A consolidation worksheet sets each group company’s trial balance side by side, adds them together line by line, and then posts consolidation adjustments in their own columns to reach the group figures. The adjustments put into practice what FRS 102 Section 9 requires: cancel the parent’s investment against the subsidiary’s equity at acquisition, recognise goodwill and fair value adjustments, eliminate intragroup balances, trading, dividends and unrealised profit, and carve out the non controlling interest.

What is a consolidation worksheet for?

Group accounts are not kept in a separate ledger. They are built each year from the individual companies’ records. Paragraph 9.13 of FRS 102 describes the process: combine the financial statements of the parent and its subsidiaries line by line, eliminate the carrying amount of the parent’s investment in each subsidiary against the parent’s portion of each subsidiary’s equity, and measure and present the non controlling interest separately in profit or loss and in net assets.

The worksheet is the working paper that does this and shows how each group figure was reached. Because the individual books never contain the consolidation entries, every adjustment that still has an effect (goodwill, fair value uplifts, cumulative amortisation, non controlling interest) has to be posted again on each year’s worksheet, with the prior year element charged to opening reserves. That is the single most important thing to understand about the worksheet. For the underlying rules on control and which entities are subsidiaries, see FRS 102 Section 9: consolidated and separate accounts.

What do you need before you start?

  • Trial balances at the same date. Paragraph 9.16 requires the same reporting date and period unless impracticable. If a subsidiary’s year end differs, use its last accounts if they end no more than three months before the parent’s date, adjusted for significant transactions in between, or interim accounts made up to the parent’s date.
  • Aligned accounting policies. Paragraph 9.17 requires uniform policies for like transactions. Where a subsidiary uses a different policy, list the adjustment needed to bring it into line.
  • The acquisition schedule for each subsidiary. This records the cost of the combination, the fair values of identifiable assets and liabilities at acquisition (paragraph 19.14), deferred tax on those adjustments (paragraphs 19.15A and 29.11), goodwill (paragraph 19.22), its useful life, and the share and reserves of the subsidiary at the acquisition date.
  • Agreed intragroup balances. Each company’s receivable from and payable to every other group company, reconciled, with cash and goods in transit identified.
  • A record of intragroup sales still in stock or fixed assets at the year end, and the margin earned by the selling company.
  • Ownership percentages for each subsidiary, and the dates of any changes.

How should the columns be laid out?

Most worksheets run down the full trial balance or the statutory format lines, with one column per company, an aggregate column, one column for each type of adjustment and a final group column. Keeping each adjustment type in its own column makes review far easier than netting everything into one. A common sign convention is debits positive and credits negative (shown in brackets), so each column sums to nil and any imbalance shows immediately.

Each adjustment should carry a reference back to a numbered journal with a short narrative and the supporting calculation. The worksheet then doubles as the audit trail for group audits.

Which adjustments go on the worksheet?

  1. Policy alignment and fair value adjustments. Bring each subsidiary onto group policies, then post the acquisition fair value uplifts and the related deferred tax. Paragraph 19.16 requires post acquisition depreciation to be based on those fair values, so post the extra depreciation since acquisition too.
  2. Cancellation of investment and goodwill. Eliminate the parent’s investment against its share of the subsidiary’s share capital and reserves at the acquisition date (paragraph 9.13(b)). The difference, after fair value adjustments, is goodwill under paragraph 19.22.
  3. Goodwill amortisation and impairment. Paragraph 19.23 requires goodwill to be amortised over its useful life, which cannot exceed 10 years where no reliable estimate can be made, and tested for impairment under Section 27. Post the cumulative charge each year: prior years against opening reserves, the current year through profit or loss. See goodwill useful life and amortisation.
  4. Non controlling interest. Paragraph 9.13(d) measures it as its share of identifiable net assets at the date of the combination plus its share of changes in equity since. Its share of profit is shown separately (paragraph 9.21), and paragraph 9.22 allocates total comprehensive income to it even if that leaves it in deficit.
  5. Intragroup balances and transactions. Paragraph 9.15 requires intragroup balances, income, expenses and dividends to be eliminated in full.
  6. Unrealised profit. Paragraph 9.15 also requires profits and losses on intragroup transactions that remain in assets such as stock or property, plant and equipment to be eliminated in full, with Section 29 applying to the timing differences that result.
  7. Intragroup dividends. Cancel dividend income in the parent against the dividend recorded in the subsidiary’s reserves, again under paragraph 9.15. See intra group dividends for the company law side.

