Consolidated Income Statement

When talking about the group financial statements the consolidated financial statements include Consolidated Income Statement that a parent must prepare among other sets of consolidated financial statements. Consolidated Income statement that is also called consolidated statement of comprehensive income or CSOCI. 

Format of Consolidated Income Statement

Both parent's and subsidiary's income statement items are added together on the face of the consolidated income statement as follows.

Important Terms

The consolidated income statement questions will include some important and new terms unlike a simple income statement. 

Intra-group transactions

When a parent or subsidiary buy or sell goods or exchange assets within the group, such transactions are called intra-group transactions. Since the group is considered as a single reporting entity that is why the intra-group transactions occurring at profit are required to be adjusted for any unrealized profits.

Excess Depreciation and Amortization

When a non current tangible or intangible asset is transferred from parent or subsidiary at a price above the cost of the asset gives rise to unrealized profit to the seller. This Unrealized profit needs to be adjusted on the face of the income statement. 

Incomes from Subsidiaries

Since the parent controls the subsidiary's shares and hence receives dividends from the subsidiary that is separately shown in parent's other income section. This part is not included in the consolidated income statement because the Parent and subsidiary both are a single entity.

Impairment of Goodwill

As the parent acquires control over subsidiary normally goodwill arises. The Income statement must incorporate any impairment on goodwill at the end of the accounting period.

Distribution of profits to NCI and Group

The profits of subsidiaries are distributed to NCI at the end of the consolidated income statement as per the percentage of  subsidiary's shares owned by NCI. For this reason the subsidiary's profits are adjusted for effects of intragroup transactions and then the share of NCI is given out of this adjusted profit. The remaining amount of consolidated profits belongs to the Parent company or group owners.

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