Consolidated Statement Formula 02 PDF

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CONSOLIDATED STATEMENTBUSINESS COMBINATIONFORMULASChapter 171.) Consolidated SalesParent xxx Sabsidiary xxx Total xxx Less: Intercompany sales (Downstream sales + Upstream sales) xxx Consolidated Sales xxx2.) Consolidated cost of goods soldFirst Year Parent xxx Subsidiary xxx Total xxx Intercompany ...

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CONSOLIDATED STATEMENT BUSINESS COMBINATION FORMULAS

Chapter 17 1.) Consolidated Sales Parent Sabsidiary Total Less: Intercompany sales (Downstream sales + Upstream sales) Consolidated Sales

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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

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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

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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

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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 sales 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 sales Unrealized profit in ending inventory Consolidated net income

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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

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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

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Upstream sales

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

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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 sales Unrealized profit in ending inventory Parent adjusted net income Add: Income from subsidiary Consolidated net income attributable to parent

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7.) NCI in net income of Subsidiary/ Consolidated net income attributable to NC 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

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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

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Upstream sales

8.) Consolidated retained earnings Parent retained earnings - January 1, current year Add: Gain from acquistion, if any Consolidated net income attributable to parent Total Less: Dividends declared - parent only Consolidated retained earnings - December 31, current year

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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

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Previous Year/s

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Current Year

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

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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

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Previous Year/s

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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? Don’t 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.

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