I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

PART G: PREPARING SIMPLE CONSOLIDATED FINANCIAL STATEMENTS 

 

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Intra-group debts 

Suppose Pleasant has receivables of $40,000 and Sweet has receivables of $30,000. Included in the 

receivables of Pleasant is $5,000 owed by Sweet. Remember again that consolidation means presenting 

the results of the two companies as if they were one. 

Do we then simply add together $40,000 and $30,000 to arrive at the figure for consolidated 

receivables? We cannot simply do this, because $5,000 of the receivables is owed within the group. This 

amount is irrelevant when we consider what the group as a whole is owed. 

Further, suppose that Pleasant has payables of $50,000 and Sweet has payables of $45,000. We 

already know that $5,000 of Sweet's payables is a balance owed to Pleasant. If we just added the 

figures together, we would not reflect fairly the amount the group owes to the outside world. The outside 

world does not care what these companies owe to each other – that is an internal matter for the group.