Groups: Step by step guide:

HOW TO PREPARE CONSOLIDATED/GROUP FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

ABC LIMITED
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE
YEAR ENDED XXXXXXXX
Parent + 100% of subsidiaries
Adjustments R Note
Revenue Intragroup revenue 20 000 000 ❶
Intragroup revenue, unrealised profit in
Cost of sales (12 000 000) ❶
opening and closing inventory
Gross profit 8 000 000
Intragroup dividends (parent share),
unrealised profit on intragroup sale of NCA,
gain from bargain purchase (subsidiary
Other income 1 000 000 ❷
acquired current year), intragroup OI (rent,
interest, management fees), profit on
disposal of subsidiary
Depreciation/amortisation on NCA revalued
at acquisition, impairment of goodwill,
depreciation/amortisation on intragroup sale
Other expenses (3 500 000) ❸
of NCA, intragroup OE (rent, interest,
management fees), loss on disposal of
subsidiary
Finance costs Intragroup interest paid (1 000 000)
Investor share of after tax profit + excess
Share of profit of associate (current year acquisition). Adjust for investor
500 000 ❹
and joint venture share of unrealised intragroup profits (after
tax) if associate/JV is the seller.
Profit before tax 5 000 000
Tax on unrealised intragroup profits ONLY
(opening & closing inventory, PPE &
Income tax expense (1 000 000) ❺
depreciation), tax on depreciation/
amortisation for NCA revalued at acquisition.
Profit for the period 4 000 000
Other comprehensive
income
Items that may be
500 000
reclassified to profit or loss
− FVA
FVA (IFRS 9 mandatory), FCTR (PGDA only) 500 000
− FCTR
Items that may not be
-
reclassified to profit or loss
− FVA
FVA (IFRS 9 shares), revaluation surplus -
− Revaluation surplus
Total comprehensive
4 500 000
income for the period
Groups: Step by step guide:
HOW TO PREPARE CONSOLIDATED/GROUP FINANCIAL STATEMENTS

Profit attributable to:

− Equity owners of the Total profit less NCI 3 800 000
parent
− Non-controlling NCI share of subsidiaries profit 200 000
interests
4 000 000
Total comprehensive
income attributable to:
− Equity owners of the Total CI less NCI 4 200 000
parent
− Non-controlling NCI share of subsidiaries profit + NCI share 300 000
interests of subsidiaries OCI
4 500 000

If a group is an investor and associate/JV only, the financial statements are NOT consolidated as there
are NO subsidiaries. These financial statements should be referred to as group financial statements.

Refer to the journals shared with students to determine if adjustments are debit or credit.

Notes
❶ Revenue and Cost of sales

If an investor sells to an associate, the investor share of the intragroup revenue and cost of sales is
eliminated. Refer journal 1 (Associates)

❷ Other income

Unrealised profit on the intragroup sale of a PPE asset - If the seller is in the business of
manufacturing the P, P & E, the journal is different. Refer J4.

❸ Other expenses

Students may be asked to disclose expenses by function as per IAS 1:

− Distribution costs
− Administrative expenses
− Other expenses

❹ Share of profit of associate or joint venture

Refer to the journals for associates and joint ventures. Pay attention to upstream and downstream
adjustments. ALWAYS adjust investor share only.

❺ Income tax expense

Always calculated by consolidating parent and subsidiaries tax and then adjusting for the tax effect of
unrealised intragroup profits and depreciation/amortisation on assets revalued at acquisition. NEVER
adjusted for goodwill impairment, dividends and other common items.
Groups: Step by step guide:
HOW TO PREPARE CONSOLIDATED/GROUP FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

ABC LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED XXXXXXXX

Parent + share of subsidiaries, associates and JVs

Share Retained
OCE OCE Group total NCI Total
capital earnings Note
R R R R R
R R
Balance beginning of year 1 000 000 8 000 000 150 000 - 9 150 000 1 000 000 10 150 000 ❻

Total comprehensive income 3 800 000 250 000 150 000 4 200 000 300 000 4 500 000
− Profit 3 800 000 3 800 000 200 000 4 000 000 ❼
− Other comprehensive income 250 000 150 000 400 000 100 000 500 000 ❼

ALWAYS
Dividends paid (500 000) (500 000) (100 000) (600 000) ❽
parent only
Change in ownership ❾
Acquisition/disposal of subsidiary ❾
Transfer to retained earnings 100 000 (100 000) ❿
Other

Balance end of year 1 000 000 11 400 000 300 000 150 000 12 850 000 1 200 000 14 050 000
These balances all transfer to the equity section of the consolidated statement of financial position
Groups: Step by step guide:
HOW TO PREPARE CONSOLIDATED/GROUP FINANCIAL STATEMENTS

A separate OCE column is required for each type of OCE. This includes: Revaluation surplus, Mark-to-
market reserve, Change in ownership, Foreign currency translation reserve (FCTR) (PGDA only),
Equity component of convertible instruments (Per IFRS 9), Share-based payment reserve (PGDA
only).

All amounts in the SOCIE are always after tax (if applicable).

Notes

❻ Opening balances

Parent + parent/investor share of since acquisition to beginning of the year of all subsidiaries,
associate and JVs. Must be adjusted for:

− unrealised profits after tax for prior years intragroup adjustments

− additional depreciation/amortisation on NCA revalued at acquisition.
− other at acquisition adjustments that may have been realised since acquisition
− gain on bargain purchase or excess on subsidiaries or associates and JVs acquired in a
previous period.

All of the above adjustments are after tax and parent share only.

❼ Total comprehensive income

These amounts are transferred from the SOPLOCI. If the SOPLOCI is not required these amounts must
be calculated (can be tricky). The subsidiaries AOE (since column) can be used to determine the
amounts attributable to the parent from the subsidiaries.

❽ Dividends paid

Always parent and NCI ONLY as all other dividends are eliminated when consolidating or equity
accounting the subsidiary, associate or JV.

❾ Change in ownership and acquisition/disposal of subsidiary

Only applicable to subsidiaries.

− Change in ownership - Amounts per AOE where there has been an increase or decrease in the %
interest. Affects the change in ownership and NCI columns of the SOCIE.
− Acquisition or disposal of subsidiary: NCI at acquisition equity is recognised for subsidiaries
acquired. NCI is derecognised for subsidiaries sold.

❿ Transfer to retained earnings

OCE is realised to retained earnings when the underlying asset to which it relates is derecognised. In
a group context this transfer is necessary when the parent/investor decreases their % interest. Only
the parent share that is realised is transferred to RE.
Groups: Step by step guide:
HOW TO PREPARE CONSOLIDATED/GROUP FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

ABC LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT XXXXXXXX

ASSETS (Parent + 100% subsidiaries) Adjustments R

Non-current assets
Property, plant and equipment Revaluations at acquisition,
unrealised profit on intragroup
Intangible assets
sale, depreciation/amortisation
Investment in associates/JVs Unrealised profit, dividends
Goodwill Impairment

Current assets
Inventory Unrealised profit (closing)
Trade and other receivables Eliminate Intragroup TR
Cash and cash equivalents
TOTAL ASSETS

EQUITY AND LIABILITIES

Total equity
Equity attributable to owners of parent
Ordinary share capital
Retained earnings
All amounts transferred from
Other components of equity SOCIE
Non-controlling interest

Total liabilities (Parent + 100% subsidiaries)

Non-current liabilities
Loans and other non-current liabilities Eliminate intragroup loans
Deferred tax Tax effect of all adjustment

Current liabilities
Trade and other payables Eliminate Intragroup TP
Current tax payable
TOTAL EQUITY AND LIABILITIES