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

Cancellation of like items 

To arrive at a fair picture we eliminate both the receivable of $5,000 in Pleasant's books and the payable 

of $5,000 in Sweet's books. Only then do we consolidate by adding together. 

Consolidated receivables  = $40,000 + $30,000 – $5,000 

 = 

$65,000 

Consolidated payables 

= $50,000 + $45,000 – $5,000 

 = 

$90,000 

So far we have established that consolidation means adding together any items that are not eliminated as 

internal to the group. Going back to the example, however, we see that Pleasant only owns 80% of 

Sweet. Should we not then add Pleasant's assets and liabilities to 80% of Sweet's?