Question

It seems as if consolidated net income is always less than the sum of the parent’s and subsidiary's separately calculated net incomes. Is it possible that the consolidated net income of the two affiliated companies could actually exceed the sum of their individual net incomes?

Answer 1

Consolidated net income is the sum of net income of the parent company excluding any income from subsidiaries recognized in its individual financial statements plus net income of its subsidiaries determined after excluding unrealized gain in inventories, income from intra-group transactions, etc.