit held in closing inventory relating to intragroup 

trading. 

4 

Calculate the profits attributable to the non

­

controlling interests. 

After profit for the year show split of profit between amounts attributable to the 

parent's shareholders and the non

­

controlling interest (to reflect ownership).