In a working paper for combined financial statements of home office and branch, the balance of the Shipments to Branch ledger account is eliminated against the balance of the Investment in Branch account.

Question

Quizplus · Accepted Answer

The balance of the Shipments to Branch ledger account is typically eliminated against the Branch Inventory account, not the Investment in Branch account, to reflect the cost of inventory sent to the branch. The Investment in Branch account reflects the home office's investment in the branch, not the shipments of inventory.

In a Working Paper for Combined Financial Statements of Home