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

Consolidate as if you owned everything 

The answer is no. Pleasant controls Sweet, its subsidiary. The directors of Pleasant can visit all of 

Sweet's factory, if they wish, not just 80% of it. So the figure for consolidated land and buildings is 

$100,000 plus $80,000 as stated above. 

Show the extent to which you do not own everything 

However, if we just add the figures together, we are not telling the whole story. There may well be one or 

more shareholders who own the remaining 20% of the shares in Sweet Ltd. These shareholders cannot 

visit 20% of the factory or tell 20% of the workforce what to do, but they do have an interest in 20% of 

the net assets of Sweet. The answer is to show this non-controlling interest separately in the equity 

section of the consolidated statement of financial position. 

Summary 

 Consolidation 

means 

adding 

together (uncancelled items). 

 

Consolidation means cancellation of like items internal to the group.  

 

Consolidate as if you owned everything then show the extent to which you do not. 

Keep these basic principles in mind as you work through the detailed techniques of consolidated financial 

statements. 

Now try the following questions.