A group statement of cash flows shows the cash that moves between the group and outsiders. Money that moves between a parent and its own subsidiary is just money moving between pockets of the same coat. So the group statement is built from the group’s statement of financial position and profit or loss, not by adding up each company’s statement.
That brings extra items: dividends paid to outside shareholders in subsidiaries, dividends from associates, and the purchase or sale of subsidiaries.
This topic covers the consolidated statement of cash flows under International Accounting Standard (IAS) 7. The previous topic covered the statement for a single entity, which you should know first. The next topic covers earnings per share. The latest Pathfinder diets have no stand-alone cash flow question, but the topic is examinable.
In 30 seconds
Prepare it like a single-entity statement, plus:
- (1) dividends paid to the non-controlling interest (NCI) = opening NCI + NCI profit (± NCI on acquisition or disposal) − closing NCI, shown in financing
- (2) deduct the share of profit of associates in the operating reconciliation and show dividends received from associates in investing (opening investment + share of profit − closing investment)
- (3) show one line in investing for the cash paid for a subsidiary net of the cash it held (or cash received on a disposal net of cash disposed of)
- (4) to avoid double counting, remove the subsidiary’s assets and liabilities at the acquisition (or disposal) date from every movement you calculate
- (5) add back goodwill impairment and any foreign exchange loss, as they are not cash
Key terms in plain English
| Term | What it means |
|---|---|
| Non-controlling interest (NCI) | The part of a subsidiary owned by outsiders |
| Associate | An entity over which the investor has significant influence, accounted for by the equity method |
| Net of cash acquired | The cash paid less the cash the subsidiary already held |
| Double counting | Counting the same movement twice, once in the acquisition line and again in a working capital or asset movement |
| Non-cash item | A charge or gain that does not move cash, such as impairment |
Syllabus check
IAS 7 is examinable under syllabus area C. This topic covers:
- the preparation of a consolidated statement of cash flows, and extracts from it;
- NCI, associates and joint ventures, and acquisitions and disposals of subsidiaries.
CAMA 2020 and group cash flows
The Companies and Allied Matters Act 2020 (CAMA 2020) requires statements that follow International Financial Reporting Standards (IFRS) and give a true and fair view.
| Section | What it says | Link to this topic |
|---|---|---|
| s. 377(1) and s. 378 | Directors prepare statements that follow IFRS and give a true and fair view | The group statement of cash flows follows IAS 7 |
| ss. 379 to 381 | The provisions on group accounts, as ICAN teaches them | It is part of the group statements |
| s. 374(1) | The company keeps accounting records | Records of acquisitions, disposals and dividends support it |
| s. 385 | The directors’ report covers performance and risk | Group liquidity and funding are discussed |
| s. 404(7) | The audit committee reviews policies and internal control | It can review the classification choices |
Non-controlling interests
Outside shareholders in a subsidiary are third parties. Dividends paid to them are a cash outflow, shown separately, usually in financing. Unless there is an acquisition or disposal, they are the balancing figure:
| NCI in group net assets at the start | X |
|---|---|
| NCI share of profit after tax | X |
| NCI on a subsidiary acquired (added) or disposed of (deducted) | X or (X) |
| Dividends paid to the NCI (balancing figure) | (X) |
| NCI at the end | X |
Adjust for any NCI share of other comprehensive income (for example a revaluation) and of foreign exchange differences, which change the NCI without any cash moving. If dividends are payable to the NCI at either date, adjust for the payable too.
Associates and joint ventures
The cash of an associate is outside the group. Only the cash flows between the group and the associate count.
- Deduct the share of profit of the associate in the operating reconciliation (add a share of loss). It is not cash.
- Dividends received go in investing. Calculate: opening investment + share of profit − closing investment. If a dividend receivable is shown, adjust for it.
- Cash paid for shares in an associate, and cash received on their sale, are investing. A loan to or from an associate is investing or financing according to its nature.
Acquisitions and disposals of subsidiaries
Acquisition
One line in investing: cash paid, net of the cash and cash equivalents of the subsidiary acquired. Use 100% of the subsidiary’s cash, even if only 80% was bought. Shares issued as part of the price are not cash. A note shows the assets and liabilities acquired, the NCI, goodwill, and how the price was settled.
Disposal
One line in investing: cash received less the cash and equivalents of the subsidiary at the date of disposal. If the subsidiary had an overdraft that was part of cash equivalents, the group is better off by the overdraft that leaves, so it is added. A note shows the net assets disposed of, the NCI, the profit or loss and the proceeds.
