03 May 2011
when we prepare company baance sheet we make consolidate profit and loss A/C but in case of firm we prepare branch profit and loss A/C seprately and head office profit and loss A/C seprately what is the reason behind it please tell me
03 May 2011
In case of Company we make Consolidated profit and loss account only in the case where company have sum subsidiary, JV or associates having different business entity. This is also required by company act.
If company has only branches then we never made consolidated BS but only combined all of them.
In case of Firm Branches has to be merged in the firm account and it will not called consolidated accounts. If firm has made some investment in some accounts then it has to show as investment in their books of account because it was not fall in the subsidiary.
This difference arise because of status of business.
03 May 2011
"Consolidate" it self means merging of 2 or more P&L A/cs.Hence when there is a single P&L A/c it is not said that it is a consolidated P&L A/c. Consolidated Balance Sheet & P& L A/c is thus nothing but merging of Balance Sheets and P&L A/cs and this can be possible when separate accounts of Holding Company & of its Subsidiaries' a/cs have been prepared
The basic purpose of preparing separate Branch and HO A/cs is to evaluate the profitability and financial position at the respective accounting center.
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