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ACCA Applied Knowledge · Financial Accounting · Associates

In the consolidated statement of profit or loss of a parent with an associate, how is the parent's share of the associate's profit after tax presented under the equity method?

The share of the associate's profit after tax is shown as a single line in the consolidated statement of profit or loss, separate from group revenue and costs. Equity accounting is a one-line consolidation, so the associate's revenue and expenses are not added line by line.

  1. AAs a single line item, after group operating profit and finance costs, and before group taxCorrect
  2. BAdded line by line to group revenue and expenses
  3. CIncluded in group revenue only
  4. DShown as a deduction from group retained earnings

Explanation

Equity accounting is a one-line consolidation: the share of the associate's profit after tax appears as one line, as 'share of profit of associate', and is not combined line by line with group revenue or costs. It is presented after finance costs and before group profit before tax.

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