Consolidated financial statements
Consolidated financial statements present a parent and its subsidiaries as one economic entity. The group combines like assets, liabilities, income and expenses and removes intragroup balances and transactions. The investment in the subsidiary is replaced with the underlying net assets and acquisition-related amounts such as goodwill. Non-controlling interests show the part attributable to owners outside the parent.
Worked example
A $10,000 receivable in the parent and matching payable in its subsidiary are eliminated because the group cannot owe itself money.
Common mistake
Do not consolidate an associate line by line: the equity method has a different treatment.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | FR | Direct | Official assessment-window verification pending |
| ACCA | K1 | Direct | July 2027–August 2028 |
| ACCA | SBR | Direct | Official assessment-window verification pending |
| CIMA | F2 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |