Page 350 - F1 Integrated Workbook STUDENT 2018

Chapter 20

Consolidated Statement of profit or

loss adjustments

Adjustments will be necessary to the parent and subsidiary's own accounts to reflect
that the group is one economic unit.

The consolidated figures will be calculated as:

Parent + subsidiary +/– adjustments

Consolidation adjustments should be dealt with as follows:

2.1 Impairments
Impairments of goodwill relating to the current year will be charged as
an expense in the CSP&L. The question will give specific guidance,
however impairments are usually an addition to admin costs or cost of
sales.
2.2 Fair value adjustments

Fair value adjustments may result in additional depreciation charges.
The additional charge for the current year is charged as an expense,
usually to cost of sales in the CSP&L.

2.3 Unrealised profit

An adjustment for PURP will result in a reduction in the closing
inventory value, hence an increase in the cost of sales figure for the
CSP&L. This will ultimately reduce profits.

340