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Financial Accounting · Subsidiaries

How to Prepare a Consolidated Statement of Financial Position

Updated 11 October 2026 · Fact-checked

A consolidated statement of financial position shows a parent and its subsidiaries as one entity. You add assets and liabilities line by line, remove the investment in the subsidiary against its share capital and reserves at acquisition, record goodwill, and split equity between the group and non-controlling interest. Do the workings first, then build the statement.

Understand Consolidated Statement of Financial Position Basics

A parent company that controls a subsidiary must present group financial statements. The group is shown as if it were a single business. The reader sees everything the parent controls, not just what the parent legally owns.

In exams, control normally means the parent holds more than 50% of the voting shares. The parent's own statement shows the shares in the subsidiary as a single asset, investment in subsidiary. In the group statement that asset is replaced by the subsidiary's actual assets and liabilities, which are added line by line to the parent's. This is 100% of the subsidiary's assets and liabilities, even if the parent owns only 80%.

If you add the subsidiary's assets and also keep the investment, you count the same thing twice. So you cancel the investment against the subsidiary's share capital and reserves at the acquisition date. Any difference is goodwill. The subsidiary's share capital never appears in the group statement. Only the parent's share capital does.

The subsidiary's profits made after acquisition belong partly to the group. The group's share goes into consolidated retained earnings. The rest belongs to outside shareholders and is shown as non-controlling interest (NCI) within equity.

This is why you build workings first: the group structure, net assets of the subsidiary, goodwill, NCI and consolidated reserves. The statement itself is then just adding up.

Key formulas to remember

Control (exam rule of thumb)
Parent holds more than 50% of voting shares → subsidiary
IFRS 10 defines control by power, exposure to variable returns and ability to use that power. Exam questions usually give a shareholding above 50%.
Net assets at acquisition
Share capital + reserves of subsidiary at acquisition date (± fair value adjustments)
Use the acquisition date, not the reporting date, for goodwill.
Goodwill (NCI at proportionate share of net assets)
Consideration paid + NCI at acquisition − subsidiary net assets at acquisition
NCI at acquisition = NCI % × net assets at acquisition. If NCI is measured at fair value, use that fair value instead.
Non-controlling interest at reporting date
NCI % × subsidiary net assets at reporting date
This is under the proportionate method. It is added to equity.
Consolidated retained earnings
Parent retained earnings + parent % × (subsidiary retained earnings now − at acquisition)
Only post-acquisition profits are included.
Line-by-line consolidation
Parent + 100% of subsidiary (for each asset and liability) ± adjustments
Replace investment in subsidiary with goodwill. Add 100% even when the parent owns less.

How to solve Consolidated Statement of Financial Position Basics questions

Use the same order every time. It keeps the statement balanced and earns working marks even if one figure is wrong.

  1. 1Read the question and draw the group structure: parent, subsidiary, percentage owned, acquisition date and consideration paid.
  2. 2Work out the subsidiary's net assets at acquisition: share capital plus reserves at that date (plus any fair value adjustment given).
  3. 3Work out the subsidiary's net assets at the reporting date: share capital plus reserves now. The movement since acquisition is the post-acquisition profit.
  4. 4Calculate goodwill: consideration paid plus NCI at acquisition, minus net assets at acquisition.
  5. 5Calculate NCI at the reporting date: NCI % × net assets at the reporting date.
  6. 6Calculate consolidated retained earnings: parent's reserves plus the parent's % of post-acquisition profit.
  7. 7Build the statement: add parent and subsidiary line by line, leave out the investment, add goodwill to non-current assets, use the parent's share capital only, and add NCI in equity.
  8. 8Check that total assets equal total equity plus liabilities. If not, recheck your workings.

Quickest way: Five-working shortcut

When to use it: Use this for any multi-task consolidation question, and for single-figure objective questions such as goodwill, NCI or group reserves.

  1. Write the five headings: structure, net assets, goodwill, NCI, reserves.
  2. Fill in the net assets table with three columns: at acquisition, at reporting date, post-acquisition movement.
  3. For a single-figure question, do only the working that is asked for.
  4. Add assets and liabilities across, cross out the investment, insert goodwill.
  5. Finish with the balance check. A mismatch means one working has a slip.

Common mistakes in Consolidated Statement of Financial Position Basics

  • Leaving the investment in subsidiary in the group statement

    You copy the parent's statement and add the subsidiary on top.

    Fix: Cross out the investment as soon as you start. It is replaced by the subsidiary's net assets and goodwill.

  • Including the subsidiary's share capital in group equity

    You add all equity lines across, as you do for assets.

    Fix: Group share capital is the parent's only. The subsidiary's capital is cancelled in the goodwill working.

  • Using reporting-date net assets to calculate goodwill

    The reporting-date figures are the ones shown in the statement.

    Fix: Goodwill uses net assets at the acquisition date. The reporting-date figures are for NCI and post-acquisition profit.

  • Adding only the parent's percentage of the subsidiary's assets

    You think an 80% holding means 80% of the assets.

