Corporate Financial Reporting · Consolidated Financial Statements and Separate Financial Statements

Consolidated Statement of Profit and Loss under Ind AS 110

Updated 11 October 2026 · Fact-checked

The consolidated statement of profit and loss combines like items of income and expense of the parent and its subsidiaries line by line, eliminates intragroup income, expenses and unrealised profit, and then splits the profit between the owners of the parent and the non-controlling interest. Solve it in that order.

Understand Consolidated Statement of Profit and Loss

A group is shown as a single economic entity. So the consolidated statement of profit and loss does not just add up two profit figures. It adds up each line, such as revenue, purchases and depreciation, and then removes anything that happened only inside the group.

Ind AS 110 (para B86) says consolidated statements combine like items of income and expenses of the parent and its subsidiaries. They also eliminate in full intragroup income, expenses and cash flows. Profits or losses on intragroup transactions that sit in assets, such as closing inventory or fixed assets, are eliminated in full. Ind AS 12 applies to the temporary differences that arise from these eliminations.

A subsidiary's income and expenses are included only from the date control is gained until control ceases (para B88). They are based on the fair values of assets recognised at acquisition. So if fair value of a depreciable asset is higher than its book value, the extra depreciation is charged in the consolidated statement.

Finally, profit and each component of other comprehensive income is attributed to the owners of the parent and to the non-controlling interest (para B94). Total comprehensive income is attributed too, even if the NCI ends up with a deficit. If the subsidiary has cumulative preference shares classified as equity and held by NCI, adjust for their dividend, declared or not, before computing the share (para B95).

Dividends paid by a subsidiary to the parent are intragroup. The parent shows dividend income in its own books, but it is eliminated on consolidation. Dividend paid to NCI is not income of the group; it only reduces NCI's balance.

Key rules to remember

Line-by-line aggregation: Consolidated item = Parent item + Σ Subsidiary items (from control date) ± consolidation adjustments; Ind AS 110 para B86(a). Combine like items such as revenue, cost of materials and depreciation.
Intragroup sales elimination: Deduct intragroup sales from Revenue and the same amount from Purchases / Cost of goods sold; Eliminate in full at the transfer price. This changes revenue and cost but not profit by itself.
Unrealised profit in closing inventory: Unrealised profit = Intragroup stock remaining × Profit % on transfer price (or ÷ markup on cost); Remove from profit and from closing inventory. If profit is on cost, use markup ÷ (100 + markup) of the transfer price.
Opening unrealised profit: Add back opening unrealised profit in the seller's profit for the year, to the extent the stock was sold outside the group during the year; Opening stock sold outside means the profit is now realised for the group. For an upstream sale, attribute the add-back to NCI in proportion to its holding.
Extra depreciation on fair value uplift: Extra depreciation = (Fair value − Book value) ÷ Remaining useful life; Para B88. Charge it in the consolidated statement and attribute to NCI according to its share.
Profit attributable to NCI: NCI share = (Subsidiary profit after tax ± adjustments − cumulative preference dividend on equity-classified preference shares held by NCI) × NCI ordinary % + NCI's preference dividend; Para B95 requires the profit to be adjusted for the cumulative preference dividend, whether or not declared, before the share is computed. So the ordinary NCI % applies only to profit after that dividend. NCI's total attribution (para B94) then includes its preference dividend as a consequence. Use adjusted profit, not reported profit.
Profit attributable to owners of the parent: Owners' share = Consolidated profit for the year − NCI share; Check: owners' share + NCI share must equal total consolidated profit.

How to solve Consolidated Statement of Profit and Loss questions

Use this order for every question. It keeps the eliminations and the attribution clean.

