Direct method of multi-level consolidation — Accounting glossary

In an indirect group, determine the ultimate parent’s effective economic interest and the relevant non-controlling interests, then consolidate assets and liabilities and apply required group adjustments. A direct calculation is an educational consolidation technique, not a separate IFRS 10 recognition model or a method permitted only when non-controlling interests are absent. Assess control separately from ownership percentages.

Worked example

P owns 80% of S and S owns 75% of T. A direct calculation identifies P’s indirect economic interest in T as 60% and then applies the appropriate consolidation and non-controlling-interest calculations.

Common mistake

Assuming a direct calculation can be used only if there is no non-controlling interest or simply including 60% of a controlled subsidiary’s assets line by line.

Where it appears in your exams

Qualification	Exam	Relationship	Period
ACCA	FR	Supporting	September 2026–June 2027
ACCA	SBR	Supporting	September 2026–June 2027