You know that SG&A line on the income statement? Well, it stands for Sales, General, and Administrative, and this budget simply prognosticates what a company will spend in the next ninety-one-ish to three hundred sixty-five-ish days.
It answers such fetching questions as, "what will rent cost?" and "how much will our insurance be?" and "what will we spend on lawyers?" The admin budget does not include the people who actually make stuff for the company. It just covers the bureaucrats who do nothing productive, other than organize the work of the people who actually add direct value to the company itself.
At Shmoop, the administrative budget applies to bureaucrats managing contractors, and doesn't cover the cost of the writers, editors, and artists who actually make the fine Shmoop product you dearly love.
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Finance: What is a Consolidated Income S...12 Views
Finance a la shmoop what is a consolidated income statement? alright
people put it together consolidated combined and yeah put [Rabbit appears in a cage]
together imagine that..well think of a consolidated income statement as a
mash-up of the income statements of two merging companies sort of like you know [Company merges into another]
when Rihanna met Eminem and there was that monster thing under the bed Reese's
Pieces thing you know peanut butter and chocolate and they mashed up and they
were awesome yeah together all right well yeah well only in this case we have
a consolidated income statement accounting is never that exciting we
have two drink company's lemonade stands are us being mashed up or consolidated [Boy stood at a lemonade stand]
with harmonic and peaceful make like a mint and leave yeah that's their
competitor so let's look at them line by line side by side and go through the
process of consolidation note the first line here as we compare the hindsight [Lemonade stand company balance sheets appear]
year of 2020 where lemonade stands our US had 20,000 units of lemonade sold and
make like a mint and leave had 10,000 units of tea sold so 30,000 if we were
reporting a consolidated income statement under the new company called
Le-mint-ade stands are us sorry we could stretch for that then yeah we'd report
30,000 total drink units sold and yes the number would be a bit more vague
because it wouldn't necessarily state what was lemonade and what was tea and
doing solid accounting separately we would probably break out those numbers
as separate line items if we were actually really good and no you cannot [Lemonade poured into a barrel]
pour them together and just make them one big fat Arnold Palmer sorry so now
go down to the revenues line alright the gross revenues from lemonade of 20,000
would simply be added to the gross revenues of 8,000 bucks for a mint
to show consolidated income statement revenues of $28,000 with net revenues of
19,000 plus 7,000 there or 26,000 using advanced calculus to find these numbers
now go down to the expenses area alright this mashup is well less elegant [Expenses section highlighted on balance sheet]
in it we don't have apples to apples consolidation like we do in the revenues
category where dollars map cleanly to dollars on the
expences lines well tea comprises different elements than lemonade so and
we've got some stretching to do we still have dollars but they're attributed to
different kinds of costs in the merged Mint company we have new line items like
pots and soil and greenhouse rent none of which are items in our lemonade
stand business because in the mint tea business we grow our own stuff that's [Person give thumbs up at tea plants]
kind of cool right so more than likely good accounting would simply itemize
each of these elements producing a detailed and granular income statement
that would eventually well basically add one side with the other noting the
pre-tax profits of eight thousand bucks from lemonade combining with sixteen
hundred dollars of profits for a mint for total pre-tax profits of 9600
dollars is it likely that the combined company finds what are called synergies
that is with more volume of product being ordered and/or more volume of [Definition of synergies appears on 100 dollar bill]
advertisements being placed might the merged company benefit from volume
discounts? sure what about cross promotion from lemonade drinkers to tea
drinkers sure what about the cost of accountants who used to separately
prepare each statement for taxes now combining efforts likely at relatively
cheaper prices per dollar earned? yes they negotiate with accountants like us
and get a better price all right well the gist is that when you consolidate an
income statement you're usually merging with or acquiring
a competitor or supplier in an analogous business space and most of the time good [Boy and girl cheering at a lemonade stand with stacks of cash]
things happen so yeah now that you know how to consolidate an income statement
you can well you know get busy..
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