1Identify the date of control and the period for which the subsidiary's results are included. Time-apportion if control came mid-year.
2Adjust the subsidiary's profit first: extra depreciation on fair value uplift, unrealised profit on its sales to parent, and preference dividend where required.
3List intragroup items: sales and purchases, interest, rent, management fees, dividends. Note the amount of each and the stock still unsold at year end.
4Prepare the aggregation working with columns for Parent, Subsidiary, Adjustments and Consolidated. Add like items line by line.
5Eliminate intragroup revenue and cost, intragroup interest and rent on both sides, and group dividend income. Then remove unrealised profit in closing stock and add back opening unrealised profit.
6Compute consolidated profit for the year and then profit attributable to NCI using the subsidiary's adjusted profit.
7Compute profit attributable to owners as the balancing figure and cross-check. Show the working notes clearly.
8 Present the statement in the required format with the attribution at the bottom.
9 If asked, show other comprehensive income and total comprehensive income attributable the same way.

Quickest way: Adjusted-profit shortcut

When to use it: Use when the question asks only for consolidated profit, or profit attributable to owners and NCI, and not the full line-by-line statement.

Start with the parent's own profit, excluding dividend received from the subsidiary.
Add the subsidiary's profit for the period after control.
Subtract extra depreciation on fair value uplift and unrealised profit in closing stock, adding back opening unrealised profit.
The total is consolidated profit. Take NCI % of the subsidiary's adjusted profit for NCI's share.
Owners' share is total minus NCI share. If the full statement is required, still show the line items quickly for method marks.

Common mistakes in Consolidated Statement of Profit and Loss

Adding the parent's dividend income from the subsidiary to consolidated profit.
The parent's profit already includes the dividend, so students forget it is an intragroup flow.
Fix: Exclude it from consolidated income. Under B86(c), intragroup income is eliminated in full.
Eliminating only the unrealised profit and not the intragroup sales and purchases.
Students think the profit adjustment is the whole elimination.
Fix: Remove the full transfer value from both revenue and cost of purchases, then separately remove the unrealised profit from closing stock.
Computing NCI share on the subsidiary's reported profit.
Adjustments for fair value depreciation and unrealised profit on the subsidiary's sales get skipped.
Fix: Adjust the subsidiary's profit first. Upstream unrealised profit reduces the subsidiary's profit, and the NCI bears its percentage share of that reduction. Apply the NCI % to the adjusted profit.
Including the subsidiary's full-year results when control was gained mid-year.
Students use the full-year statement given in the question.
Fix: Include only post-control income and expenses (para B88). Pre-acquisition profit goes to the acquisition working, not the consolidated statement.
Ignoring cumulative preference dividend when preference shares are held by NCI.
Because the dividend has not been declared, it seems not to matter.
Fix: Para B95 requires the adjustment whether or not declared, for cumulative preference shares classified as equity.
Treating dividend paid to NCI as an expense of the group.
Students confuse distribution with an expense.
Fix: It is a distribution of equity. It reduces NCI's balance and never appears in the consolidated profit or loss.

Worked examples

Example 1

P Ltd holds 80% of S Ltd, acquired several years ago, so the full year is included. For the year, P Ltd's profit after tax is ₹6,00,000 including ₹40,000 dividend from S Ltd. S Ltd's profit after tax is ₹3,00,000. During the year P sold goods to S for ₹5,00,000 at a profit of 20% on selling price. S still holds goods worth ₹1,00,000 (at transfer price) at year end. There was no opening unrealised profit. Compute consolidated profit and the split between owners and NCI.

Show the solution

Remove the dividend from P's profit: ₹6,00,000 − ₹40,000 = ₹5,60,000.
Unrealised profit in closing stock: ₹1,00,000 × 20% = ₹20,000. P is the seller, so this is a downstream sale and the whole adjustment reduces P's share.
Consolidated profit = ₹5,60,000 + ₹3,00,000 − ₹20,000 = ₹8,40,000.
NCI share: S Ltd's profit ₹3,00,000 × 20% = ₹60,000. The unrealised profit is on P's sale, so no adjustment to NCI.
Owners' share = ₹8,40,000 − ₹60,000 = ₹7,80,000.
Check: ₹7,80,000 + ₹60,000 = ₹8,40,000.

