What comprises the assets displayed in a consolidated statement of financial position (SFP)?

The assets displayed in a consolidated statement of financial position (SFP) consist of the parent's assets along with 100% of the subsidiary's assets, adjusted for any intra-group transactions. This approach reflects the full economic resources controlled by the group as a whole, rather than just the parent's individual assets.

When consolidating financial statements, the assets of the subsidiary must be included in their entirety because the parent company effectively controls these assets as part of the consolidated group. However, it's important to avoid double counting any intra-group transactions; therefore, adjustments are made to eliminate any intra-group profits or balances, ensuring that only the net assets pertaining to the external parties are reflected in the consolidated financial statements.

This method provides a true and fair view of the financial position of the group, indicating the total assets available to both the parent and its subsidiaries, while ensuring that the duplicates from intra-group transactions are removed, thus maintaining the integrity of the financial reporting.