CONSOLIDATED STATEMENT

FORMULAS

INTERCOMPANY TRANSACTIONS
1.) Consolidated Sales
Parent
Sabsidiary
Total
Less: Intercompany sales (Downstream sales + Upstream sales)
Consolidated Sales

xxx
xxx
xxx
xxx
xxx

2.) Consolidated cost of goods sold

First Year
Parent
Subsidiary
Total
Intercompany sales (Downstream sales + Upstream sales)
Amortization of excess (inventory), if any
Unrealized gross profit in ending inventory
Cosolidated cost of goods sold

xxx
xxx
xxx
(xxx)
xxx
xxx
xxx

Second Year
Parent
Subsidiary
Total
Intercompany sales (Downstream sales + Upstream sales)
Amortization of excess (inventory), if any
Realized gross profit in beginning inventory
Unrealized gross profit in ending inventory
Cosolidated cost of goods sold

xxx
xxx
xxx
(xxx)
xxx
(xxx)
xxx
xxx

3.) Consolidated Inventory

Parent
Subsidiary
Add: Excess of inventory FMV over BV during acquisition that are remained unsold, if any
Total
Less: Unrealized gross profit in ending inventory (Downstream + Upstream)
Consolidated inventory

xxx
xxx
xxx

xxx
xxx
xxx
xxx

4.) Consolidated net income

First Year
Parent net income from own operation, exclusive of dividends income received from Subsidiary
Impairment loss, if any
Unrealized profit in ending inventory (Downstream sale)
Parent adjusted net income
Add: Subsidiary adjusted net income
Subsidiary reported net income
+/- Amortization
Impairment loss, if any
Unrealized profit in ending inventory (Upstream sale)
Consolidated net income
Second Year
Parent net income from own operation, exclusive of dividends income received from Subsidiary
Impairment loss, if any
Realized profit in begining inventory
Downstream s ales
Unrealized profit in ending inventory
Parent adjusted net income
Add: Subsidiary adjusted net income
Subsidiary reported net income
+/- Amortization
Impairment loss, if any
Realized profit in begining inventory
Upstream s ales
Unrealized profit in ending inventory

xxx
(xxx)
(xxx)
xxx
xxx
(xxx)
(xxx)
(xxx)

xxx
xxx

xxx
(xxx)
xxx
(xxx)
xxx
xxx
(xxx)
(xxx)
xxx
(xxx)

xxx

Consolidated net income

xxx

5.) Income from subsidiary

First Year
Subsidiary reported net income
+/- Amortization
Impairment loss, if any
Unrealized profit in ending inventory (Upstream sale)
Subsidiary adjusted net income
Multiply by: Controlling interest
Income from subsidiary

xxx
(xxx)
(xxx)
(xxx)
xxx
x%
xxx

Second Year
Subsidiary reported net income
+/- Amortization
Impairment loss, if any
Realized profit in begining inventory
Unrealized profit in ending inventory
Subsidiary adjusted net income
Multiply by: Controlling interest
Income from subsidiary

xxx
xxx
(xxx)
xxx
(xxx)
xxx
x%
xxx

Upstream s ales

6.) Consolidated net income attributable to parent

First Year
Parent net income from own operation, exclusive of dividends income received from Subsidiary
Impairment loss, if any
Unrealized profit in ending inventory (Downstream sale)
Parent adjusted net income
Add: Income from subsidiary
Consolidated net income attributable to parent
Second Year

xxx
(xxx)
(xxx)
xxx
xxx
xxx

Parent net income from own operation, exclusive of dividends income received from Subsidiary
Impairment loss, if any
Realized profit in begining inventory
Downstream s ales
Unrealized profit in ending inventory
Parent adjusted net income
Add: Income from subsidiary
Consolidated net income attributable to parent

xxx
(xxx)
xxx
(xxx)
xxx
xxx
xxx

7.) NCI in net income of Subsidiary/ Consolidated net income attributable to NCI
First Year
Subsidiary reported net income
+/- Amortization
Impairment loss, if any
Unrealized profit in ending inventory (Upstream sale)
Subsidiary adjusted net income
Multiply by: Noncontrolling interest
NCI in net income of Subsidiary/Consolidated net income attributable to NCI

