Chapters 2 and 3 govern consolidated financial statements. Assets and liabilities of consolidated undertakings are incorporated in full; shares in capital are set off against the proportion of capital and reserves. Except for own shares held by the parent or another consolidated undertaking, set-off uses book values at first consolidation, though Member States may permit set-off at acquisition or at subsidiary date. Remaining differences are shown as goodwill, with methods and material changes disclosed; offset analyses are required where authorised. Negative goodwill may be transferred to the consolidated profit and loss account. Non-controlling interests and their share of profit or loss are shown separately; income and expenditure are included in full.

Consolidated statements eliminate intra-group debts, claims, income, expenditure and unrealised profits and use the parent’s balance sheet date unless another date is permitted with disclosure and interim statements where a subsidiary’s date differs by more than three months. Significant changes in composition require comparability information, including adjusted comparatives. Assets and liabilities are measured uniformly under Chapter 2; the consolidating undertaking normally applies the same measurement bases as its annual accounts unless a Member State permits otherwise with disclosure. Differing bases are re-measured except in exceptional disclosed cases. Deferred tax is recognised on consolidation where a tax charge is probable; tax-only value adjustments are eliminated before consolidation.