ACCA FA Syllabus G. Preparing Simple Consolidated Financial Statements - Preparing a consolidated SFP. - Notes ^{3 / 11}

Consolidated SFP

1. Take the individual accounts of the parent and subsidiary and cancel out items which appear as an asset in one company and a liability in another, e.g. receivables in one company and payables in another.

2. Add together all the uncancelled assets and liabilities throughout the group on a line by line basis.

3. The investment in the subsidiary (S) shown in the parent’s (P) statement of financial position is replaced by the net assets of S.

The consolidated statement of financial position shows

• The net assets of the whole group (P + S)

• The share capital of the group which always equals the share capital of P only and

• The retained profits, comprising profits made by the group (i.e. all of P’s historical profits + profits made by S post-acquisition).