Combined income statement-branches, Financial Accounting

Assignment Help:

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.

 

 


Related Discussions:- Combined income statement-branches

Balance sheet, how to solve balance sheet in five million capital

how to solve balance sheet in five million capital

Rules of intestacy-one surviving spouse and children, The intestate leaves ...

The intestate leaves one surviving spouse and children The surviving spouse is entitled to: a. The personal and household effects of the deceased absolutely; b. A life inte

Limited liability company, Limited Liability Company (LLC) - Form of doing ...

Limited Liability Company (LLC) - Form of doing business combining limited liability for all owners (known as members) with taxation as a PARTNERSHIP. An LLC is formed by filing AR

Divisible property-bankruptcy, DIVISIBLE PROPERTY The property of the ban...

DIVISIBLE PROPERTY The property of the bankrupt divisible among creditors includes: Property belonging to the bankrupt at the commencement of the bankruptcy; Property ac

Write up the necessary ledger accounts, Question: Agatha Co. is a tradi...

Question: Agatha Co. is a trading company making up its accounts regularly to 31 December each year. At 01 January 2005 the following balances existed in the records of Agat

Objective type question, 1 The entry establishing a $175 petty cash fund wo...

1 The entry establishing a $175 petty cash fund would include a: a) debit to cash for $175 b) credit to Petty cash for $175 c) debit to petty cash for $175 d) debit to miscellaneou

What are the u.s. tax consequences of this liquidation for w, 1. Finco is a...

1. Finco is a wholly owned Finnish manufacturing subsidiary of Winco, a domestic corporation that manufactures and markets residential window products throughout the world. Winco h

What is the present value index for each proposal, The net present value ha...

The net present value has been computed for Proposals A and B. proposal A proposal B invested amount 75000 125000 total present value of cash 84000 136250 net present value 9000 11

Prepare a purchases ledger control account, Question: The following inf...

Question: The following information was extracted from the books of William Noel for the year ended 30 April 2009.

Expected net cash flows resulting from the digger, Sigma is thinking about ...

Sigma is thinking about purchasing a new clam digger for $14,000. The expected net cash flows resulting from the digger are $9,000 in year 1, $7,000 in year 2, $5,000 in year 3, an

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