Abridged Incorporation

Incorporation of branch balances in the Head Office books can also be effected with the help of a short cut method known as the ‘abridged incorporation’.

Under this method, we prepare a Memorandum Branch Trading and Profit & Loss Account and pass a journal entry only for the net profit or net loss. Thus, the six entries passed under the detailed incorporation method are replaced by just one entry which is as follows:


Branch Account                                                  Dr.

To General Profit & Loss A/c

Being branch net profit incorporated)

In case of net loss, the above entry shall be reversed.

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