Avoiding double counting
The subsidiary’s assets and liabilities enter (or leave) the group in the one-line item. So in every movement that you calculate from the opening and closing group statements, adjust for the subsidiary’s balance at the acquisition or disposal date:
| Item | Acquisition in the year | Disposal in the year |
|---|---|---|
| Receivables, inventory, payables | Deduct the acquired balance from the closing figure (or add it to the opening) | Deduct the disposed balance from the opening figure |
| Property, plant and equipment | Acquired assets are a separate line in the movement | Disposed assets are a separate line in the movement |
| Tax | Add the acquired liability to the opening | Deduct the disposed liability |
| NCI | Add the NCI acquired to the opening | Deduct the NCI disposed of |
| Goodwill | Add goodwill acquired to the opening before finding the impairment | Deduct goodwill disposed |
Other group items
- Goodwill impairment is a non-cash charge: add it back in the operating reconciliation.
- Exchange differences are not cash. Add back a loss and deduct a gain. The effect on foreign currency cash is shown separately.
- Discontinued operations: start with the total profit before tax of continuing and discontinued operations, excluding the gain on disposal (that is in the investing line).
- Dividends paid to the parent’s shareholders are in financing as before.
Note: from 2027 the amendment to IAS 7 made by International Financial Reporting Standard (IFRS) 18 starts the indirect method at operating profit and fixes the classification of dividends and interest. See the previous topic.
The rules in more depth
Why the associate’s profit is deducted
The group’s profit includes its share of the associate’s profit, but no cash has come in except the dividend.
Why the net figure for a subsidiary
The cash the subsidiary held is part of what the group gets or gives up, so showing the gross cost would mislead.
Why double counting needs care
The group statements already add in the subsidiary’s balances at the date of control. If you do not remove them, the change in each balance would include a movement that was paid for in the acquisition line.
Effect on analysis
A large acquisition outflow shows growth by purchase. Dividends to the NCI show how much of the group’s profit leaks to outsiders.
Worked examples
Example 1: NCI dividends. The NCI in group net assets was ₦1,380,000 at the start and ₦1,510,000 at the end. The NCI share of profit after tax was ₦250,000.
- 1,380,000 + 250,000 − 1,510,000 = ₦120,000, shown in financing.
Example 2: dividends from an associate. The investment in the associate was ₦912,000 at the start and ₦932,000 at the end. The share of the associate’s profit after tax was ₦136,000.
- 912,000 + 136,000 − 932,000 = ₦116,000 in investing.
- The ₦136,000 share of profit is deducted in the operating reconciliation.
Example 3: cash paid for a subsidiary. Blue Group acquired 80% of Green on 5 September for ₦700,000: ₦500,000 in new shares and ₦200,000 in cash. Green held ₦25,000 in cash and equivalents.
- Cash paid ₦200,000 less cash acquired ₦25,000 = ₦175,000 in investing (all ₦25,000 is deducted though only 80% was bought).
Example 4: inventory and an acquisition. Group inventories were ₦120,000 at the start and ₦190,000 at the end. A subsidiary acquired during the year had inventories of ₦40,000 at the acquisition date.
- 190,000 − (120,000 + 40,000) = an increase of ₦30,000, which is deducted in the reconciliation.
(The other ₦40,000 is in the acquisition line.)
Example 5: purchases of equipment and an acquisition. Non-current assets at carrying amount were ₦240,000 at the start and ₦290,000 at the end. Disposals had a carrying amount of ₦30,000, depreciation was ₦40,000 and ₦65,000 of assets came with a subsidiary.
- 240,000 − 30,000 − 40,000 + cash additions + 65,000 = 290,000.
Cash additions = ₦55,000.
Example 6: tax paid and an acquisition. Group tax (current and deferred) was ₦386,000 at the start and ₦490,000 at the end. A subsidiary acquired during the year had a tax liability of ₦120,000. The group tax charge was ₦950,000.
- 386,000 + 120,000 + 950,000 − 490,000 = ₦966,000 paid.
Example 7: NCI dividends and an acquisition. The NCI was ₦350,000 at the start and ₦415,000 at the end. A 60% subsidiary with net assets of ₦800,000 was acquired. The NCI share of profit was ₦270,000.
- NCI acquired.
40% × 800,000 = 320,000. - 350,000 + 320,000 + 270,000 − 415,000 = ₦525,000 of dividends to the NCI.
Example 8: goodwill impairment. Goodwill was ₦600,000 at the start and ₦540,000 at the end. Goodwill of ₦110,000 arose on a subsidiary acquired in the year.
- 600,000 + 110,000 − 540,000 = ₦170,000 impairment, added back in the reconciliation.
Example 9: a disposal for cash. Entity D sold its 80% in S for ₦550,000 in cash. At the disposal date S had net assets of ₦400,000: non-current assets 500, inventory 200, receivables 300, payables (200), tax (80) and a bank overdraft (320) (₦’000). S was formed by D, so there is no goodwill.
- Net assets 400; NCI 20% × 400 = (80); net assets attributable 320.
Profit on disposal = 550 − 320 = ₦230,000. - Cash line in investing.
