Combined income statement-branches, Financial Accounting

Combined income statement

The figures to appear in the combined income statement are based on the following diagram:

1009_combined sttatement.jpg


1) An arrow pointing into a box refers to purchases by the organization represented by the box

2) An arrow leading out of the box refers to sales made by the organization represented by the box

3) The outside box refers to the combined entity.

4) When the head office purchased and received goods costing sh 18,000, the combined entity also purchased and received goods costing Sh 18,000.  Thus the purchases reported by the head office (column 1) will usually be the purchases reported by the combined entity (column 3).  The only exception would be if the branch also had external purchases.

5)If the head office and branch made sales of Sh 15,000 and Sh 9,000 respectively, the combined entity will have made sales of Sh 24,000 (Sh 15,000 + Sh 9,000)

6) The sales of Sh 7,150 made by the head office (which is deemed to be a purchase by the branch) cannot be claimed to be a sale or purchase by the combined entity.

7) The combined closing stock should be shown at original cost to the combined entity. This means that the combined closing stock is made up of two components, all at original cost:

  • Closing stock at the head office at an original cost of Sh 1,500;
  • Closing stock at the branch.  This had cost the branch Sh 550 (as can be seen in the income statements), but had an original cost of Sh 500 (550 x 100/110) when received by the head office on behalf of the combined entity.

 

 

Posted Date: 12/12/2012 1:56:24 AM | Location : United States







Related Discussions:- Combined income statement-branches, Assignment Help, Ask Question on Combined income statement-branches, Get Answer, Expert's Help, Combined income statement-branches Discussions

Write discussion on Combined income statement-branches
Your posts are moderated
Related Questions
Maghrabi Enclosure follows a moderate current asset investment policy, but it is considering whether to shift to a different strategy. The firm''s annual sales are $500,000; its f

Q. What is Short Sale? Short Sale - Sale of an item before it is purchased. A person entering into a short sale believes that the price of item will decline between date of the

SE CTION A QUESTION 1: Below is a trial balance of a manufacturer of boots for the local market. Trial balance as at 31st December 2012 Dr Rs

Using CAPM's formula, Return on equity = Risk-free rate + Beta*(Expected market return - risk-free rate) With the given information, Return on equity = 1% + 1.7*(9% - 1%)

The partnership of Lewis and Clark had these balances at April 30, 2008: Cash........$28,000 Liabilities........56,000 Clark Capital...14,000 Other Assets...84,000 Service Re

What are main factors that Nor'easters should take into account in establishing a pricing policy? The minor revenue generators of Nor'easters include corporate sponsorships and

An investor holds a bullish view for the equity market over the next twelve months and wishes to recalibrate his portfolio to reflect this view. The investor's portfolio consists o

Heather & Terry have a mortgage on their primary residence of $750,000 and a mortgage on their vacation home of $410,000. In 2013, they incurred $46,400 of mortgage interest expens

Application Information The application must include information as to: The full name of the deceased; The death and place of his death; Whether or not the decease

Prepare the journal entries required to record the following transactions of a nongovernment, not-for-profit organization.   1. Unrestricted cash contributions received durin