Consolidated

Statements
David, Jamaica B.
What is a consolidated financial
statement?
Consolidated financial statements combine the financial
statements of separate companies that belong to the same
group into one financial statement for the entire group. The
consolidated financial statement shows the accounts of the
group as though the different legal entities were one single
legal entity.
PFRS 10 and consolidated financial
statements
- It requires a parent that controls other entities to prepare a consolidated financial
statement

- It defines the principles of control

- It sets out the accounting requirements and the procedures that must be followed
in order to prepare a consolidated financial statement

- It sets out the exception to consolidation requirements

 Power
Power can be obtained directly from
ownership of the majority of voting
rights or can be derived from other
rights.

&
Control requires exposure or
rights to variable returns and
the ability to affect those
returns through power over an
investee.
Control
Control is the basis for
consolidation.
 Consolidated Balance Sheet

Consolidated Statement of
Consolidated Income Statement
Retained Earnings

Consolidated Financial Statements

Consolidated Statement of Cash

Flows
 Accounting requirements:

Reporting dates: consolidated financial

Consolidated Balance statements shall have the same reporting
Sheet dates.
Consolidated Consolidated Income
Statement of Retained Uniform accounting policies: both
Statement
parent and subsidiary shall use the same
Earnings
Consolidated Financial accounting policies.
Statements Consolidated period: consolidation
begins from the date the investor obtains
Consolidated
control of the investee and ceases when
Statement of Cash
the investor loses control of the investee.
Flows
Exemption from preparing group accounts
● The parent is itself a wholly-owned subsidiary or it is a partially
owned subsidiary of another entity and its other owners, including
those not otherwise entitled to vote, have been informed about,
and do not object to, the parent not presenting consolidated
financial statements.
● Its securities are not publicly traded.
● It is not in the process of issuing securities in public securities
markets.
● The ultimate or intermediate parent publishes consolidated
financial statements that comply with International Financial
Reporting Standards.
Exclusion of a subsidiary from consolidation

● If a subsidiary that carries a large amount of debt can be excluded, then

the gearing of the group as a whole will be improved. In other words, this
is a way of taking debt out of the consolidated statement of financial
position.
● IAS 27 did originally allow a subsidiary to be excluded from consolidation
where control is intended to be temporary. This exclusion was then
removed by IFRS 5.
● Subsidiaries held for sale are accounted for in accordance with IFRS 5
Non-current assets held for sale and discontinued operations.
● In the past subsidiaries should be excluded from consolidation on the
grounds of dissimilar activities, that to include its results in the
consolidation would be misleading. IFRS 10 rejects this argument.
Non- controlling interests (NCI)
Non-controlling interest should be presented in the consolidated statement of
financial position within equity, separately from the parent shareholders' equity.

NCI in the net assets of the subsidiary consists of:

a. The amount determined at the acquisition date using PFRS 3;
b. The NCI’s share of changes in equity since the acquisition date.

NCI in profit or loss and comprehensive income

a. Owners of the parent
b. Non-controlling interest
Thank you!