If the home office carries branch equipment in its accounting records, an acquisition of equipment by the branch is recorded in the home office accounting records by a debit to the Investment in Branch ledger account and a credit to the Equipment: Branch account.

Question

Quizplus · Accepted Answer

When the home office carries branch equipment in its accounting records, an acquisition of equipment by the branch is typically recorded by a debit to the Equipment account (to reflect the addition of the asset) and a credit to Cash or Accounts Payable (depending on how the purchase is financed), not by debiting Investment in Branch and crediting Equipment: Branch.

If the Home Office Carries Branch Equipment in Its Accounting