Consolidated Income Statements

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Is any body else stuggling with this area?! I think there is a high possibilty of this occuring so any help would be greatly appreciated.

Thanks
gem x

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Consolidated Income Statements

    Dont get too worried about having to do a consolidated income statement - these are actually much easier than doing a consolidated balance sheet

    The most important thing is to show your workings. I have been setting this out in a table as below:

    Co A Co B Adj Consolidated

    Revenue X X (X) X
    Cost of sales (X) (X) X X
    Other expenses (X) (X) X
    Dividends rec X (X) X

    So basically columns 1 and 2 are taken straight from the information you have been given - so just write it in.

    In column 3 is any adjustments. The likely adjustments are :
    1) That the two companies have traded with each other. To deal with this you need to remove the proceeds (not cost) from revenue and add back into COS.
    2) The other likelihood is that the parent will have received dividends from the sub - this has to be removed completely from the consolidated statement.

    Once you have made the adjustments and totalled up the last column, you can now simply put the figures into the income statement

    I know tables dont come out well on here so if oyu need any furhter help just ask
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Consolidated Income Statements

    Thank you that has helped!

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