05-02-2008, 06:07 PM
Dear,
This is a matter of reconcilation. If the issuer of cheque will add it back, the account would be reconciled and inter company balance could be eliminated. If the issuer does not add it back; rather the recepient makes this entry in its books, again the balances would be agreed and could be elminated in consolidation.
The purpose is to reconcile and agree the balances.
However, practically in very big concerns and their consolidations, consolidation is not materially affected even if such adjustments are not reconciled and agreed becoz every entry has double effects and overall presentation will not be misleading.
In material transactions, such adjustments should be and are properly digged.
This applies to both queries.
Regards,
KAMRAN.
This is a matter of reconcilation. If the issuer of cheque will add it back, the account would be reconciled and inter company balance could be eliminated. If the issuer does not add it back; rather the recepient makes this entry in its books, again the balances would be agreed and could be elminated in consolidation.
The purpose is to reconcile and agree the balances.
However, practically in very big concerns and their consolidations, consolidation is not materially affected even if such adjustments are not reconciled and agreed becoz every entry has double effects and overall presentation will not be misleading.
In material transactions, such adjustments should be and are properly digged.
This applies to both queries.
Regards,
KAMRAN.