550 + 320 (the overdraft that leaves the group) = ₦870,000. - If group inventory was 1,600 at the start and 1,500 at the end, deduct the inventory disposed (200): 1,600 − 200 = 1,400.
Closing 1,500 means an increase of ₦100,000.
Example 10: a disposal in full (Caitlin Group, ₦’000). Caitlin sold its 80% interest in Desdemona for cash of 400 on 31 March. Desdemona’s net assets at disposal: property, plant and equipment 390, inventory 50, receivables 39, cash 20, payables (42) = 457. Discontinued profit is 50 (profit before tax 20, tax (4), profit on disposal 34). Group property, plant and equipment was 3,950 at the start and 4,067 at the end; depreciation was 800. Receivables were 417 and 605, inventory 535 and 736, payables 408 and 380. The NCI was 512 and 482, and the NCI share of profit 103.
- Investing, the disposal:
400 − 20 = 380. - Additions:
3,950 + additions − 390 (disposed) − 800 = 4,067, so additions = 1,307. - NCI dividends:
512 + 103 − 91 (20% × 457 disposed) − 482 = 42. - Note:
net assets 457 less NCI 91 = 366
profit on disposal 400 − 366 = 34. - Reconciliation:
profit before tax 862 + 20 = 882
depreciation 800 = 1,682.
Receivables increase (605 − 417 + 39) (227); inventory increase (736 − 535 + 50) (251); payables increase (380 − 408 + 42) 14.
Cash generated from operations = 1,218.
How to score full marks
- Identify first whether there is an acquisition, disposal, associate or NCI. Each changes the workings.
- Set up a working for each balance that involves the subsidiary and adjust for its acquisition or disposal balance.
- Show the one-line acquisition or disposal figure net of cash.
- Prepare the notes for acquisitions and disposals if they are asked for.
- Deduct associate profit, add back impairment and exchange losses.
- Check the closing cash against the group statement of financial position.
Common mistakes in the exam
- Forgetting to adjust working capital for a subsidiary acquired or sold.
- Using the gross price for a subsidiary and not the figure net of cash.
- Deducting only 80% of the acquired subsidiary’s cash.
- Not adding back the share of profit of an associate, or showing its dividend in operating.
- Missing the NCI acquired or disposed of in the NCI working.
- Treating the impairment of goodwill as a cash flow.
- Forgetting a bank overdraft in the disposal line.
Quick revision
- NCI dividends: opening + profit ± acquired or disposed − closing. Financing.
- Associate: deduct profit; dividends received are investing.
- Subsidiary acquired or sold: one line, net of cash.
- Adjust every movement for the subsidiary’s balance at the date.
- Add back impairment and exchange losses.
- CAMA 2020: ss. 377(1), 378, 379 to 381, 374(1), 385, 404(7).
Practice questions
These are original questions written in the style of the Institute of Chartered Accountants of Nigeria (ICAN) exam. Try each one before you open the answer. Full model answers follow the written questions.
Recall check: multiple choice
The real ICAN paper has no multiple-choice section. These questions are for quick recall. The written questions that follow are closer to the exam.
Question 1. Dividends paid to the NCI are normally shown in:
- Operating activities
- Financing activities
- Investing activities
- Not shown
Show the answer
B. They are paid to third parties.
Question 2. The share of profit of an associate is, in the operating reconciliation:
- Added
- Deducted
- Ignored
- Doubled
Show the answer
B. It is not cash.
Question 3. Dividends received from an associate are shown in:
- Operating activities only
- Investing activities
- Financing activities
- Equity
Show the answer
B. Under the present rules.
Question 4. The cash paid for a subsidiary is shown:
- In operating activities
- Net of cash acquired, in investing activities
- In financing
- As a note only
Show the answer
B. One line.
Question 5. A subsidiary was acquired with inventory of ₦50. To find the change in inventory for the reconciliation, you:
- Ignore it
- Adjust the opening inventory by adding the ₦50
- Add it to profit
- Deduct it from cash
Show the answer
B. To avoid double counting.
Question 6. A subsidiary sold had an overdraft that was part of cash equivalents. The disposal line:
- Deducts it
- Adds it back
- Ignores it
- Is nil
Show the answer
B. The group no longer has the overdraft.
Question 7. Goodwill impairment in the reconciliation is:
- Deducted
- Added back
- Cash
- Ignored
Show the answer
B. It is a non-cash charge.
Question 8. In the NCI working, the NCI acquired with a subsidiary is:
- Deducted
- Added to the opening NCI
- Ignored
- Shown in operating
Show the answer
B. It increases the NCI.
Question 9. The profit on disposal of a subsidiary is:
- Added in operating
- Excluded from the reconciliation because the cash is in investing
- Shown in financing
- Cash
Show the answer
B. Start with profit before tax excluding the gain.
Question 10. Which section of CAMA 2020 requires the statements to follow IFRS?
