Consolidated statement of profit or loss

In this lesson

1. 0:00 Associates in consolidated profit and loss
2. 0:43 Eliminating unrealised profit with associates
3. 1:06 Worked example: three-company consolidation
4. 3:05 Calculating associate profit share
5. 4:12 Allocating profit between parent and minority
6. 5:01 Working through unrealised profit adjustment
7. 6:03 Associate impairment and final calculations

About this lesson

You'll discover why associates are treated differently from subsidiaries (they're not line-by-line consolidated), how to include the group's share of associate profit as a separate line item, and how to adjust for unrealised profit on intercompany transactions and impairments. Through a worked example, you'll see exactly how to build a consolidated statement step-by-step, split profit between the parent and noncontrolling interests, and handle the specific calculations that examiners test. The core principle is control: because the group doesn't control the associate, you don't consolidate its individual revenue, costs, and expenses. Instead, you include only the parent company's share of the associate's profit after tax as a single line. This means your consolidated statement combines the parent and subsidiary figures normally, then adds one adjustment for the associate's contribution. You'll also learn when to eliminate unrealised profit on goods sold between the group and associate — but only the group's proportionate share — and how to treat impairments (using only the current year's amount in the profit or loss statement, not cumulative figures). By the end, you'll understand that associates have a surprisingly focused impact on consolidation: typically one working and one line on the statement. This clarity helps you work efficiently under exam conditions and avoid the common mistake of over-consolidating associates or missing the adjustments that matter.

Duration: 7m