CONSOLIDATED  STATEMENT

FORMULAS

INTERCOMPANY  TRANSACTIONS

1.) Consolidated  Sales

Parent   xxx
Sabsidiary xxx
Total   xxx
Less:  Intercompany  sales  (Downstream  sales  +  Upstream  sales) xxx
Consolidated  Sales xxx

2.) Consolidated  cost  of  goods  sold

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

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

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

4.) Consolidated  net  income

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

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

5.) Income  from  subsidiary

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

Second  Year
Subsidiary  reported  net  income xxx
+/-­  Amortization   xxx
Impairment  loss,  if  any (xxx)
Realized  profit  in  begining  inventory Upstream  s ales xxx
Unrealized  profit  in  ending  inventory (xxx)
Subsidiary  adjusted  net  income xxx
Multiply  by:  Controlling  interest x%
Income  from  subsidiary xxx

6.) Consolidated  net  income  attributable  to  parent

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

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

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

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

Second  Year
Subsidiary  reported  net  income xxx
+/-­  Amortization   xxx
Impairment  loss,  if  any (xxx)
Realized  profit  in  begining  inventory Upstream  s ales xxx
Unrealized  profit  in  ending  inventory (xxx)
Subsidiary  adjusted  net  income xxx
Multiply  by:  Noncontrolling  interest x%
NCI  in  net  income  of  Subsidiary xxx

8.) Consolidated  retained  earnings

Parent  retained  earnings  -­  January  1,  current  year xxx

Add:  Gain  from  acquistion,  if  any xxx
Consolidated  net  income  attributable  to  parent   xxx xxx
Total xxx
 Less:  Dividends  declared  -­  parent  only xxx
Consolidated  retained  earnings  -­  December  31,  current  year xxx

Consolidated  retained  earnings  formula  if  involves  more  the  one  previous  year  passed

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

6.) Noncontrolling  interest

First  Year
Noncontrolling  interest  -­  January  1,  current  year  -­  computed  using  formula  chapter  15 xxx
Add:  NCI  in  net  income  of  Subsidiary/Consolidated  net  income  attributable  to  NCI xxx
Total xxx
Less:  Dividends  declared  x  Noncontrolling  interest xxx
Noncontrolling  interest  -­  December  31  current  year xxx
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  )   xxx
Add:  NCI  share  in  the  income  undistributed  adjusted  cumulative  earnings
     Subsidiary  Retained  Earnings  -­  January  1  current  year xxx
     Less:  Subsidiary  Retained  Earnings  -­  date  of  acquisition   xxx
     Undistributed  Subsidiary  unadjusted  cumulative  earnings  (net  income ) xxx
     Less:      Amortization  (  cumulative  amortization  ) xxx Previous  Y ear/s
Impairment  of  goodwill  -­  previous  year  if  any xxx
Unrealized  profit  in  ending  inventory  -­  recent  previous  year xxx xxx
Undistributed  Subsidiary  adjusted  net  income xxx
Multiply  by:  Noncontrolling  interest x% xxx
Noncontrolling  interest  -­  January  1,  current  year xxx
Add:  NCI  in  net  income  of  Subsidiary/Consolidated  net  income  attributable  to  NCI xxx
Total xxx Current  Y ear
Less:  Dividends  declared  x  Noncontrolling  interest xxx
Noncontrolling  interest  -­  December  31  current  year xxx

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.