accounting entry

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praveen (Querist)
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27 January 2011 We are a 100 % eou company exporting roses. we have units situated at two different places. one unit is already set up and functional and the other unit is being set up now.

we are sending rose plants (starter plants) to the other unit . The other unit wants to capitalise these starter plants.

what are the accounting entries that needs to be done.

if one units shows sale and the other unit shows purchase and then capitalises those starter plants , then the balances will not set off against each other in consolidation ( each unit is maintaining its own books of account even thoough they are one company)

pls guide

regards

prv

CA Shiv

CA Shiv (Expert)
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28 January 2011 Hello,

you should not show it as purchase and sale.
Just show it as internal transfer from one unit to another.

SO receviable account and payable account will set off in consolidation..

In books of unit A
Unit B Dr.
TO Plants. Cr.

In books of unit B
Plants Dr.
To unit A.

IF it not a big amount of starter Plants than better charge to P&L and dont show as asset.....As difficult to prove fixed asset...