Students often find a consolidated statement of comprehensive income question more difficult that a consolidated statement of financial position question. In reality you can complete a consol SCI question in just three easy steps.
1. Add parent and sub line by line, remembering to:
- time apportion the sub if it’s a mid year acquisition or disposal
- translate the sub average rate if it’s a foreign sub.
2. Eliminate intercompany transactions, typically:
- intercompany sales (reduce revenue and cost of sales)
- intercompany interest (reduce finance costs and investment income)
- dividends paid by sub to parent (reduce investment income)
3. Record DIP adjustments and use them to calculate NCIs share of profits & TCI
- D = depreciation adjustment
Time apportion if mid year
- I = impairment
Only effects NCI working under the fair value method
- P = PUP.
Increase cost of sales.
Only effects NCI working if the sub is the seller
And that’s it!