Consolidated financial statements

Consolidated financial statements combine a parent company and its subsidiaries into one set of accounts, eliminating intragroup balances and showing outside shareholders as non-controlling interest.

ByHoang TruongUpdated July 11, 2026

FrameworkIFRS 10

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A parent pays €1,300,000 in cash for a 75% stake in a subsidiary whose identifiable net assets are worth €1,600,000. The non-controlling interest, valued at its proportionate 25% share, is €400,000. Goodwill on consolidation is the consideration paid plus that non-controlling interest, less the net assets acquired: €1,300,000 plus €400,000 minus €1,600,000, giving €100,000.

Where it fits

SubjectFinancial AccountingAdvancedTopicThe Financial StatementsAdvanced

The formula

LaTeX

G = P + NCI - FV_{na}

Variables

$G$: Goodwill on consolidation (€)
$P$: Consideration paid (€)
$N C I$: Fair value of non-controlling interest (€)
$F V_{na}$: Fair value of identifiable net assets acquired (€)

Gives the goodwill recognised on consolidation under the full-goodwill method at the date the parent gains control.