What does a simple worksheet look like?

Illustration only. P bought 80% of S at the start of the year for £500,000. At that date S had share capital of £100,000 and reserves of £300,000, and fair values equalled book values. S made £100,000 profit in the year and paid no dividend. At the year end S owes P £60,000. Goodwill is amortised over 10 years. Deferred tax is ignored for simplicity.

Goodwill is £500,000 less 80% of £400,000, which is £180,000. The adjustments are:

  • A: Dr S share capital £100,000, Dr S reserves at acquisition £300,000, Dr goodwill £180,000, Cr investment £500,000, Cr non controlling interest £80,000.
  • B: Dr reserves £20,000, Cr non controlling interest £20,000 (20% of S’s £100,000 post acquisition profit).
  • C: Dr reserves (via group profit) £18,000, Cr goodwill £18,000 (one year’s amortisation).
  • D: Dr payable to P £60,000, Cr receivable from S £60,000.
Line P S Adjustments Group
Goodwill 0 0 180,000 A, (18,000) C 162,000
Investment in S 500,000 0 (500,000) A 0
Other net assets 1,200,000 560,000 1,760,000
Receivable from S 60,000 0 (60,000) D 0
Payable to P 0 (60,000) 60,000 D 0
Share capital (1,000,000) (100,000) 100,000 A (1,000,000)
Reserves (760,000) (400,000) 300,000 A, 20,000 B, 18,000 C (822,000)
Non controlling interest 0 0 (80,000) A, (20,000) B (100,000)

Two quick proofs confirm the result. Group reserves of £822,000 equal P’s £760,000 plus 80% of S’s £100,000 post acquisition profit, less £18,000 amortisation. The non controlling interest of £100,000 equals 20% of S’s year end net assets of £500,000. Next year, adjustments A and B are posted again in full, and C becomes £18,000 against opening reserves plus the new year’s charge.

How is the profit and loss side handled?

The same columns run through the profit and loss lines. Income and expenses are added together, then intragroup sales and purchases, management charges, interest and dividends are cancelled. Paragraph 9.18 includes a subsidiary’s income and expenses only from the acquisition date (unless merger accounting applies), so a subsidiary bought partway through the year needs its trial balance split at that date. The non controlling interest’s share of profit is then shown separately in the statement of comprehensive income, as paragraph 9.21 requires.

When eliminating unrealised profit, think about which company made the sale. If the parent sold to the subsidiary, the whole adjustment belongs to the parent’s shareholders. If a partly owned subsidiary made the sale, the adjustment reduces that subsidiary’s profit before the non controlling interest share is calculated.

What mistakes come up most often?

  • Not reconciling intragroup balances first. Unmatched balances force a plug figure into the worksheet. Agree them before the year end close and investigate differences.
  • Forgetting to repost prior year adjustments. Starting each year from the individual trial balances means cumulative goodwill amortisation, fair value depreciation and unrealised profit brought forward must be put back each time.
  • Using the subsidiary’s book values instead of acquisition fair values, and forgetting the deferred tax that paragraph 29.11 requires on fair value adjustments.
  • Eliminating only the margin on intragroup sales. Turnover and cost of sales both need the full intragroup sale removed, as well as the unrealised profit in stock.
  • Applying the wrong method to a group reconstruction. Where a reconstruction qualifies for merger accounting under paragraph 19.27, book values are carried forward and no goodwill arises. See merger accounting for group reconstructions.
  • Forgetting the parent’s own accounts. The worksheet produces the group figures; the parent still needs its individual balance sheet, and may be able to omit its own profit and loss account under section 408.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.