Only dividends paid on the Saks shares would be shown as dividend income (which is, actually, added to total revenue or sales in most cases).
Unless you delved deep into the company's 10-K, you may not even realize that the Saks dividend income is included in total revenue as if it were generated from sales at Federated's own stores.
A detailed consolidation model of financial statements is a complex accounting topic and is out of scope in this article.
Typically, consolidation should take place when the company exercises control over the investee. All entities are classified into VIEs (variable interest entities) and non-VIEs.
The company would not be able to report its share of Saks' earnings, except for the dividends it received from the Saks stock.
The asset value of the investment would be reported at the lower of cost or market value on the balance sheet. If Federated purchased 10 million shares of Saks stock at per share for a total cost of million, it would record any dividends received from Saks on its income statement, and add million to the balance sheet under investments.
For instance, if one party owns 30 percent of common stock and the remaining shares of the company are spread out among a large number of small investors, then that party would be considered to have an effective control over the company even though the party has less than 50 percent of voting shares.
Moreover, in practice investors may possess an equal number of shares (50-50 percent or near).