04-30-2008, 04:58 PM
if a company sells goods to another on credit, this would appear in the Trade Account Receivables of Selling company and Trade Account Payables of Purchasing company. But if Purchasing company make payment by cheque of some portion of paayables and used to reduce the its payables by the amount of that cheque but this cheque did not reached at the Office of addressee and the date of Consolidation for the Statement of Financial Position came.
The intercompany trasaction is to be eliminated but the issue of Cash in transit arises. <font color="green">this cash in transit it to be added into the Bank account of Paying company, which can be either Parent or Subsidiary.</font id="green">
Second Concept,
If one company grants loan to other one but the borrowing company has paid some part of loan at the date of Consolidation but this is not yet received by the Lender. <font color="blue">so on consolidation the cash in Transit would be added into the bank account of Lender.</font id="blue">
