Clubbing of H.O. and B.O. accounts..URGENT SIR!!!

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Rajesh (Querist)
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12 September 2010 Dear Experts,
Very Urgent Sir...Posted already but no response..pls help me..sir
While clubbing both the Head Office and Branch Office units i am having the following doubt. Please clarify me.
1) The closing stock lying unsold, if it is transferred from the HO at cost + profit margin then should i have to deduct profit margin in the cl. stock (credited in the trading a/c itself and for the double effect can i reduce it from the Gross profit or net profit) Alternatively in the balance sheet can i deduct the stock reserve amount and debit in the partners current a/c (giving double effect).
2) Receivables and Payables in the books of HO and BO with respect to each other need not be recorded in the Balance sheet.
3) Is there any other thing which is important i should be careful.
With regards,
Rajesh.

CA Manoj Kumar Rai

CA Manoj Kumar Rai (Expert)
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13 September 2010 Dear Rajesh,
Profit margin on closing stock is notional profit , So it is required to be deducted from closing stock and adjust in gross profit. As per AS - 2, Valuation of Closing stock is taken cost, or NRV whichever is lower.

In case of receivable and payable inter branch reconciliation is must and need not recorded in B/s.

Provision for expenses is important.
Regards;
CA Manoj Kumar Rai

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