Differences in inter company balances-group accounts, Financial Accounting

Assignment Help:

Differences in Inter company balances

i) Cash in transit
Where one company may have sent cash which is yet to be received by the other company as at the end of the financial period and thus irrespective  of the  company sending the cash, the following entry will be made;
         DR.  Group cash at bank
                 CR. Group accounts receivable/payables.


ii) Goods in transit
Whereby one company has sent goods that are yet to be received by the other company as at the end of the financial period and in most cases it is assumed that the goods are sent at an inflated price and thus there is an unrealized profit thereof. The relevant entry will be

DR.  Group inventory (with the cost of the goods)
DR.  Group retained profit (with holding company share of unrealized profit)
DR. M.J (with M.J’s share of unrealized profit if  it is subsidiary company sending goods)
       CR   Group account receivables /payables.


iii) Administration expenses

The holding company may have charged the subsidiary company with its share of administration expenses but this amount is yet to be accrued or accounted for by the subsidiary…

The relevant entry will be;

DR.  Group retained profits (with holding company share of admin expenses)
DR.  M.I (with M.I share of admin expenses)
       CR.  Group accounts receivable/payable.


Related Discussions:- Differences in inter company balances-group accounts

Invoices before Inventory, How should I handle Booking an invoice in one mo...

How should I handle Booking an invoice in one month for Raw material that has not been received until the following month?

Value of accounting information, Value of accounting information When a...

Value of accounting information When assessing value of accounting information we are confronted with similar problems. Provision of accounting information can be very expensiv

Group accounts, Group Accounts A company can have investments in other co...

Group Accounts A company can have investments in other companies in the form of: ordinary shares, preference shares and loan stock. The investment in ordinary shares leads to own

Calculate the npv for the purchase, 1. Lease vs. Buy Trasky Company is t...

1. Lease vs. Buy Trasky Company is trying to decide whether it should purchase or lease a new automated machine to be used in the production of a new product. If purchased, the

Income statement, depreciation in question is given more and in adjustment ...

depreciation in question is given more and in adjustment is less. What would be in the profit and loss account?

Winding up under supervision-liquidation of companies, Winding up under sup...

Winding up under supervision Virtually obsolete, in consequence of s.303 and the power to invoke the court's assistance under s.301. If a supervision order is made, the effect

International financial reporting standards and gaap, Alta Velocidad Espera...

Alta Velocidad Esperanza de L'Argentina, Sociedad Anónima (AVE), a high-speed railway operator domiciled in Rio Norte, Argentina, is a Foreign Private Issuer as defined by the U.S.

Non-financial factors for non-financial considerations, Q. Non-financial fa...

Q. Non-financial factors for non-financial considerations? There are several non-financial factors which possibly relevant to a decision to contract out and the type of factors

Explain about credit-worthiness, Q. Explain about Credit-worthiness? Th...

Q. Explain about Credit-worthiness? There are a numerous ways in which Fenton Security plc could ensure that customers are subjected to tighter credit appraisal checks before g

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd