The consolidated statement of profit or loss tells the story of the group’s year as if it were one business: all the sales, all the costs, one profit. It looks like a simple addition of the parent’s and the subsidiary’s results, and in the basic case it is.
Two things make it more than that: the subsidiary’s profit belongs only partly to the parent, so the statement must show how much goes to the non-controlling interest; and a subsidiary bought part-way through the year contributes only the part of the year the group has owned it.
This topic covers the line-by-line combination, the attribution of profit and total comprehensive income between the owners of the parent and the non-controlling interest, intra-group dividends, and the treatment of an acquisition during the year. The next topic covers the complications: intra-group trading, unrealised profit, fair value depreciation and goodwill impairment.
The statement is the main task in the group questions on the consolidated statement of profit or loss. November Diet, 2021, Question 2 asked for the consolidated statement of profit or loss and other comprehensive income of a parent and its subsidiary, and May Diet, 2023, Question 3(a) (12 marks) did the same, with a part-year of ownership. Read fair values, unrealised profit and intra-group items first.
In 30 seconds
Every income and expense line in the consolidated statement is a straight cross-cast of the parent’s and the subsidiary’s lines, at 100% of the subsidiary’s figures, but only for the period the subsidiary has been owned. If the subsidiary was bought during the year, include its results from the acquisition date, time-apportioned (profits are assumed to accrue evenly unless told otherwise).
Intra-group dividends and other intra-group items are eliminated. Profit and total comprehensive income are then attributed to the owners of the parent (the balancing figure) and the non-controlling interest (its percentage × the subsidiary’s profit or total comprehensive income included in the group).
The basic approach
A consolidated statement of profit or loss and other comprehensive income brings together the revenue, income and expenses of the parent and its subsidiaries. Each line is the sum of the same line in each company’s own statement. The main exercise is attributing the result, because the items of the subsidiary are included in full, even if only part is owned.
For example, P has owned 80% of S for several years. Their statements for the year (₦ thousand) are:
| P | S | Consolidated | |
|---|---|---|---|
| Revenue | 900 | 400 | 1,300 |
| Cost of sales | (540) | (250) | (790) |
| Gross profit | 360 | 150 | 510 |
| Other income | 25 | 10 | 35 |
| Distribution costs | (70) | (40) | (110) |
| Administrative expenses | (100) | (60) | (160) |
| Other expenses | (30) | (10) | (40) |
| Finance costs | (15) | (10) | (25) |
| Profit before tax | 170 | 40 | 210 |
| Income tax expense | (50) | (12) | (62) |
| Profit for the year | 120 | 28 | 148 |
Attributing profit and total comprehensive income
The statement discloses profit for the period, and total comprehensive income for the period, attributable to the owners of the parent and to non-controlling interests, in a table beneath the statement. The NCI figure is simply its percentage of the subsidiary’s profit (or total comprehensive income) included in the consolidated statement, after consolidation adjustments. The owners’ share is the balancing figure.
- Profit.
NCI = 20% × ₦28 = ₦5.6
owners = ₦148 − ₦5.6 = ₦142.4. - If S also has other comprehensive income of ₦10 (a revaluation gain after acquisition), consolidated other comprehensive income is ₦10 and total comprehensive income is ₦158.
NCI = 20% × (₦28 + ₦10) = ₦7.6
owners = ₦158 − ₦7.6 = ₦150.4.
Intra-group dividends
A dividend paid by the subsidiary to the parent is income in the parent’s statement. But it is only a transfer within the group, so the parent’s dividend income is eliminated against the subsidiary’s dividend paid. Dividends paid to the parent therefore do not appear in the consolidated statement of profit or loss.
If S pays a dividend of ₦20 and P owns 80%, P’s income of ₦16 is removed. The remaining ₦4 paid to the non-controlling interest is a distribution to outside shareholders and is shown in the statement of changes in equity as a reduction of the NCI, not as profit. A dividend from an associate is treated differently (see the associates topics).
Acquisition during the year
Only post-acquisition results of a subsidiary are consolidated. If the parent acquires the subsidiary part-way through the year, the subsidiary’s results are divided into pre-acquisition and post-acquisition, normally on a time basis because profits are assumed to accrue evenly unless there is information to the contrary. Only the post-acquisition part is included, line by line, and the NCI’s share is its percentage of the post-acquisition profit.
For example, P acquired 75% of S on 1 October, three months before the year end. S’s results for the year are revenue ₦400, cost of sales ₦240 and expenses ₦112 (profit ₦48). The post-acquisition part is 3/12: revenue ₦100, cost of sales ₦60, expenses ₦28, profit ₦12. P’s own results are revenue ₦700, cost of sales ₦400 and expenses ₦200 (profit ₦100). The consolidated revenue is ₦700 + ₦100 = ₦800, cost of sales ₦460, expenses ₦228, and profit ₦112. The NCI is 25% × ₦12 = ₦3 and the owners receive ₦109.
