Preparation of the Consolidated Statement of Financial Position part 1

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Preparation of the Consolidated Statement of Financial Position

• Consolidation is the process of adjusting and combining financial information from the individual financial statements of a parent undertaking and its subsidiary undertakings to prepare consolidated financial statements that present financial information for the group as a single economic entity.

• the Consolidated Statement of Financial Position reflects the assets and liabilities within the control of the parent entity, and how they are owned.

• defined by IAS 27 Consolidated Financial Statements and Accounting for Investments in Subsidiaries, consolidated financial statements are “the financial statements of a group presented as those of a single entity”.


  1. Avatar of francis7 says

    Thanks Sir this lecture is helpin me out…. how to answer exam question on F7 as its my 1st time, do one have to do the woorkings at the back of the answer sheet and later answer the questions at the front of the answer sheet?

    • Avatar of MikeLittle says

      Too late to help francis, sorry Francis – you should have put your question on the Ask the Tutor page!

      However, for any others reading this thread, no! Do your workings first and then write out your answer behind the workings. Always remember, these markers are not idiots! They also have done ACCA exams and know the issues facing students.

      The positioning of your workings relative to the “answer” is totally immaterial (other than having all your workings together and not spread throughout the answer booklet. I’ve actually seen that done on two occasions whilst I was an ACCA marker)

    • Avatar of MikeLittle says

      Are you following the lecture at all? I clearly say “Look at the example Rasa and Tatjana” Do you have the course notes in front of you? Then look on page 33 and …..Lo!!!!! There is an example called Rasa and Tatjana!

      • Avatar of maat9 says

        hello sir i have passed f7 with 60% marks ,due to your effort , you have the main role in my success thank you very much sir..

      • Avatar of MikeLittle says

        Hi, you are very kind but there was quite a bit of input from you too! It wasn’t me sitting in that exam room – that was you.

        Anyway, well done to both of us! :-)

  2. avatar says

    When working out the full 25 mark SFP question you might have to work for Unrealised profit to work out the Net Assets of the subsidiary, do you then make that Working 2 or the Arrangement of which is 1st and subsequent workings is not that important?

    • Avatar of MikeLittle says

      I must have said it many times in the recordings – at least I think I have – after working W2 Goodwill, we have to do calculations for pups (pretty well every exam question) and dividends (very rarely)

      Then we are in the position where we can do working W3 Consolidated Retained Earnings (or Cons Ret Ears as I write it on the screen)

  3. avatar says

    Please help me am using an apple iPad and when I want to watch the lectures the video does not come out and ave tried the support page nnothing seem to help the browser am using is safari,what cud be the problem it only the page with comment which show and tithe video does moot appear at all.thank you in advance

    • Avatar of MikeLittle says

      Look at a marking scheme – there are no marks allocated to writing:

      The Warrburt Group
      Consolidated Statement of Financial Position
      as at 30 September 2013

      but, if you don’t believe me …. that’s ok – write it out in full


  4. avatar says

    Hi Mr. Little. I observed that in the first example you included the investment of 3000 (cost of acquiring the subsidiary) in the Balance Sheet but in this lecture, you did not include the 18,000 investment in the Balance Sheet. Why is that so?

    • Avatar of MikeLittle says

      That first example is to show the effect of acquiring a subsidiary in the acquirer’s records. It’s the only example where the answer does NOT ask for a consolidated position. All subsequent examples ask for consolidated statement of financial position

      • Avatar of MikeLittle says

        OK but …… may I suggest that, if you had listened carefully to the lecture, you would have understood and then there would have been no need to ask.

        However, it’s always nice to hear from students and we’re all of us very happy to respond when requested to

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