Strategic Business Reporting (International) · Group accounting including statements of cash flows

Consolidated Statement of Profit or Loss and OCI for ACCA SBR

Updated 11 October 2026 · Fact-checked

A consolidated statement of profit or loss and OCI adds the parent's results to the subsidiary's, line by line, from the acquisition date. You remove intragroup sales, purchases, unrealised profit and dividends. Then you split profit and total comprehensive income between the parent's owners and the non-controlling interest (NCI).

Understand Consolidated Statement of Profit or Loss and OCI

A group is presented as one economic entity. The consolidated statement of profit or loss shows what the group earned from outside parties. So you add the income and expenses of the parent and each subsidiary, then remove anything that happened inside the group.

A subsidiary is included only from the date control is gained (IFRS 10). If the parent buys 8 months into the year, you include only 4 months of the subsidiary's income and expenses. This is called time-apportionment. Pre-acquisition results never enter group profit.

Intragroup items must go. Sales from one group company to another are not group revenue, and the matching purchase is not group cost of sales. Remove both at the full amount. If some of the goods are still in inventory at the year end, the profit on them is unrealised. Add that unrealised profit to group cost of sales, which reduces the closing inventory value. Dividends paid by a subsidiary to the parent are also intragroup. Remove the parent's dividend income. The part paid to NCI is not shown in the statement of profit or loss at all. It is a movement in equity.

Finally, show who owns the result. The statement shows profit for the year and total comprehensive income, each split between owners of the parent and NCI. NCI takes its percentage of the subsidiary's adjusted profit and OCI, including fair value adjustment effects such as extra depreciation and any goodwill impairment if you use the full goodwill method. Unrealised profit is charged to the seller's profit, so it is shared with NCI only if the subsidiary is the seller.

Key rules to remember

Group line item: Parent + Subsidiary (time-apportioned from acquisition) − intragroup items ± consolidation adjustments; Apply to revenue, cost of sales and every other expense line.
Intragroup trading: Deduct intragroup sales from revenue AND from cost of sales (same amount); This has no effect on profit. Only unrealised profit changes profit.
Unrealised profit in closing inventory: URP = intragroup goods still held × profit margin (margin on sales) or × mark-up ÷ (100 + mark-up); Add URP to cost of sales. Check whether the question gives margin or mark-up.
Fair value depreciation: Extra depreciation = (fair value − carrying amount) ÷ remaining useful life, for the time held; Charge it to the subsidiary's results. NCI shares it.
Profit attributable to NCI: NCI % × (subsidiary profit after tax, adjusted for fair value depreciation, URP if subsidiary sold, and time-apportioned) − (NCI % of goodwill impairment under full goodwill); Use the same approach for total comprehensive income by including the subsidiary's OCI.
Profit attributable to owners: Group profit for the year − NCI share; Owners' share is the balancing figure.
Intragroup dividend: Remove parent's dividend income from the subsidiary = parent % × dividend paid; The NCI part of the dividend never appears in the parent's profit or loss, so there is nothing to remove. It is shown in the statement of changes in equity as a distribution to NCI.

How to solve Consolidated Statement of Profit or Loss and OCI questions

Use the same order every time. It keeps adjustments from being missed and gives you a clear working for NCI.

1Read the question for acquisition date, percentage held, goodwill method, fair value adjustments and intragroup transactions. Work out the fraction of the year the subsidiary is owned.
2Time-apportion the subsidiary's revenue, expenses and OCI from the acquisition date. Ignore the pre-acquisition period.
3Add the parent and subsidiary line by line. Then remove intragroup sales and purchases from revenue and cost of sales.
4Calculate unrealised profit on goods still in inventory at the year end. Add it to cost of sales. Note who sold the goods.
5Add extra depreciation from fair value adjustments, and any goodwill impairment, to the relevant expense lines.
6Remove intragroup dividend income and any other intragroup interest, rent or management charges. Check each carefully for matching income and expense.
7Prepare the NCI working: NCI % × the subsidiary's adjusted profit and OCI, with goodwill impairment shared if the full goodwill method is used. Compute profit and total comprehensive income separately.
8Present profit and total comprehensive income, each split between owners of the parent and NCI. Check that the two parts add to the total.

Quickest way: One-page working layout

When to use it: Use this when time is short and the question has several adjustments. Build a columns working instead of writing narrative.

Draw columns: Parent, Subsidiary (time-apportioned), Adjustments, Group.
Fill in the adjustments column first for each line: intragroup sales and purchases, URP, extra depreciation, impairment, dividend.
Add across and complete the group statement.
Write a small NCI working under it: subsidiary profit after tax, less adjustments, times NCI %.
Cross-check: owners' share plus NCI share must equal the group total.

