Stepwise method of multi-level consolidation — Accounting glossary

For example, first determine the intermediate subgroup’s consolidated figures and then consolidate that subgroup with the ultimate parent, taking account of ownership at each level. Correctly applied direct and stepwise techniques should reflect the same underlying IFRS consolidation requirements. The technique is not mandated solely because non-controlling interests exist. Avoid confusing it with the direct and indirect methods of presenting operating cash flows.

Worked example

P owns 80% of S and S owns 75% of T. A stepwise calculation first considers the S–T subgroup, including T’s non-controlling interest, then incorporates it into P’s group while recognising the interests outside P.

Common mistake

Choosing the two-stage approach solely because an outside shareholder exists or treating it as the indirect method of cash-flow preparation.

Where it appears in your exams

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