Answer: Consolidated profit is ₹8,40,000, of which ₹7,80,000 is attributable to owners of P Ltd and ₹60,000 to NCI. In the revenue line, ₹5,00,000 of intragroup sales is also eliminated against purchases.

Example 2

A Ltd acquired 75% of B Ltd some years ago. For the year, A Ltd's revenue is ₹50,00,000 and B Ltd's revenue is ₹30,00,000. Cost of goods sold excluding adjustments is ₹30,00,000 for A and ₹18,00,000 for B. Other expenses are ₹5,00,000 for A and ₹4,00,000 for B (before depreciation adjustment). B sold goods to A for ₹6,00,000 at a profit of 25% on cost. A still holds one-fifth of these goods at year end. At the acquisition date, B's plant was ₹2,00,000 below fair value, with 5 years remaining life. Ignore tax and opening stock. Prepare the consolidated profit and the NCI share.

Show the solution

Intragroup sales: ₹6,00,000 is deducted from revenue and from cost of goods sold.
Consolidated revenue = ₹50,00,000 + ₹30,00,000 − ₹6,00,000 = ₹74,00,000.
Unrealised profit: stock held = ₹6,00,000 × 1/5 = ₹1,20,000. Profit is 25% on cost, so profit = ₹1,20,000 × 25 ÷ 125 = ₹24,000.
Consolidated cost of goods sold = ₹30,00,000 + ₹18,00,000 − ₹6,00,000 + ₹24,000 = ₹42,24,000.
Extra depreciation: ₹2,00,000 ÷ 5 = ₹40,000. Other expenses = ₹5,00,000 + ₹4,00,000 + ₹40,000 = ₹9,40,000.
Consolidated profit = ₹74,00,000 − ₹42,24,000 − ₹9,40,000 = ₹22,36,000.
B's reported profit = ₹30,00,000 − ₹18,00,000 − ₹4,00,000 = ₹8,00,000. Adjusted for upstream unrealised profit and extra depreciation: ₹8,00,000 − ₹24,000 − ₹40,000 = ₹7,36,000.
NCI share = ₹7,36,000 × 25% = ₹1,84,000.
Owners' share = ₹22,36,000 − ₹1,84,000 = ₹20,52,000.

Answer: Consolidated profit is ₹22,36,000. Profit attributable to NCI is ₹1,84,000 and to owners of A Ltd is ₹20,52,000.

Exam tips

Show a working note for every elimination. Marks are given for the method even if one figure goes wrong.
Check the direction of each intragroup sale. Upstream unrealised profit affects NCI's share; downstream does not.
Look for time-apportionment cues like acquisition in the middle of the year, and cumulative preference shares held outside the group.
Always end with a cross-check: owners' share plus NCI share equals consolidated profit.
In MCQs, the trap is usually dividend income or the markup versus margin on transfer price. Read the wording on profit basis first.

Practice questions from Consolidated Financial Statements and Separate Financial Statements

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

Is the consolidated statement of profit and loss a simple sum of parent and subsidiary profits?

No. You add like items line by line, then remove intragroup income and expenses and unrealised profit in assets. Only then do you compute the group profit. Ind AS 110 para B86 sets out this procedure.

How do you calculate non-controlling interest's share of profit?

Take the subsidiary's profit after fair value depreciation and any upstream unrealised profit adjustments. Where NCI holds cumulative preference shares classified as equity, para B95 requires you to adjust profit for their dividend, declared or not, before computing the share. Apply the ordinary NCI percentage to the profit left after that dividend. NCI's total attribution then also includes its preference dividend.

What happens to dividends paid by the subsidiary to the parent?

The dividend is an intragroup transaction. The parent's dividend income is eliminated against the subsidiary's distribution, so it does not appear in consolidated profit or loss.

Do I include the subsidiary's income from the date of acquisition only?

Yes. Income and expenses of the subsidiary are included from the date control is gained until control ceases, based on fair values at acquisition (para B88).