Group Accounts - Conso SOFP

• Consolidated Statement of Financial Position


  Presents the group as a single entity
• Intra-Group Transactions


  Eliminate the effects of transactions between group members
• Intercompany Balances


  • Cancelled against each other on consolidation
  • Check that current accounts agree before cancelling as they may not agree if goods or cash are in transit at the year end
  • Adjust cash/goods in transit in receiving books
  • After adjustments, cancel the intra-group balances
• Unrealised intra-group profit


  • Arises from intra-group trading when goods still held in inventory of buying company
  • Arises from intra-group transfers of non-current assets
  • Must be eliminated to prevent overstatement of group profits
  • Remove this profit by creating a Provision for Unrealised Profit (PURP)
  • Inventories in the consolidated statement of financial position should be reduced by the full amount of the unrealised profit irrespective of whether the parent or a subsidiary is the selling company
  • Non-controlling interest is only affected when the subsidiary is the seller
  • If a subsidiary sold the goods to another subsidiary, rather than to the parent, the adjustment should be the same
• Non-current asset transfers


  • If the asset is transferred at a price different from its carrying amount immediately before the transfer, the selling company will have recorded a profit or loss on sale which is unrealised and must be eliminated
  • The purchasing company will have recorded the asset at the amount paid to acquire it and will use that amount as the basis for calculating depreciation
  • The group accounts should reflect the non-current asset as if the transfer had not been made
  • The consolidated statement of financial position should show non-current assets at their cost to the group, and any depreciation charged should be based on that cost
• The objective of group accounts is to present the group as a single entity
• UK GAAP