PDA

View Full Version : Income statement


strkyl002
May 30, 2007, 02:37 AM
What is an additive income statement?

masud
May 30, 2007, 11:06 AM
Additive Approach

•Consolidated net income is computed through an additive approach by adding together the parent's income from its own operations (i.e. excluding any income from consolidated subsidiaries recognized by the parent) and the parent's proportionate share of the net income of each subsidiary adjusted to differential write-off, where appropriate.

•This is the same approach used to compute the parent's equity-method net income.

•In the absence of unrealized profits from intercompany transactions, consolidated net income and the parent's equity-method net income are normally equal.

Hope this will help you to unerstand the idea.

omsailogistic
May 31, 2007, 02:07 PM
masud is perfectly correct in wake of financial accounting
but in case of costing it means
direct labour
+ direct expenses
+ direct materials
+ indirect labour
+ indirect materials
+ factory overheads
+ administration overheads
+selling and distribution overheads
+ profit
= income

this approach is used in costing to arrive at income using additive approach.
+
+