The same split gives the retained earnings at the acquisition date needed for goodwill and the statement of financial position. If S’s retained earnings were ₦80 at the start of the year, the amount at 1 October is ₦80 + 9/12 × ₦48 = ₦116 (assuming no dividends). At the year end they are ₦128, so the post-acquisition profit is ₦12, the figure used in the profit statement.
The ideas in more depth
Why the full subsidiary figures are included
The parent controls the subsidiary’s activities, so the group’s revenue and costs include all of them. The NCI’s share of the profit is then shown as an attribution, not by cutting the lines to the parent’s percentage.
Why only the post-acquisition period
The group was not the owner of the subsidiary before the acquisition date. Profits earned before then belong to the previous owners and were paid for in the price.
Sources and references
- International Financial Reporting Standard (IFRS) 10 Consolidated Financial Statements: consolidation procedures, attribution to non-controlling interests; IFRS 3 Business Combinations: the acquisition date.
These points are stated as at 5 November 2026.
Worked examples
Example 1: the basic statement. P (80% owner for years) and S have profits for the year of ₦120 and ₦28. Required: consolidated profit and its attribution.
- Profit.
₦120 + ₦28 = ₦148. - NCI.
20% × ₦28 = ₦5.6.
Owners. ₦148 − ₦5.6 = ₦142.4.
Example 2: an acquisition on 1 October. P bought 75% of S on 1 October. S’s results for the year: revenue ₦400, cost of sales ₦240, expenses ₦112. P’s own: revenue ₦700, cost of sales ₦400, expenses ₦200. Required: consolidated profit and the NCI.
- S after acquisition. 3/12: revenue ₦100, cost of sales ₦60, expenses ₦28, profit ₦12.
- Consolidated. Revenue ₦800; cost of sales ₦460; expenses ₦228; profit ₦112.
- NCI.
25% × ₦12 = ₦3; owners ₦109.
Example 3: dividends. S paid a dividend of ₦20; P owns 80%. Required: the treatment.
- Eliminate. P’s dividend income of ₦16 is cancelled against S’s dividend.
- NCI. ₦4 is a distribution to the non-controlling interest, shown in the statement of changes in equity.
How to answer in the exam
- Set out columns for the parent, the subsidiary (time-apportioned if acquired in the year) and the group, with a working reference for each adjusted line.
- Remove intra-group items before adding.
- Show the attribution table below the statement for profit and for total comprehensive income.
- Check that the NCI and owners’ shares add to the totals.
Common mistakes in the exam
- Including a full year of the subsidiary’s results after a mid-year acquisition.
- Adding only the parent’s percentage of the subsidiary’s lines.
- Leaving the parent’s dividend income from the subsidiary in profit.
- Calculating the NCI share on the parent’s profit.
- Forgetting the NCI’s share of the subsidiary’s other comprehensive income.
- Using the year-start retained earnings as the retained earnings at the acquisition date.
Quick revision
- Cross-cast every line; subsidiary at 100% for the period owned.
- Attribution: NCI = its % × the subsidiary’s profit or total comprehensive income; owners = balance.
- Eliminate intra-group dividends.
- Mid-year acquisition: time-apportion; retained earnings at acquisition = opening + pre-acquisition share of the year’s profit.
Practice questions
These are original questions written in the style of the Institute’s exams. Try each one before you open the answer. Section A is a recall check, because the paper itself is written.
Recall check: multiple choice
Question 1. A consolidated statement of profit or loss:
- Shows only the parent’s results
- Shows only the subsidiary’s results
- Combines the revenue, income and expenses of parent and subsidiaries line by line
- Shows only the NCI
Show the answer
C. After removing intra-group items.
Question 2. The NCI’s share of profit is:
- Its percentage of the parent’s profit
- Its percentage of the subsidiary’s profit included in the consolidated statement
- Half of the group profit
- Nil
Show the answer
B. After consolidation adjustments.
Question 3. Of a subsidiary’s results, the consolidated statement includes:
- Only the post-acquisition results
- The full year always
- Only the pre-acquisition results
- None
Show the answer
A. The group only owns it from the acquisition date.
Question 4. Profit attributable to the owners of the parent is:
- The parent’s profit only
- The subsidiary’s profit only
- The NCI’s share
- Consolidated profit less the NCI’s share
Show the answer
D. The balancing figure.
Question 5. A subsidiary acquired on 1 October is consolidated:
- For the full year
- For the three months after acquisition, on a time basis
- Not until the next year
- For nine months
Show the answer
B. Profits are assumed to accrue evenly.
Question 6. Profits of a subsidiary are assumed to accrue:
- Evenly over time, unless there is information to the contrary
- All at the year end
- All at the start
- In the last quarter
Show the answer
A. Hence time apportionment.
Question 7. A dividend paid by the subsidiary to the parent is:
