Introduction

In this lesson

1. 0:00 Consolidated Statement of Financial Position overview
2. 0:20 Consolidation agenda and key topics
3. 0:45 Basic consolidation principles explained
4. 2:25 Worked example: Ruby acquires Strings
5. 5:04 Step-by-step consolidation methodology
6. 6:09 Determining group structure and ownership
7. 6:29 Net assets summary for subsidiaries
8. 7:33 Goodwill calculation and impairment
9. 8:37 Noncontrolling interest valuation
10. 10:07 Group retained earnings calculation

About this lesson

You'll discover how to combine parent and subsidiary assets and liabilities as a single entity, understand the treatment of goodwill and fair values, and identify what needs eliminating during consolidation—including investments, equity, and inter-group transactions. This session builds directly on basic group principles and sets up everything you need for Strategic Business Reporting (SBR) and other advanced papers. The session walks you through five key areas: the basic consolidation principles that underpin all group accounting, goodwill recognition under IFRS 3, fair value adjustments before and after acquisition, the treatment of reserves, and inter-group transactions that must be cancelled out. You'll work through a practical example where a parent acquires 100% of a subsidiary, consolidating their statements of financial position line by line and understanding why no goodwill arises in this case. You'll then learn the five-step methodology you'll use for every consolidation: determine the group structure and ownership percentage, prepare a net asset summary for the subsidiary at acquisition and reporting dates, calculate goodwill as the difference between what was paid and what was acquired, work out any non-controlling interest, and finally calculate group retained earnings. Each step builds logically on the previous one, giving you a repeatable framework for tackling consolidation questions with confidence.

Duration: 11m