To consolidate the income statement, we use the same formula as is used to consolidate the balance sheet You start off with an investor income statement item such as sales You then add on the investee's sales and then you add/subtract any transaction effects So maybe sales was affected by the transaction, maybe there are sales synergies And that gets you your consolidated sales So what transaction effects do we see? Well firstly, we may have only bought the company during the year If we've only bought it maybe 6 months into the year, we only include the post acquisition date sales Next up, because of the deal, you may taken on some extra debt to buy this target company In which case, you may have to pay extra interest expense on that deal debt and you may have lost interest expense on retired debt or lost interest income on any balance sheet cash you used to buy the target company You've got revenue and cost synergies Your PP&E and intangibles may have stepped up in value during the deal In which case you may have extra depreciation or amortization And lastly, you have to add in the tax impact of any of the above transaction effects