hello friends we have a registered office at Mumbai and a branch
at Bangalore, now all payments are made from Mumbai of banglore branch. we have purchase an asset in name of banglore branch and made a payment from Mumbai branch so what accounting entry has to be passed for the transaction and how the asset will be valued that who will claim the depreciation on it, eventhough we are preparing a consolidated balance sheet. please reply.
9 Replies
sabyasachi mukherjee
(27574 Points)
Replied 28 December 2023
All branch assets are controlled by head office . So asset is booked at ho. Branch will book maintainence.
prasad Nilugal
( GST Practitioner & Accounts )
(14801 Points)
Replied 29 December 2023
In the Bangalore branch book entry for Asset.
Asset A/c Dr
To Mumbai Office A/c Cr
( Asset purchase by H.O for Branch)
-------------------------------------------------
In the books of Head office ( Mumbai branch)
Bangalore Branch A/c Dr
To Bank A/c Cr
( Asset purchase for branch and payment made )
Even though you are maintaining consolidated financial statements, Asset & Liabilities will transfer to H.O at the end of the year from branch.
Take others opinion as well.
Asset A/c Dr
To Mumbai Office A/c Cr
( Asset purchase by H.O for Branch)
-------------------------------------------------
In the books of Head office ( Mumbai branch)
Bangalore Branch A/c Dr
To Bank A/c Cr
( Asset purchase for branch and payment made )
Even though you are maintaining consolidated financial statements, Asset & Liabilities will transfer to H.O at the end of the year from branch.
Take others opinion as well.
prasad Nilugal
( GST Practitioner & Accounts )
(14801 Points)
Replied 29 December 2023
Asset purchase entry is first one , Correct me if any thing wrong.
prasad Nilugal
( GST Practitioner & Accounts )
(14801 Points)
Replied 29 December 2023
@ Sabyachi Mukherji
bro , You also can pass other entries.
Yasaswi Gomes new
(Finance )
(4514 Points)
Replied 03 January 2024
Purchases dr.
Cr. Bank
(Asset cannot be capitalized in Mumbai office)
Dr. bank
Cr. purchases written off
(when Bangalore branch pays you for it)
Thats it! transfer the asset to other branch in Bangalore. Depreciate it Bangalore branch only.
In Bangalore books
Dr. Asset
Cr. Bank.
(asset gets capitalized)
if we do purchases entry, then balance sheet wont tally. During consolidation you wont have a clue of this transaction
P+S purchases
P+S bank
P+S assets
prasad Nilugal
( GST Practitioner & Accounts )
(14801 Points)
Replied 03 January 2024
As per the query all the payments of Bangalore branch were made form Mumbai office only , Bangalore branch is not paying back .
In the books of Mumbai office I made short entry as above , it should be
Bangalore branch A/c Dr
To Creditors A/c Cr
( Asset purchase for branch office )
Creditors A/c Dr
To Bank A/c Cr
( payment to creditors by H.O for purchase of Asset of branch )
Yasaswi Gomes new
(Finance )
(4514 Points)
Replied 03 January 2024
Ok. It's the debtors method it seems and not interested in that. But branch is owned by company which means it's an asset.
Dr. asset
Cr. Bank
(Purchase of asset)
Dr. Branch assets ac
Cr. Asset
Taxes are paid by main office and depreciation must be done by main office because it needs to recover taxes paid included in the assets if it's a fully depreciable asset.
This is final accounts version
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