What is the treatment of liabilities in a consolidated SFP?

In a consolidated Statement of Financial Position (SFP), the treatment of liabilities involves recognizing the liabilities of both the parent and its subsidiaries. The correct practice is to include the parent's liabilities along with 100% of the subsidiary's liabilities, with adjustments made for any intra-group items.

This method ensures that the consolidated financial statements accurately reflect the total financial position and obligations of the entire group as if it were a single entity. When preparing the consolidated SFP, it's important to eliminate any intra-group balances and transactions, such as loans or obligations between the parent and subsidiary, to avoid double-counting. This approach provides a clearer picture of the group's financial health and obligations to external parties.

As a result, the inclusion of all liabilities, while excluding the intra-group items, forms the foundation for a comprehensive view of the group's total liabilities. This treatment aligns with the principles of consolidation as outlined in accounting standards, ensuring transparency and a true representation of the financial position.