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

 

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 

The consolidated statement of profit or loss is prepared by combining the statements of profit or loss of 

each group company on a line by line basis. 

 

Intra-group sales and purchases are eliminated from the consolidated statement of profit or loss. 

 

If a subsidiary is acquired during the year, only the post-acquisition element of statement of profit or loss 

balances are included on consolidation. 

 

 

1 

Describe the preparation of a consolidated statement of profit or loss in its simplest form.  

2 

What adjustments are made to the consolidated statement of profit or loss in respect of intra-group 

trading?  

 

The following information is relevant for questions 3 and 4 

Hardy has a 90% subsidiary, Lawrence. During the year ended 31 December 20X2 Lawrence sold goods 

to Hardy for $25,000, which was at a mark-up of 25%. At 31 December 20X2 $10,000 of these goods 

remained unsold. 

3 

In the consolidated statement of profit or loss for the year ended 31 December 20X2, what will revenue 

be reduced by?  

A $18,750  

B $20,000   

C $22,500 

D $25,000 

4 

In the consolidated statement of profit or loss for the year ended 31 December 20X2, what will gross 

profit be reduced by?  

A $1,800   

B $2,000 

 

C $2,250 

D $2,500  

 

5 

Fill in the blank. Intra-group sales and purchases are ………………. from the consolidated statement of 

profit or loss. 

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CHAPTER ROUNDUP 

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