Matakuliah
Tahun
: Akuntansi Keuangan Lanjutan I
: 2010
An Introduction to Consolidated Financial
Statements
Pertemuan 17-18
Consolidated Income Statements
Prepared by
combining
revenues and
expenses of the
parent and
subsidiary
companies
Bina Nusantara University
 Intercompany transactions are
eliminated to prevent double
counting of revenues and
expenses.
• (Similar to eliminations for
preparing a consolidated
balance sheet)
3
What kinds of intercompany transactions
affect the consolidated income statement?
 Sales and purchases between parent and
subsidiary
 Income and expenses related to loans,
receivables, or bond indebtedness between
parent and subsidiary
 Other income and expense from intercompany
transactions
Bina Nusantara University
4
Consolidated Income Statement Worksheet Sample
Bina Nusantara University
5
Consolidated Income Statements of Sand & Pilot
Cost of 90% of Sand
$10,200
Implied value of Sand
$11,333
Book value (4000+1000+900)
Excess over book value
Allocate to:
Inventory
Land
Building
Equipment
Note payable
Goodwill
Total
Bina Nusantara University
5,900
$5,433
$100
200
1,000
(300)
100
4,333
$5,433
1st yr
40 yrs
5 yrs
1st yr
-
6
Consolidated Income Statements – Cont’d
Inventory
Land
Building
Equipment
Note
Goodwill
Total
Bina Nusantara University
Unamortized
Current
Unamortized
excess
amortization
excess
100
(100)
0
200
0
200
1,000
(25)
975
(300)
60
(240)
100
(100)
0
4,333
0
4,333
5,433
(165)
5,268
7
Pilot
Sand
Consol.*
Consolidated
Income
Statements
–
Cont’d
Sales
$9,523.50 $2,200.00
$11,723.50
Income from Sand
Cost of sales
571.50
$0.00
(4,000.00)
(700.00)
(4,800.00)
Depreciation exp - bldg
(200.00)
(80.00)
(305.00)
Depreciation exp - equip
(700.00)
(360.00)
(1,000.00)
(1,800.00)
(120.00)
(1,920.00)
(300.00)
(140.00)
(540.00)
$3,095.00
$800.00
Other expense
Interest expense
Net income
Total consolidated income
Noncontrolling interest share
Controlling interest share
Bina Nusantara University
$3,158.50
63.50
$3,095.00
8
Key Income Statement Items
• The Income from Subsidiary account is eliminated.
• Current period amortizations are included in the
appropriate expense accounts.
• Noncontrolling interest share of net income is
proportional to the Income from Subsidiary under the
equity method.
$571.50 x .10/.90
= $63.50
Bina Nusantara University
9
Push Down Accounting
• SEC requirement
– Subsidiary is substantially wholly-owned (approx. 90%)
– No publicly held debt or preferred stock
• Books of the subsidiary are adjusted
– Assets, including goodwill, and liabilities revalued based on
acquisition price
– Retained earnings is replaced by Push-Down Capital which
includes retained earnings and the valuation adjustments
Bina Nusantara University
10