PREPARING A CONSOLIDATED

STATEMENT OF PROFIT AND LOSS

AND OTHER COMPREHENSIVE
INCOME
CONSOLIDATED STATEMENT OF PROFIT AND
LOSS AND OTHER COMPREHENSIVE INCOME
(TEMPLATE) P S Adj GROUP
Revenue XX XX (XX) XX
COS (XX) (XX) XX (XX)
PUP (Inventory) (XX) (XX)
FV Adj(extra Depn) (XX)
Gross Profit XX
Distribution costs (XX) (XX) (XX)
Administrative Expenses (XX) (XX) (XX)
Impairment (XX)
Finance Cost (XX) (XX) XX (XX)
Investment income XX XX (XX) XX
Dividend from S/A (XX)
Associate (P's % x A's PFY) -
impairment XX
Profit before tax XX
Taxation (XX) (XX) (XX)
PFY XX XX
Revaluation gain XX XX XX
Associate revaluation gain XX
TCI XX XX

PARENT (Balancing figure) XX

NCI = NCI % X S's TCI XX
ADJUSTMENTS : INTRA-GROUP TRADING
TRANSACTIONS

These may include sales, loans/debenture interest and management fees. Intra –
group trading transactions are dealt as follows:
Remove the expense (using the adjustment column)
Remove the income (using the adjustment column)
ADJUSTMENTS : UNREALISED PROFITS

PUP adjustments on goods unsold at year end (cost structures) are accounted
for by increasing COS in Seller’s column.
ADJUSTMENTS : FAIR VALUE ADJUSTMENTS

Any additional annual depreciation on the fair value increase of S’s net assets
is adjusted through COS in S’s column.
IMPAIRMENTS AND GROUP ACCOUNTS

• An asset/CGU is impaired if its carrying amount is greater that its

recoverable amount

• The recoverable amount is the higher of the value in use and the fair value
less cost to sell
IMPAIRMENT : SUBSIDIARY (FULL
GOODWILL)
The subsidiary is treated as a cash generating unit where the carrying value is that of the
subsidiary plus any goodwill.
If the full goodwill method is adopted, then the impairment is split between the parent and
the NCI based upon the ownership percentages since goodwill consists of the parent’s
goodwill and NCI goodwill. The journal entries will be as follows:
Dr Retained earnings (W5)  P’s % of the impairment
Dr NCI (W4)  NCI’s % of the impairment
Cr Goodwill (W3)  100% of the impairment
IMPAIRMENT : SUBSIDIARY (PARTIAL
GOODWILL)
• If goodwill is measured using the proportionate method, the goodwill calculated
consists of goodwill (P’s share) and the impairment is allocated entirely to the group
retained earnings as there is no NCI share of goodwill.
• The calculation of impairment gets to be slightly complicated as the carrying value
of the subsidiary needs to reflect the net assets of the subsidiary plus the full
goodwill, as the recoverable amount used is that of the entire subsidiary.
• There is therefore need to gross-up the goodwill to get an equivalent of full goodwill
IMPAIRMENT : SUBSIDIARY (PARTIAL
GOODWILL)

Illustration on page 25 of the ACCA SBR Handbook.

ACCA-SBR-Notes-September-2019-Exams.pdf
IMPAIRMENT OF AN ASSOCIATE

An associate is treated as an asset, where the value of the asset is the value of
the investment in associate.
Any impairment should therefore reduce the value of the investment in
associate.