Editing Consolidated financial statement (section)

== Consolidated statement of financial position ==
While preparing a consolidated financial statement, there are two basic procedures that need to be followed: first, cancelling out all the items that are accounted as an asset in one company and a liability in another, and then adding together all uncancelled items. 

There are two main type of items that cancel each other out from the consolidated statement of financial position. 
* "Investment in [[subsidiary]] companies" which is treated as an asset in the parent company will be cancelled out by "share capital" account in subsidiary's statement. Only the parent company's "share capital" account will be included in the consolidated statement. 
* If trading between different companies in one group happen, then the payables of one company will be cancelled by the receivables of another company. 

=== Goodwill arising on consolidation ===

[[Goodwill (accounting)|Goodwill]] is treated as an intangible asset in the consolidated statement of financial position. It arises in cases where the cost of purchase of shares is not equal to their par value. For example, if a company buys shares of another company worth $40,000 for $60,000, there is a goodwill worth $20,000. 

Proforma for calculating goodwill is as follows:<ref>{{Cite book|title=Fia foundations of financial accounting ffa (acca f3).|author=BPP Learning Media|date=2016|publisher=BPP Learning Media|isbn=9781472745903|location=[Place of publication not identified]|oclc=951710877}}</ref>

'''''Goodwill'''''

Fair value of consideration transferred

Plus fair value of non-controlled interest at acquisition

Less ordinary share capital of subsidiary company

Less share premium of subsidiary company

Less retained earnings of subsidiary company at acquisition date

Less fair value adjustments at acquisition date

=== Non-controlled interest ===
If the parent company does not buy 100% of shares of the subsidiary company, there is a proportion of the net assets owned by the external company. This proportion that is related to outside investors is called the non-controlling interest (NCI).

The proforma for calculating the NCI is as follows: 

'''''Non-controlling interest'''''

Fair value of NCI at acquisition date

Plus NCI's share of post-acquisition retained earnings or other reserves