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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 

Basic consolidation consists of two procedures. 

 

– 

Cancelling out items which appear as an asset in one company and a liability in another 

 

– 

Then adding together all the uncancelled assets and liabilities on a line by line basis 

 

The asset 'investment in subsidiaries' in the parent company accounts always cancels with the share 

capital of the subsidiary companies. The only share capital in the consolidated accounts is that of the 

parent company. 

 

Goodwill arising on consolidation is recognised as an intangible asset in the consolidated statement of 

financial position. 

 

The non-controlling interest (NCI) shows the extent to which net assets controlled by the group are 

owned by other parties. 

 

A consolidation adjustment is required to remove unrealised profit on intra-group trading. 

 

When a parent acquires a subsidiary part way through the year, the profits for the period need to be 

apportioned between pre- and post-acquisition. Only post-acquisition profits are included in the group's 

consolidated statement of financial position.