    Fix: Add 100% of assets and liabilities. NCI shows the outside owners' share in equity.

  • Taking all subsidiary profit into group reserves

    You forget profit earned before acquisition was already paid for in the purchase price.

    Fix: Include only the movement in reserves since acquisition, and only the parent's percentage of it.

  • Forgetting NCI in equity, so the statement does not balance

    NCI feels like a liability or is simply overlooked.

    Fix: NCI is part of equity. Always show share capital, group reserves and NCI as the three equity lines, then do the balance check.

Worked examples

Example 1

P acquired 100% of S for $60,000 when S's retained earnings were $25,000. Today: P has investment in S $60,000, other non-current assets $140,000, current assets $80,000, share capital $100,000, retained earnings $120,000, liabilities $60,000. S has non-current assets $50,000, current assets $30,000, share capital $20,000, retained earnings $40,000, liabilities $20,000. Prepare the consolidated statement of financial position.

Show the solution
  1. Net assets of S at acquisition = 20,000 + 25,000 = $45,000.
  2. Goodwill = 60,000 − 45,000 = $15,000. There is no NCI because P owns 100%.
  3. Post-acquisition profit = 40,000 − 25,000 = $15,000. Group share is 100%.
  4. Consolidated retained earnings = 120,000 + 15,000 = $135,000.
  5. Non-current assets = 140,000 + 50,000 + 15,000 goodwill = $205,000. The investment is excluded.
  6. Current assets = 80,000 + 30,000 = $110,000. Total assets = $315,000.
  7. Equity = share capital 100,000 + retained earnings 135,000 = $235,000. Liabilities = 60,000 + 20,000 = $80,000. Total = $315,000, so it balances.

Answer: Total assets $315,000 (goodwill $15,000, non-current assets $205,000 in total, current assets $110,000). Equity $235,000 and liabilities $80,000.

Example 2

P acquired 80% of S for $90,000 when S's share capital was $40,000 and retained earnings $30,000. NCI is measured at its proportionate share of net assets. Today: P has investment in S $90,000, other non-current assets $210,000, current assets $100,000, share capital $150,000, retained earnings $170,000, liabilities $80,000. S has non-current assets $100,000, current assets $40,000, share capital $40,000, retained earnings $50,000, liabilities $50,000. Prepare the consolidated statement of financial position.

Show the solution
  1. Net assets of S at acquisition = 40,000 + 30,000 = $70,000.
  2. NCI at acquisition = 20% × 70,000 = $14,000.
  3. Goodwill = 90,000 + 14,000 − 70,000 = $34,000.
  4. Post-acquisition profit = 50,000 − 30,000 = $20,000. Group share = 80% × 20,000 = $16,000.
  5. Consolidated retained earnings = 170,000 + 16,000 = $186,000.
  6. Net assets of S now = 40,000 + 50,000 = $90,000. NCI = 20% × 90,000 = $18,000.
  7. Non-current assets = 210,000 + 100,000 + 34,000 = $344,000. Current assets = 100,000 + 40,000 = $140,000. Total assets = $484,000.
  8. Equity = 150,000 + 186,000 + 18,000 NCI = $354,000. Liabilities = 80,000 + 50,000 = $130,000. Total = $484,000, so it balances.

Answer: Goodwill $34,000; consolidated retained earnings $186,000; NCI $18,000; total assets $484,000; total equity $354,000; liabilities $130,000.

Exam tips

  • In objective questions, read exactly which figure is asked for: goodwill, NCI, group reserves or total assets. Do only that working.
  • Number-entry questions need the exact figure. Check whether the question uses proportionate NCI or fair value NCI before calculating goodwill.
  • In the 15-mark consolidation question, show every working clearly. Marks are given for method even if a later figure is wrong.
  • Write the acquisition-date and reporting-date net assets side by side so you do not mix them up.
  • Finish with the balance check on the statement. It takes seconds and catches most errors.

Practice questions from Subsidiaries

Consolidated Statement of Financial Position Basics in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Consolidated Statement of Financial Position Basics: frequently asked questions

Why do we add 100% of the subsidiary's assets if the parent owns less than 100%?

The parent controls all of the subsidiary's assets and liabilities, not just its share. So the group statement includes all of them. The outside shareholders' claim is shown separately as non-controlling interest in equity.

Why is the subsidiary's share capital not shown in the group statement?

It is cancelled against the parent's investment in the goodwill working. Group equity shows only the parent's share capital, group reserves and NCI. Showing the subsidiary's capital as well would double count the same ownership.

Which net assets figure do I use for goodwill?

Use net assets at the acquisition date: share capital plus reserves on that date, plus any fair value adjustments. Reporting-date net assets are used only to find NCI and post-acquisition profit.

What is the order of workings for a consolidation question?

Start with the group structure, then net assets at acquisition and at the reporting date, then goodwill, NCI and consolidated reserves. Build the statement last. This order is easy to follow and shows method to the marker.