The consolidated income statement and the parent company's income statement are both important parts of the enterprise's financial statements, and they are obviously different in meaning, preparation method and function.
First, the difference in meaning.
The consolidated income statement is based on the individual income statements of the parent company and its subsidiaries, which is compiled by the parent company and summarizes the individual income statements of the subsidiaries to offset the influence of internal transactions and internal investments. Reflect the operating results of enterprise groups composed of parent companies and subsidiaries in a certain accounting period.
The income statement of the parent company only reflects the operating results of the parent company itself in a certain accounting period. It does not include the operating results of subsidiaries, nor does it include internal transactions and internal investments between parent companies and subsidiaries.
Second, the differences in compilation methods.
The preparation of consolidated income statement needs to follow specific accounting standards and procedures, including determining the scope of consolidation, preparing consolidated working papers, offsetting the influence of internal transactions and internal investments, etc. In the process of compiling, it is necessary to adjust and summarize the individual income statements of the parent company and subsidiaries to eliminate the influence of internal transactions and internal investment, so as to obtain the overall operating results of the enterprise group.
The preparation of the parent company's income statement is relatively simple, and it is enough to prepare the parent company's individual income statement according to accounting standards and procedures. It does not need to consider the operating results of subsidiaries and the influence of internal transactions and internal investments.
Third, functional differences.
The consolidated income statement is mainly used to reflect the overall operating results of enterprise groups and help investors, creditors and other stakeholders understand the economic strength and profitability of enterprise groups. It can also be used to evaluate the management efficiency and resource allocation efficiency of enterprise groups and provide reference for management decision-making.
The income statement of the parent company is mainly used to reflect the operating results of the parent company itself and help investors, creditors and other stakeholders understand the economic strength and profitability of the parent company. It can also be used to evaluate the management efficiency and resource allocation efficiency of the parent company and provide reference for management decision.
To sum up:
Although the consolidated income statement and the parent company's income statement are both important parts of the enterprise's financial statements, there are obvious differences in their meanings, preparation methods and functions. Investors, creditors and other stakeholders need to pay attention to their differences when using these two statements, and analyze and use them in combination with the actual situation.
Legal basis:
The Company Law of People's Republic of China (PRC) stipulates that a company shall prepare financial and accounting reports in accordance with laws, administrative regulations and the provisions of the financial department of the State Council, and be audited by an accounting firm according to law. Financial and accounting reports shall be prepared in accordance with the format prescribed by laws, administrative regulations and the State Council, and important accounting matters shall be explained. Therefore, when dealing with the consolidated income statement and the parent company's income statement, we must abide by relevant laws and regulations and strictly enforce them.