Common mistakes in Consolidated Statement of Profit or Loss and OCI

Including the subsidiary's full-year results in a mid-year acquisition.
Students copy the subsidiary's figures straight from the question without checking the acquisition date.
Fix: Always write the fraction of the year owned first. Apply it to every subsidiary line, including OCI.
Removing intragroup sales from revenue but not the same amount from cost of sales.
Students think of the adjustment as a profit adjustment rather than eliminating both sides of a transaction.
Fix: Remove the full intragroup amount from both lines. Add unrealised profit separately to cost of sales.
Applying URP using mark-up as if it were margin.
The wording 'profit mark-up of 25%' is confused with 'margin of 25%'.
Fix: Mark-up of 25% means profit is 25/125 of the selling price (20%). Margin of 25% means 25% of the selling price.
Leaving the parent's dividend income from the subsidiary in group profit.
It looks like ordinary investment income in the parent's column.
Fix: Eliminate it. The subsidiary's profit is already included in the group figures, so counting the dividend would double count.
Calculating NCI share on the subsidiary's unadjusted profit.
Students skip fair value depreciation and the goodwill impairment.
Fix: Adjust the subsidiary's profit for extra depreciation (and URP if the subsidiary sold the goods) before applying NCI %. Share goodwill impairment only under the full goodwill method.
Forgetting OCI when asked for total comprehensive income.
Students stop at profit for the year.
Fix: Add each entity's OCI, time-apportioned for the subsidiary, then split total comprehensive income between owners and NCI.

Worked examples

Example 1

Pam owns 80% of Sam, acquired several years ago. For the year, Pam's revenue is $900,000 and Sam's is $400,000. During the year Pam sold goods to Sam for $100,000 at a margin of 20% on selling price. Half of these goods remain in Sam's inventory at year end. Pam's cost of sales is $500,000, Sam's is $220,000. Calculate group revenue, group cost of sales and the unrealised profit.

Show the solution

Group revenue = 900,000 + 400,000 − 100,000 = $1,200,000.
Unrealised profit = 100,000 × 50% still held × 20% margin = $10,000.
Group cost of sales = 500,000 + 220,000 − 100,000 + 10,000 = $630,000.
Group gross profit = 1,200,000 − 630,000 = $570,000. Check: 900,000 − 500,000 + 400,000 − 220,000 = 580,000 before URP. Less 10,000 URP gives 570,000.

Answer: Group revenue $1,200,000. Group cost of sales $630,000. Unrealised profit $10,000, and group gross profit is $570,000.

Example 2

Hat acquired 75% of Sock on 1 May 20X5. Year end is 31 December 20X5. Sock's profit after tax for the year is $240,000, accruing evenly, and its OCI is $24,000 gain. Sock paid a dividend of $40,000 on 30 November 20X5. On acquisition, Sock's plant had a fair value $60,000 above carrying amount, with 5 years remaining life. Goodwill is not impaired. Calculate the NCI share of profit for the year and of total comprehensive income.

Show the solution

Time-apportion: Hat owns Sock from 1 May to 31 December = 8 months. Fraction = 8/12.
Sock's profit after acquisition = 240,000 × 8/12 = $160,000.
Extra depreciation = 60,000 ÷ 5 × 8/12 = $8,000.
Adjusted profit = 160,000 − 8,000 = $152,000.
NCI share of profit = 25% × 152,000 = $38,000.
Sock's OCI post-acquisition = 24,000 × 8/12 = $16,000. Adjusted total comprehensive income = 152,000 + 16,000 = $168,000.
NCI share of total comprehensive income = 25% × 168,000 = $42,000.
The dividend does not affect NCI share of profit. It reduces NCI in the statement of financial position and changes in equity.

Answer: NCI share of profit is $38,000. NCI share of total comprehensive income is $42,000.

Exam tips

Write the fraction of the year owned at the top of your answer. Clear workings help you earn credit for correct method even if a later number is wrong.
Show a separate NCI working. Marks are given for the method, so label each adjustment.
Read whether the question gives mark-up or margin before computing unrealised profit. Underline it in the question.
When the scenario asks for comment, explain the effect on group profit, such as the effect of intragroup trading on revenue, to earn professional skills marks.
Check which entity sold the goods. If the subsidiary sold, URP reduces the subsidiary's profit and NCI shares in it.

Practice questions from Group accounting including statements of cash flows

Consolidated Statement of Profit or Loss and OCI 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 Profit or Loss and OCI: frequently asked questions

How do I calculate NCI share of profit in SBR?

Take the subsidiary's profit after tax for the period owned. Adjust it for extra depreciation on fair value uplifts and for unrealised profit if the subsidiary was the seller. Multiply by the NCI percentage. Under the full goodwill method, also deduct NCI's share of any goodwill impairment.

How do I treat a mid-year acquisition in the consolidated statement of profit or loss?

Include the subsidiary's income and expenses only from the acquisition date. Time-apportion its full-year figures and its OCI. Profit before that date is pre-acquisition and is excluded from group results.

Why are intragroup dividends eliminated on consolidation?

The subsidiary's profit is already included line by line in the group statement. Counting the parent's dividend income as well would double count the same profit. Remove the parent's dividend income. The dividend to NCI is a distribution of equity, not an expense.

Does intragroup trading change group profit?

Only through unrealised profit. Removing the intragroup sale and purchase at equal amounts leaves profit unchanged. If goods remain in inventory at year end, you remove the unrealised profit by adding it to cost of sales.