Page 11 - Topic 1 - 1.3. Business Combinations
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CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
The elimination of common items
• It is summarised as follows:
• The journal entry for the elimination of the investment and
the owners' equity at the date of acquisition will remain
unchanged from one year to the next.
• The share capital in the consolidated statement of financial
position is always only that of the parent.
• Profits made by the subsidiary after the date of acquisition
become part of the retained earnings of the group and are
shown as such in the consolidated financial statements.
• Profits made by the subsidiary before the date of
acquisition cannot form part of the retained earnings of
the group. The parent pays for such profits.
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