are classified as a Asset to be realized b Assets acquired c Assets realized d

Are classified as a asset to be realized b assets

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are classified as: a.Asset to be realizedb.Assets acquiredc.Assets realizedd.Assets not realizedLiabilities of the receivership or trusteeship are classified as: Supplementary itemsfor the period of receivership or trusteeship include:a.Supplementary debits/charges/expenseb.Supplementary credits/incomeNet income or loss is computed based on the transactions of the receiver on the entity’s assets, liabilitiesand supplementary items.III.Accounting for Home Office, Branch and AgencyFunctions, operations and accountingHome OfficeBranchAgencyThe main business unit that establishes several business segments (branches and agencies) in different geographical location.Supervise and controls the operations of the business segments under its name.Maintains the accounting records of the company as a whole and prepares the combined financial statements of the company.A business segment of the home office that carries its own merchandise, makes sales, approves customers’ credit, makes collections fromits customers, and remits cash received.Has more independence and wider operation than agency.Maintains its separate accounting records and prepares its separate financialstatements for submission to home office.A business segment of the home office that merely takescustomer orders and carries no stocks other than samples.Operates under the direct supervision of the home office and has limited functions.Does not maintain separate accounting records and does not prepares its own financialstatements.Agency fund is accounted in an imprest system by the Module 6 Page 5 of 9
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Module 6: Partnership, Corporate Liquidation & HOBALVChome office.Accounting for branchReciprocal accounts-The home office maintains an “Investment in Branch” account while the branch maintains a “Home Office Current” account. Investment in Branch is similar to an asset and Home Office Current is similar to an equity account.-If periodic method is use the home office used “Shipments to Branch” account to record transfer of merchandise to branch. The branch records the goods received from home office using “Shipments from Home Office” account. If perpetual method is used, the transfer is merely recorded in the inventory account.-Reciprocal accounts are eliminated at the end of the reporting period.Shipments above cost-Home office used an allowance for overvaluation account to record the mark-up on shipments.-This mark-up is typically undisclosed to branch so the branch continues to record shipments at billed price.-This overvaluation in the inventory of branch results in the overstatement of its cost of sales and consequently, understatement of net income.
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  • Fall '17
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