The basic idea of preparing consolidated statement of profit or loss is to show the results of the group as if it were a single entity.

The majority of figures are simple aggregations of the results of the parent and all the subsidiaries (line by line) down to profit after tax.

In aggregating the results of the parent and subsidiaries, intra-group transactions such as dividend income, interest income and unrealised profits are eliminated.

Any non-controlling interest is ignored until profit after tax. Their interest in profits after tax is then subtracted as a one-liner to leave profits attributable to members of the parent.

P group plc – Pro-forma Consolidated statement of profit or loss

For year ended 30 November 20X6


Sales revenue (P+S less intra-group sales)                                                                                      X

Cost of Sales (P+S less intra-group purchases plus unrealised profit in inventory)             (X)

Gross Profit                                                                                                                                             X

Distribution Costs (P+S)              (X) Administrative Expenses (P+S)          (X)

Group operating Profit                                                                                                                         X

Interest and similar income receivable (P+S less intra group interest income)                      X

Interest expenses (P+S less intra-group interest expense)                                                         (X)


Share of Profits of Associate (PAT)

Profit before tax

Income tax expense (P+S) Profit for the period

Profit attributable to :  
Owners of the parent X
Non-controlling interest X


  • If the subsidiary is acquired during the current accounting period it is necessary to apportion the profit for the period between its pre-acquisition and post-acquisition elements. This is dealt with by determining on a line-by-line basis the post-acquisition figures of the subsidiary.
  • After profit after tax in consolidated statement of profit or loss, total profits are divided between profits attributable to group and profit attributable to NCI
  • Any dividends receivable by the parent must be cancelled against dividends paid from the subsidiary undertaking.
  • Where group companies trade with each other one will record a sale and the other an equal amount as a purchase. These items must be removed from the consolidated statement of profit or loss by cancelling from both sales and cost of sales.
  • The unrealized profit adjustment is to increase cost of sales. In case of upstream transaction, the unrealized profit is deducted from profit attributable to NCI also.
  • Investment in loans means an intra-group finance cost as well as inter-group dividends.
  • These will cancel out in basically the same way as for dividends.
  • Impairment of goodwill is treated as an administration expense unless otherwise stated
  • There is no impact of fair value adjustment on acquisition at the statement of profit or loss. However, any additional depreciation related to such fair value adjustment must be charged by adding to cost of sales and deducting from profit after tax of subsidiary while calculating profit attributable to NCI
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