2.

4 Example: Other comprehensive income

BRODRICK GROUP
s . p k s . p k
b o ok
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
b o ok
re e
Profit for the year
re e 320
F Other comprehensive income:
Gain on property revaluation
F 200
Total comprehensive income for the year 520
Total comprehensive income attributable to:
Owners of the parent (316 + (200 × 80%)) 476
Non-controlling interest (4 + (200 × 20%) 44
520

2.5 Full worked example

On 1 July 20X8 Crystal acquired 60,000 of the 100,000 shares in Pebble, its only subsidiary. The draft
statements of profit or loss and other comprehensive income of both companies at 31 December 20X8 are
shown below:
Crystal Pebble

s . p k $'000 $'000
s . p k
Revenue
Cost of sales o ok 43,000
(28,000)
26,000
o ok
(18,000)

re eb
Gross profit 15,000
r e eb 8,000
F Other income – dividend received from Pebble 2,000 F –
Distribution costs (2,000) (800)
Administrative expenses (4,000) (2,200)
Finance costs (500) (300)
Profit before tax 10,500 4,700
Income tax expense (1,400) (900)
Profit for the year 9,100 3,800
Other comprehensive income:
Gain on property revaluation (Note (i)) – 2,000
Investment in equity instrument 200 –
Total comprehensive income for the year 9,300 5,800

Additional information:
(i)
p k
At the date of acquisition the fair values of Pebble's assets were equal to their carrying amounts
s . s . p k
ook ok
with the exception of a building which had a fair value $1m in excess of its carrying amount. At the

b b o
date of acquisition the building had a remaining useful life of 20 years. Building depreciation is

F ree Fre
e
charged to administrative expenses. The building was revalued again at 31 December 20X8 and its
fair value had increased by an additional $1m.
(ii) Sales from Crystal to Pebble were $6m during the post-acquisition period. All of these goods are
still held in inventory by Pebble. Crystal marks up all sales by 20%.
(iii) Despite the property revaluation, Crystal has concluded that goodwill in Pebble has been impaired
by $500,000.
(iv) It is Crystal's policy to value the non-controlling interest at full (fair) value.
(v) Income and expenses can be assumed to have arisen evenly throughout the year.
Prepare the consolidated statement of profit or loss and other comprehensive income for the year ended
31 December 20X8.

s . pk s .p k
b ook b ook
e e
162 Fre F re
9: The consolidated statement of profit or loss and other comprehensive income  F7 Financial Reporting
 Solution

s . p k
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
s . p k
ok ok $'000

ebo
Revenue (43,000 + (26,000  6/12) – 6,000 (W1))
ebo 50,000

Fre
Cost of sales (28,000 + (18,000  6/12) – 6,000 + 1,000 (W1))
Gross profit
Fre (32,000)
18,000
Distribution costs (2,000 + (800  6/12)) (2,400)
Administrative expenses (4,000 + (2,200  6/12) + 25 (W2) + 500 impairment) (5,625)
Finance costs (500 + (300  6/12)) (650)
Profit before tax 9,325
Income tax expense (1,400 + (900  6/12)) (1,850)
Profit for the year 7,475
Other comprehensive income:
Gain on property revaluation(post-acquisition) 1,000
Investment in equity instrument 200
Total comprehensive income for the year 8,675
Profit attributable to:
Owners of the parent 6,925
. p k
Non-controlling interest (W3)
s s . p k 550

o o k o ok 7,475
e b
Total comprehensive income attributable to:
eb
Fre Owners of the parent
Non-controlling interest (550 + (1,000  40%)
F r e 7,725
950
8,675
Workings
1 Unrealised profit
Remove intercompany trading:
DR Revenue $6m/CR Cost of sales $6m
Unrealised profit = 6,000  20/120 = 1,000 – add to cost of sales
2 Movement on fair value adjustment
The fair value adjustment of $1m will be depreciated over the remaining life of the building. The
amount to be charged at 31 December is:

s . p k
1,000,000 / 20  6/12 = 25,000 s . p k
b ook
40% of this (10,000) will be charged to the NCI. b o ok
Free Fre
e
3 Non-controlling interest – share of profit for the year
$'000
Share of post-acquisition profit (3,800  6/12  40%) 760
Movement on fair value adjustment (25  40%) (10)
Share of goodwill impairment (500  40%) (200)
550

s . pk s .p k
b ook b o ok
e e
Fre F re
F7 Financial Reporting  9: The consolidated statement of profit or loss and other comprehensive income 163
 3 Disposals
s . p k s . p k
FAST FORWARD

b o ok b o ok
The consolidated statement of profit or loss will include the results of subsidiaries disposed of up to the

e
date of disposal.
re re e
F F
When a subsidiary is disposed of, this must be accounted for in both the parent's separate financial
statements and the consolidated financial statements.

3.1 Parent's separate financial statements

This calculation is straightforward: the proceeds are compared with the carrying amount of the investment
sold. The investment will be held at cost or at fair value if held as an investment in equity instruments:
$
Fair value of consideration received X
Less carrying amount of investment disposed of (X)
Profit/(loss) on disposal X/(X)

3.2 Group financial statements

s . p k s . p k
(a)
o ok
Statement of profit or loss and other comprehensive income
ook
re eb (i) Consolidate results and non-controlling interest to the date of disposal.
r e eb
F (b)
(ii) Show the group profit or loss on disposal.
Statement of financial position
F
There will be no non-controlling interest and no consolidation as there is no subsidiary at the date
the statement of financial position is being prepared.

3.3 Group profit/loss on disposal

The group profit or loss on disposal is the difference between the sales proceeds and the group's
investment in the subsidiary. This investment consists of the group's share of the subsidiary's net assets
up to the date of disposal, plus any remaining goodwill in the subsidiary, minus any dividends received
from the subsidiary during the period.
The basic proforma is as follows:
$ $

s . p k
Fair value of consideration received
s . p k X

b ook
Less: share of consolidated carrying amount at date of disposal
b o ok
ree e
net assets X
F goodwill
less non-controlling interests
Fre X
(X)
(X)
Profit/(loss) on disposal X/(X)

s . pk s .p k
b ook b o ok
e e
164 Fre F re
9: The consolidated statement of profit or loss and other comprehensive income  F7 Financial Reporting