- Section 378
- Section 400
- Section 405
- Section 409
Show the answer
A. IAS 7 is part of IFRS.
Written questions
Question 11 (10 marks). (a) Explain how associates and non-controlling interests affect the consolidated statement of cash flows. (5 marks) (b) Explain how the acquisition of a subsidiary is shown and how double counting is avoided. (5 marks)
Question 12 (20 marks). Zenith Group (₦m). (a) The NCI was 120 at the start and 155 at the end. The NCI share of profit was 30. A subsidiary acquired during the year had an NCI of 30. Calculate the dividends paid to the NCI. (3 marks) (b) The investment in an associate was 200 at the start and 215 at the end. The share of profit after tax was 40.
Calculate the dividends received. (3 marks) (c) The group bought 80% of Sub for cash of 260 and shares worth 40. Sub’s net assets at fair value were 240, including cash of 15. The NCI is at its share of net assets. Calculate goodwill and the cash line for investing activities. (4 marks) (d) Goodwill was 80 at the start and 170 at the end. Calculate the impairment.
(3 marks) (e) Property, plant and equipment was 500 at the start and 640 at the end. Depreciation was 70, disposals had a carrying amount of 30 and 120 of assets came with Sub. Calculate the cash purchases. (4 marks) (f) Tax (current and deferred) was 60 at the start and 75 at the end. Sub had a tax liability of 10. The tax charge was 90. Calculate tax paid. (3 marks)
Question 13 (10 marks). The group sold 70% of a subsidiary for cash of ₦500m. At the disposal date its net assets were: property, plant and equipment 300, inventory 60, receivables 40, cash 25 and payables (45), a total of 380. There is no goodwill. Group inventory was 200 at the start and 180 at the end. (a) State the cash flow for investing activities. (3 marks) (b) Prepare the note: the profit on disposal. (4 marks) (c) Calculate the inventory adjustment in the reconciliation. (3 marks)
Model answers
Show the model answer to Question 11
(a) Associates and NCI (5 marks). The cash of an associate is outside the group, so only flows between it and the group count. (1) The share of the associate’s profit is deducted in the reconciliation. (1) Dividends received from the associate are shown in investing. (1) Dividends paid to the NCI are third-party cash outflows, shown in financing. (1) They are the balancing figure in the NCI account. (1)
(b) Acquisition (5 marks). One line in investing: cash paid less cash and equivalents acquired. (2) Shares issued are not cash. (1) A note shows the assets, goodwill, NCI and how the price was settled. (1) To avoid double counting, the subsidiary’s balances at the date are removed from each movement (for example working capital, assets and tax). (1)
Show the model answer to Question 12
(a) NCI dividends (3 marks). 120 + 30 + 30 − 155 = ₦25m. (3)
(b) Associate (3 marks). 200 + 40 − 215 = ₦25m. (3)
(c) Acquisition (4 marks).
- NCI = 20% × 240 = 48.
- Goodwill = 300 + 48 − 240 = ₦108m. (2)
- Cash line.
260 − 15 = ₦245m outflow. (2)
(d) Impairment (3 marks). 80 + 108 − 170 = ₦18m, added back. (3)
(e) Equipment (4 marks).
- 500 − 30 − 70 + cash additions + 120 = 640. (2)
- Cash purchases = ₦120m. (2)
(f) Tax (3 marks). 60 + 10 + 90 − 75 = ₦85m. (3)
Show the model answer to Question 13
(a) Investing (3 marks). Proceeds 500 less cash disposed of 25 = ₦475m inflow. (3)
(b) Note (4 marks).
- Net assets 380; NCI 30% × 380 = (114); attributable 266. (2)
- Profit on disposal.
500 − 266 = ₦234m. (2)
(c) Inventory (3 marks).
- Deduct the inventory disposed of from the opening figure: 200 − 60 = 140. (1.5)
- Closing 180, so an increase of ₦40m, deducted in the reconciliation. (1.5)
Pathfinder on Consolidated statement of cash flows
These are the ICAN Pathfinder questions that test this topic. ICAN owns the questions and the suggested solutions, so we point you to them and do not copy them. Open your Pathfinder, attempt each question under exam conditions, then check your answer against the notes above.
We found no stand-alone consolidated statement of cash flows question in the November 2025 or May 2026 Pathfinders. The topic is examinable. Worked examples 1 to 10 show the workings, including a disposal in full.
Revise first: Worked examples
Questions test the net cash line and the adjustments to avoid double counting. See the section on acquisitions and disposals.
Revise first: Acquisitions and disposals of subsidiaries
Source: ICAN Pathfinder, Strategic Business Reporting. Diets covered: No stand-alone cash flow question identified in the November Diet, 2025 or May Diet, 2026 Pathfinders.
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