Branch | Part-12 | Q44-46 | Independent Branch | Abridged Incorporation | by CA Pradeep Kalra

Incorporation of Branch Trial Balance in the Head Office Books& Branch Books
Since the consolidated Final Accounts of the Head Office and its Branches have to be prepared, it will be necessary for the Head Office to incorporate the Branch Balances in it books by means of suitable Journal entries. The incorporation of Branch balances in the Head Office books can be done by:
(i) Detailed Incorporation;
(ii) Abridged Incorporation; and
(iii) Separate Final Accounts Method.

Abridged Incorporation
In case of this method, the Branch Trading and Profit and Loss Account is prepared by the Head Office as a Memorandum Account only. The entries are passed only for incorporation of the Branch Net Profit and Net Loss and the Branch Assets and Liabilities.
Entries in the Books of the Head Office of Transfer of Accounts
The following entries will be passed in the books of the Head Office, in case this method is followed:
1. For incorporation Branch Net Profit
Branch Account Dr.
To General Profit & Loss Account
(In case of loss, the entry will be reversed)
Note: It may be seen that this entry replaces first six entries which are passed in case of Detailed Incorporation Method.
2. For incorporating Branch Assets
Branch Assets Account Dr.
(Debit each asset individually)
To Branch Account

3. for incorporating Branch Liabilities
Branch Account Dr.
To Branch Liabilities Account
(Credit each liability individually)

Entries in the Books of the Branch of Transfer of Accounts
Incaseof this method, the Branch Trading and Profit & Loss account will be prepared and the Net Profit (or Net Loss) as shown by the Branch Trading and Profit & Loss Account will be transferred to the Head Office.

The following journal entries will be passed in the books of the Branch:
(i) In case of Profit
P & L A/c Dr.
To Head Office A/c
Note: In case of loss, the entry will be reversed.
(ii) For Transfer of Branch Assets
Head Office Account Dr.
To Branch Assets
(Each assets to be credited individually)

(iii) For transfer of Branch Liabilities
Branch Liabilities Account Dr.
(Each liability to be debited individually)
To Head Office Account

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