The Consolidated Revenue Calculator determines the total revenue generated by a parent company and its subsidiaries, eliminating any duplicate revenue from intercompany transactions. This ensures an accurate reflection of the group’s financial performance. It is essential for businesses preparing consolidated financial statements in compliance with accounting standards and stakeholders evaluating the group's overall revenue.
Formula of Consolidated Revenue Calculator
Step 1: Define the Consolidated Revenue Formula
Consolidated Revenue = Parent Revenue + Subsidiaries' Revenue - Intercompany Transactions
Where:
- Parent Revenue is the standalone revenue of the parent company.
- Subsidiaries' Revenue is the total revenue of all subsidiaries.
- Intercompany Transactions are revenues generated from transactions between the parent and subsidiaries or among subsidiaries that need to be eliminated.
Step 2: Gather the Required Data
- Parent Revenue: Obtain from the parent company’s income statement.
- Subsidiaries' Revenue: Sum up the revenues of all subsidiaries.
- Intercompany Transactions: Identify all sales or services between the parent and subsidiaries or among subsidiaries.
Step 3: Eliminate Intercompany Transactions
To avoid double-counting, subtract the intercompany transactions from the combined revenue of the parent and subsidiaries.
Step 4: Consolidate Revenue
Use the formula:
Consolidated Revenue = (Parent Revenue + Subsidiaries' Revenue) - Intercompany Transactions
Table of Common Terms and Values
| Component | Example Value ($) | Description |
|---|---|---|
| Parent Revenue | 1,000,000 | Revenue from the parent company’s operations |
| Subsidiaries' Revenue | 500,000 | Combined revenue of all subsidiaries |
| Intercompany Transactions | 200,000 | Transactions between parent and subsidiaries |
| Consolidated Revenue | 1,300,000 | Total group revenue after adjustments |
Example of Consolidated Revenue Calculator
Problem
A parent company generates $2,000,000 in revenue, and its subsidiaries collectively generate $1,000,000. The intercompany transactions between the parent and subsidiaries total $300,000. Calculate the consolidated revenue.
Solution
- Add the parent revenue and subsidiaries' revenue:
Parent Revenue + Subsidiaries' Revenue = 2,000,000 + 1,000,000 = $3,000,000 - Subtract the intercompany transactions:
Consolidated Revenue = 3,000,000 - 300,000 = $2,700,000
Result
The consolidated revenue is $2,700,000.
Most Common FAQs
It ensures accurate financial reporting by eliminating duplicate revenue from intercompany transactions, providing a clear picture of a group's total revenue.
Intercompany transactions are revenues generated within the group, such as sales between the parent and subsidiaries. They are eliminated to prevent overstatement of the group's total revenue.
Yes, it can handle any number of subsidiaries by summing their revenues and identifying all intercompany transactions.