- Shown as income in the group
- Shown as an expense
- Eliminated on consolidation
- Added to revenue
Show the answer
C. It is a transfer within the group.
Question 8. Total comprehensive income attributable to the NCI includes:
- Only the profit
- Only dividends
- Nothing
- Its share of the subsidiary’s other comprehensive income
Show the answer
D. As well as its share of profit.
Question 9. Retained earnings of a subsidiary at a mid-year acquisition date are:
- The year-end balance
- The opening balance
- Opening balance plus the pre-acquisition part of the year’s profit
- Nil
Show the answer
C. Less any dividends paid before the date.
Question 10. The split between owners and NCI is shown:
- In a table beneath the statement
- In the directors’ report only
- Not at all
- In revenue
Show the answer
A. For profit and for total comprehensive income.
Section B style: written questions
Question 11 (10 marks). (a) Explain how revenue and expenses are consolidated. (4 marks) (b) Explain how profit is attributed to the NCI. (3 marks) (c) State how a mid-year acquisition is dealt with. (3 marks)
Question 12 (15 marks). P (80% owner for years) has revenue ₦500, cost of sales ₦300 and expenses ₦90. S has revenue ₦250, cost of sales ₦140 and expenses ₦60. (a) Prepare the consolidated statement down to profit. (8 marks) (b) Calculate the NCI and the owners’ share. (4 marks) (c) State the effect on the consolidated figures if S had been acquired on 1 July. (3 marks)
A further written question
Question 13 (20 marks). P bought 60% of S on 1 July; the year ends on 31 December. S’s results for the year: revenue ₦600, cost of sales ₦360, expenses ₦120 and, after acquisition, other comprehensive income of ₦20. S’s retained earnings at the start of the year were ₦100. P’s own: revenue ₦1,000, cost of sales ₦600, expenses ₦250.
(a) Prepare the consolidated statement down to profit. (8 marks) (b) Attribute the profit. (3 marks) (c) Attribute total comprehensive income. (4 marks) (d) Calculate S’s retained earnings at acquisition. (3 marks) (e) State why only part of S’s results is included. (2 marks)
Model answers
Show the model answer to Question 11
(a) Each line is the sum of the parent’s and the subsidiary’s same line (2), with the subsidiary at 100% even if partly owned (1), and intra-group items removed (1).
(b) The NCI’s share is its percentage of the subsidiary’s profit included in the consolidated statement (2), after consolidation adjustments. The owners of the parent receive the balance (1).
(c) Only the post-acquisition results are included (1), time-apportioned unless there is information to the contrary (1), and the retained earnings at acquisition are calculated for goodwill (1).
Show the model answer to Question 12
(a)
- Revenue ₦500 + ₦250 = ₦750 (2).
- Cost of sales ₦300 + ₦140 = ₦440 (2).
- Expenses ₦90 + ₦60 = ₦150 (2).
- Profit ₦750 − ₦440 − ₦150 = ₦160 (2).
(b)
- S’s profit ₦250 − ₦140 − ₦60 = ₦50 (1).
- NCI 20% × ₦50 = ₦10 (1.5).
- Owners ₦160 − ₦10 = ₦150 (1.5).
(c) Only the results of S from 1 July, six months, would be included (1.5), so S’s revenue and costs are halved and the NCI’s share falls with them (1.5).
Show the model answer to Question 13
(a)
- S after acquisition, 6/12: revenue ₦300, cost of sales ₦180, expenses ₦60, profit ₦60 (2).
- Consolidated revenue ₦1,000 + ₦300 = ₦1,300 (1.5)
- cost of sales ₦600 + ₦180 = ₦780 (1.5)
- expenses ₦250 + ₦60 = ₦310 (1.5)
- profit ₦1,300 − ₦780 − ₦310 = ₦210 (1.5).
(b)
- NCI 40% × ₦60 = ₦24 (1.5)
- owners ₦210 − ₦24 = ₦186 (1.5).
(c)
- Total comprehensive income ₦210 + ₦20 = ₦230 (1).
- NCI 40% × (₦60 + ₦20) = ₦32 (2).
- Owners ₦230 − ₦32 = ₦198 (1).
(d) ₦100 + 6/12 × ₦120 = ₦160 (3).
(e) The group has owned S only since 1 July (1), and the profit earned before then belongs to the previous owners and was paid for in the price (1).
Pathfinder on The consolidated statement of profit or loss and OCI (i): basic approach
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.
The question asks for the consolidated statement of profit or loss and other comprehensive income of a parent and its subsidiary, with the profit and total comprehensive income attributable to the owners and to the non-controlling interest.
Revise first: Attributing profit and total comprehensive income
Part (a) asks for the consolidated statement of profit or loss and other comprehensive income (12 marks) where the subsidiary was acquired during the year and results accrue evenly.
Revise first: Acquisition during the year
Source: ICAN Pathfinder, Financial Reporting. Diets covered: Every diet in the Pathfinder, from November Diet, 2021 to May Diet, 2026, was reviewed here. The diets listed above test this topic directly..
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