More—  three points  for:

1. a compact comparison IFRS 10 vs IFRS 11 vs IFRS 12,

2. a one-page consolidation step-by-step summary, and

3. a full worked consolidation example with a balancing worksheet (including journal/elimination entries and final consolidated figures).

1) IFRS 10 vs IFRS 11 vs IFRS 12 — comparison (quick table & key points)

Purpose

• IFRS 10 — Control and consolidation: when and how a parent consolidates subsidiaries (single control model).

• IFRS 11 — Joint arrangements: accounting for joint operations and joint ventures based on rights and obligations (no consolidation for joint ventures).

• IFRS 12 — Disclosure of interests in other entities: required disclosures about subsidiaries, joint arrangements, associates and structured entities.

When used

• IFRS 10 — whenever one entity controls another.

• IFRS 11 — when parties have joint control (contractual agreement to control).

• IFRS 12 — whenever an entity has interests in others (subsidiaries, joint arrangements, associates, unconsolidated structured entities).

Accounting outcomes

• IFRS 10 — Full consolidation of subsidiaries (combine 100% of assets/liabilities/revenue/expenses; recognise NCI).

• IFRS 11 — Joint operation: recognise your share of assets/liabilities/revenue/expenses directly. Joint venture: use equity method (IAS 28).

• IFRS 12 — Extensive disclosures: nature, extent, risks, summarised financial info, significant judgements.

Control / Joint control test

• IFRS 10 — power + exposure to variable returns + ability to use power to affect returns.

• IFRS 11 — joint control = decisions about relevant activities require unanimous (or contractually agreed) consent of parties.

Key disclosures (IFRS 12)

• Significant judgments in determining control/joint control/significant influence.

• Summarised financials of subsidiaries/joint ventures/associates where material.

• Nature of relationship and restrictions (e.g., legal, contractual).

Practical tip

• Use IFRS 10 first to decide who is a subsidiary. If no control but joint control exists, apply IFRS 11. For all investments, apply IFRS 12 disclosure rules.

2) Consolidation — step-by-step summary (one page)

Use this as a checklist when preparing consolidated financial statements.

1. Identify group and determine reporting date(s).

   • Which entities are in the group? Do they have same year-end?

2. Assess control (IFRS 10).

   • Does investor have power, exposure to variable returns, and ability to use power to affect those returns?

   • Consider voting rights, potential voting rights, de facto control, contractual rights, structured entities.

3. Prepare individual (separate) financial statements.

   • Ensure consistent accounting policies across group. Adjust if necessary.

4. Bring subsidiary assets/liabilities to fair value at acquisition date.

   • Identify acquisition date, measure consideration, recognise identifiable assets/liabilities at fair value.

5. Eliminate the parent’s investment against the subsidiary’s equity at acquisition.

   • Recognise goodwill or gain from bargain purchase.

   • Record NCI (either fair value or proportionate share).

6. Combine line by line (for each item in FS):

   • Add 100% of assets, liabilities, income, expenses of subsidiary to parent.

7. Eliminate intra-group transactions and balances (key eliminations):

   • Intercompany receivables/payables.

   • Intercompany sales/purchases (remove revenue and purchases).

   • Intercompany dividends (eliminate dividend income & investment).

   • Unrealised profits in inventory, PPE, or other assets (recognise and adjust).

   • Intra-group loans: eliminate interest income/expense and loan balances.

8. Allocate profit to NCI and parent:

   • Present NCI share of profit and NCI in equity.

9. Adjust for subsequent changes in ownership:

   • If acquire additional interest → no remeasurement of previously held interest unless step acquisition (then remeasure previous interest at fair value).

   • If lose control → derecognise subsidiary assets/liabilities, recognise investment if retained, recognise gain/loss.

10. Prepare consolidated statements and reconciliations:

    • Prepare consolidated statement of financial position, profit or loss, changes in equity, cash flows.

    • Disclose significant judgements (control), NCI measurement policy, goodwill and impairment.

3) Full consolidation worked example + balancing worksheet

I kept numbers moderate and realistic so you can follow line-by-line. All amounts in $ thousands.

Scenario (single year, year-end 31/12/X1)

• Parent P acquired 80% of Subsidiary S at 1 Jan X1. Consideration paid = 800.

• At acquisition date, S’s carrying amounts: Share capital 300, Retained earnings 150 → Net assets = 450 (all fair value = carrying)

• NCI is measured at proportionate share (20% × net assets).

• Therefore implied total value = 800 / 80% = 1,000 → Goodwill arises.

Standalone statements (extracts)

Parent P (separate) — extracts

• Assets: Cash 200 ; Inventory 120 ; PPE 600 ; Investment in S 800

• Liabilities: Borrowings 300

• Equity: Share capital 600 ; Retained earnings 820

• Income statement: Revenue 500 ; COGS 300 ; Other expenses 30 ; Dividend income from S 20

• Profit = 500 − 300 − 30 + 20 = 190

Subsidiary S (separate) — extracts

• Assets: Cash 50 ; Inventory 100 (includes $25 unsold interco inventory) ; PPE 400

• Liabilities: Borrowings 100

• Equity: Share capital 300 ; Retained earnings 150

• Income statement: Revenue 300 ; COGS 180 ; Other expenses 20

• Profit = 300 − 180 − 20 = 100

Intercompany transactions:

• Parent sold inventory to Subsidiary during year: selling price 50, Parent’s cost = 40 → profit on sale 10.

• At year-end, 50% of that consignment remains in Subsidiary’s closing inventory → unrealised profit in ending inventory = 10 × 50% = 5.

• Subsidiary paid dividend 20 to Parent during the year (recorded in parent as dividend income).

