Consolidated income statement is a statement that reflects the operating results of enterprise groups with the parent company as the core in a specific period. Based on the individual income statements of the parent company and subsidiaries included in the merger scope, it is compiled, and then the internal transactions between the parent company and subsidiaries within the enterprise group that affect the measurement of the total profit of the enterprise group are offset.
The consolidated income statement shall be based on the income statements of the parent company and its subsidiaries, and shall be prepared by the parent company after offsetting the influence of internal transactions between the parent company and its subsidiaries on the consolidated income statement. The items that need to be offset when compiling the consolidated income statement mainly include: internal operating income and operating costs.
When internal sales revenue and internal sales cost are offset, they should be handled according to different situations.
(1) The parent company, subsidiaries and subsidiaries sell goods to each other, and all of them are sold to the outside world at the end of the period. In this case, the same purchase and sale business is reflected in the respective profit statements of the sales enterprise and the purchasing enterprise. But on the whole, this kind of purchase and sale business is only external sales, its sales income is only the sales income of purchasing enterprises selling products to enterprises outside the enterprise group, and its sales cost is only the cost of selling products to purchasing enterprises. When preparing consolidated financial statements, repeated internal operating income and internal operating costs must offset each other. The prepared offset entries are: debit "operating income" and credit "operating cost".
(2) The parent company, subsidiaries, and subsidiaries sold commodities to each other, but did not realize external sales at the end of the period, resulting in inventory offset.
When the goods purchased internally are not sold externally, the sales enterprise shall confirm the sales revenue according to the general sales business, carry forward the sales cost, calculate the sales profit and loss, and include them in its personal income statement. When preparing consolidated financial statements, the internal sales revenue and internal sales cost confirmed by the sales enterprise shall offset each other. For this kind of internal transaction, the purchasing enterprise will take the purchase price paid as the inventory cost and include it as an asset in its individual balance sheet. When preparing the consolidated income statement, unrealized internal sales gains and losses included in the inventory value should be offset.
(3) For the case that some of the goods purchased internally are sold to the outside world and some form ending inventory, we can understand that the goods purchased internally can be divided into two parts: one part is purchased in the current period and all are sold to the outside world; The other part is the ending inventory purchased in this period but not sold externally.