The organizational structure of the company may include several subsidiaries or affiliates.
For such organizations, the proceeds can be estimated separately for each company or expect consolidated revenues, including aggregate financial results.
Consolidated revenues - is free fromfinancial statements revenue. It includes the results of the parent and its subsidiaries, which are set in the legal and financial relationship. This business division in most cases is caused by economic expediency and the desire to reduce tax costs, as well as to reduce risks in the conduct of business and diversification of activities.
Consolidated revenues shown in the consolidated financial statements.
The concept of the consolidated financial statements
The consolidated financial statements includes a group of interconnected companies, which represent a single economic education. It contains the property and financial condition of the Group.
A feature of such statements isassociation of legally independent companies, their income, assets and liabilities in the separate financial reporting system. Now it provides almost all the companies and groups of companies.
The concept of consolidated net revenue, and its difference from the proceeds
Consolidated revenue is athe total amount of funds that receive subsidiary and parent companies for a certain period of its operation. Basically, it proceeds from the sales of goods or provision of services, depending on the main activity of the company. However, consolidated revenue may also include income from investments and financial transactions. It differs from the profit is that it contains in its composition the costs incurred by the company in the production process.
There are two methods of revenue recognition - it is cashmethod or accrual accounting of revenue. In the first case it is recognized directly on the date of payment or receipt of money on account of the company. Accounting for revenue accrual is usually used in large companies. In this case, advances and prepayments for goods and services is not considered revenue.
It is necessary to distinguish between the net proceeds of the gross. In the latter case we are talking about the entire amount of money that is received for goods or services rendered. In fact, a little gross revenue reflects the real state of affairs in the company, as the company is obliged to pay a mandatory government taxes, excise taxes and duties, which are incorporated in the selling price.
Therefore, more important is the net revenue, which excludes VAT, discounts, excise taxes and the revaluation amount. Net revenue is directly in the company's turnover.