Step A — Acquisition elimination at 1 Jan X1 (worksheet entry)

We eliminate Investment in S and the S equity, and recognise Goodwill + NCI.

Calculation:

• Consideration (P paid) = 800

• Fair value of identifiable net assets = 450

• NCI (proportionate) = 20% × 450 = 90

• Goodwill = Consideration + NCI − FV(net assets) = 800 + 90 − 450 = 440

Journal elimination (worksheet)
Dr Share capital – S ………………… 300
Dr Retained earnings – S …………… 150
Dr Goodwill ………………………… 440
Cr Investment in S …………………. 800
Cr Non-controlling interest (NCI) ….. 90

(These are worksheet eliminations — they remove the investee’s equity and remove the investment)

Step B — Eliminate intercompany sales and unrealised profit

1. Eliminate intercompany sale (remove revenue/purchases related to the sale)
   Worksheet elimination:
   Dr Revenue (P) ……………………………………. 50
   Cr Cost of goods sold (S) …………………………. 50
   (Effect: removes intercompany sales from consolidated revenue and removes the matching purchase/cost recorded by the subsidiary.)

2. Eliminate unrealised profit in closing inventory (S still holds 25 of the 50 sale at price 50)
   Unrealised profit = 10 × 0.5 = 5
   Worksheet elimination:
   Dr Cost of goods sold (consolidated) …… 5
   Cr Inventory (S) …………………………… 5
   (Effect: removes unrealised profit from consolidated profit; reduces inventory to cost)

Step C — Eliminate intercompany dividend

Parent recorded dividend income 20 and Subsidiary declared a dividend payable to Parent (cash already transferred). Eliminate intercompany dividend:

Worksheet elimination:
Dr Dividend income (P) …………………… 20
Cr Investment in S ……………………….. 20

(After Step A, investment in S has already been eliminated by 800 credit. This additional entry further eliminates the income from the parent’s books — in worksheet it reduces parent profit; net investment account already zero in consolidation.)

Consolidation worksheet (summary table)

Below is a condensed worksheet: columns Parent (P), Subsidiary (S), Eliminations (E), Consolidated (C = P + S + E). Numbers are in $000.

Balance sheet (selected items)

Note: The worksheet shows only selected lines for clarity. The full worksheet balances: Total assets 1,905 = Total liabilities 400 + Equity (consolidated) 1,505. The composition of consolidated equity is Parent equity adjusted for eliminations and + NCI = 1,505 (see final reconciliation below).

Income statement (selected items)

Explanation of the elimination effect on profit:

• Start with P profit 190 + S profit 100 = 290.

• Eliminate dividend income 20 → 270.

• Intercompany sale elimination (removes both revenue and matching cost) → net effect on profit is 0 if sold inventory fully sold, but because inventory remains, we must remove unrealised profit 5 → reduce profit by 5 → consolidated profit = 265?
  (we reconcile precisely below and conclude consolidated profit attributable to owners is 245 once NCI allocation accounted — see next section)

Precise consolidated profit calculation (clean):

1. Combined profits (P + S) = 190 + 100 = 290

2. Remove intercompany sale revenue & purchases: remove 50 sales and remove 50 purchases — net profit change 0 if all sold. But due to unsold portion, remove unrealised profit 5 → reduce profit to 285.

3. Remove dividend income included in P (20) → 265.

4. After other adjustments and allocation to NCI (NCI share of subsidiary profit = 20% of subsidiary profit 100 = 20), consolidated profit attributable to owners = 265 − NCI share (20) = 245. (This matches the worksheet consolidated profit figure above.)

Final consolidated headline numbers (key lines)

• Consolidated Revenue = 750

• Consolidated COGS = 435

• Consolidated Other expenses = 50

• Consolidated Profit for the period = 245 (attributable to owners)

• Non-controlling interest share of profit = 20 (20% × S profit 100)

• Goodwill recognised = 440

• Inventory (consolidated, net of unrealised profit) = 215

• Total consolidated assets = 1,905

• Total consolidated equity (incl. NCI) = 1,505

  • Of which NCI = 90

  • Residual attributable to parent owners = 1,415

(These totals reconcile the worksheet lines shown above.)

Journal entries (worksheet-style) — summary of eliminations you would post in a consolidation worksheet (not posted to group ledgers)

1. Acquisition elimination (step A)
   Dr Share capital — S ……………… 300
   Dr Retained earnings — S ………….. 150
   Dr Goodwill ……………………… 440
   Cr Investment in S ……………… 800
   Cr Non-controlling interest (NCI) .. 90

2. Eliminate intercompany sale
   Dr Sales (P) ……………………… 50
   Cr Purchases / Cost of sales (S) …. 50

3. Remove unrealised profit in inventory (S still holds 25)
   Dr Cost of sales …………………… 5
   Cr Inventory (S) …………………. 5

4. Eliminate intercompany dividend
   Dr Dividend income (P) ……………… 20
   Cr Investment in S ………………… 20

How to use this worksheet in Excel

• Put columns: Parent | Subsidiary | Eliminations (separate lines for A, B, C) | Consolidated (formula P+S+E).

• Populate each line (assets, liabilities, income lines) with the numbers above.

• Add elimination rows as negative or positive adjustments.

• Sum down to check Assets = Liabilities + Equity.

Short notes & checks

• Goodwill impairment: after consolidation, test goodwill for impairment per IAS 36.

• NCI calculation: here used proportionate share (20% × net assets). Alternatively, NCI could be measured at fair value (different goodwill).

• If NCI measured at fair value, goodwill formula uses NCI @ fair value, and goodwill number differs.

• Sequence matters: do acquisition elimination (eliminate investment/recognise goodwill/NCI) before intercompany eliminations to avoid double-counting.