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HOBAT Notes

The document discusses Home Office, Branch and Agency transactions. It provides details on how transactions are recorded between a home office and branch when items are transferred at cost or above cost. It also discusses how to account for freight costs and depreciation of property, plant and equipment between offices.

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Yaziee
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34 views

HOBAT Notes

The document discusses Home Office, Branch and Agency transactions. It provides details on how transactions are recorded between a home office and branch when items are transferred at cost or above cost. It also discusses how to account for freight costs and depreciation of property, plant and equipment between offices.

Uploaded by

Yaziee
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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1-lon,c Office, Brunch and Age n

-- c.y T r ..,nsact1on

HOME OFFICE, BRANCH ANO AGENCY !RAN


SA CTION (HOBAT)

Home Qffice book: Branch book:


Investment in
Branch or Branch Shipment
w/o Current From Home
At cost: AFOBIA (at cost) Xx Office (SrHO) xx
Shipment To Home Office
Branch (STB) xx Current xx
..--
Above wl Branch Current
cost: AFOBIA (at Billed Price) Xx
SFHO (at billec
STB (at cost) xx price) xx
AFOBIA (mark- Home Office
xx
up)
.
AFOBIA - Allowance for Overvaluatron ,n Branch Inventory Account
Current

Remember for PPE:

A (Acquirer) - Credit: Cash or Accounts Payable

R (Recorder)- Debit:PPE ;Credit. Accumulated Depreciation

U (User}-Debit: Depreciation Expense

For Inter-branch Transfer:

Should be freight (FIN-S) xx


Less: Actual Freight Cost (xx)
Excess Freight X!-1 (�x) .
Note: If positive, Other income; lf·negative, Expense

Branch 1 Branch 2
SFHO SFHO. Xx
(xx)
Less: FIN-A FIN-S xx
(xx)
le less: Cash out (xx)
_ ss: Cash out (xx)
xx
HO HOCU - Credited
_ CU -Debited (xx)
Home Office, Branch and Agency Transaction

FIN-A.: Freight In Actual


FIN-S: Freight In Should Be
HOCU: Home Office Current

Home Office Branch Transaction at ABOVE COST or at Billed Price:


Billed Price Cost =Allowance (Markup)
81-wfin Xx Xx =xx
SFHO Xx Xx =xx
Unadjusted (pre closing) I Unrealized
TGAS Xx Xx =xx Profit before adjustment
Less: El­ After (post-closing)/ Unrealized
w/in (xx) (xx} =(xx) Profit after/ Adjusted TO
CGS-wfin Xx Xx =xx Adjustment (by} I Realized Profrt
CGS-OP Xx Xx
Total CGS Home
office
Perspective
True/Rea/
Perspective In line with
of branch GAAP
Sales Revenue xx
Total CGS xx (at Billed Price}
Gross Profit xx
Less: OPEX (xx)
Branch Net Income xx (Perspective of Branch}
Adjustment• or (Overvaluation in CGS) xx
True Branch Net Income xx (Perspective of Home office}

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