xxx
(xxx)
(xxx)
(xxx)
xxx
x%
xxx

Second Year
Subsidiary reported net income
+/- Amortization
Impairment loss, if any
Realized profit in begining inventory
Unrealized profit in ending inventory
Subsidiary adjusted net income
Multiply by: Noncontrolling interest
NCI in net income of Subsidiary

xxx
xxx
(xxx)
xxx
(xxx)
xxx
x%
xxx

Upstream s ales

8.) Consolidated retained earnings

Parent retained earnings - January 1, current year
Add: Gain from acquistion, if any
Consolidated net income attributable to parent
Total

xxx
xxx
xxx

xxx
xxx

Less: Dividends declared - parent only

Consolidated retained earnings - December 31, current year

xxx
xxx

Consolidated retained earnings formula if involves more the one previous year passed
Parent Reported Retained Earnings - January 1, current year
Less: Impairment loss - previous years if any
Unrealized profit in ending inventory - recent previous year
Parent Adjusted Retained Earnings - January 1, current year
Add: Undistributed Subsidiary adjusted net income in previous year/s
Subsidiary Retained Earnings - January 1 current year
Less: Subsidiary Retained Earnings - date of acquisition
Undistributed Subsidiary unadjusted net income
Less: Amortization ( cumulative amortization )
Impairment of goodwill - previous year if any
Unrealized profit in ending inventory - recent previous year
Undistributed Subsidiary adjusted net income
Less: NCI share in the income undistributed adjusted cumulative earnings
Consolidated Retained Earnings - January 1, current year
Add: Consolidated net income attributable to parent - current year #3
Total
Less: Dividends declared - parent only
Consolidated Retained Earnings - ending

xxx
xxx
xxx

xxx
xxx

xxx
xxx
xxx
xxx
xxx
xxx

Previous Y ear/s
xxx
xxx
xxx

xxx
xxx
xxx
xxx
xxx
xxx

6.) Noncontrolling interest

First Year
Noncontrolling interest - January 1, current year - computed using formula chapter 15
Add: NCI in net income of Subsidiary/Consolidated net income attributable to NCI
Total
Less: Dividends declared x Noncontrolling interest
Noncontrolling interest - December 31 current year

xxx
xxx
xxx
xxx
xxx

Current Y ear

Note: You must noted the initial Noncontrolling interest amount on the date of acquisition. Because it is always your
beginning balance.
Computation of Noncontrolling interest more then one previous year passed
Noncontrolling interest - at the date of acquisition ( initial )
Add: NCI share in the income undistributed adjusted cumulative earnings
Subsidiary Retained Earnings - January 1 current year
Less: Subsidiary Retained Earnings - date of acquisition
Undistributed Subsidiary unadjusted cumulative earnings (net income )
Less: Amortization ( cumulative amortization )
Impairment of goodwill - previous year if any
Unrealized profit in ending inventory - recent previous year
Undistributed Subsidiary adjusted net income
Multiply by: Noncontrolling interest
Noncontrolling interest - January 1, current year
Add: NCI in net income of Subsidiary/Consolidated net income attributable to NCI
Total
Less: Dividends declared x Noncontrolling interest
Noncontrolling interest - December 31 current year

xxx
xxx
xxx
xxx
xxx
xxx
xxx

Previous Y ear/s
xxx
xxx
x%

Note: Why we adjust Retained earnings and Noncontrolling interest beginning with the unrealized profit in ending inventory
recent previous year?
Because we corrected net income of the current year with the unrealized profit in ending inventory recent previous
year, which is now realized profit in beginning inventory for the current year.
See the computation of adjusted net incomes for Parent and Subsidairy, we included realized profit in
beginning inventory to get adjusted net income. Make this a constant procedure. Because, I agree there
is other way. How? Dont include realized profit in beginning in the computation of adjusted net income
and unrealized profit in ending recent previous year in adjusted retained earnings beginning to offset errors or
to counter balance. But again may I suggest to use the formula above constantly because it is seldom in
problem to have only Consolidated Retained Earnings as requirement normally consolidated net income is
also part of the requirement, with that you must included realized profit in beginning inventory.

xxx
xxx
xxx
xxx
xxx
xxx

Current Y ear