Question

Please explain the steps of consolidation in order to complete consolidated FS.
You may add examples with or without figures.

Answer 1

As per IFRS 3 Business during consolidation every asset and liabilties must be added except intra group items.

First step is to find the post acquisition profit of subsidary company. Need to find the period of acquisition whether its 12 months or less thyan 12 months.  

Second step is to find goodwill. It is calculated as follows

Purchase consideration XXX

Fair value of non controling interest XXX

Less: Net asset of subsidiary at acquisition (XXX)

Goodwill at acquisiton XXX

Impairement (XXX)

Goodwill at reporting period XXX.

Note: if goodwil calculated is negative, then it is considered as bargain and treated as income.

Third step is to find closing balance of NCI. Share of subsidiaries post acquisition profit is added to fair value of NCI at acquisition.