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Intercompany Consolidation-UK and Russian Offices

Intercompany Consolidation-UK and Russian Offices

Hello All, first post, so excuse me if it's relatively silly!!

We are a UK Company and have a Branch Office in Moscow.  Our Branch Office in Moscow can only work with Clients who are based in Russia, so any Clients outside Russia have to be Invoiced via UK Office, then we carry out an `Act of Transfer' between UK and Moscow Office for this work.  Out Accountants in Russia are then treating this as a `Sale' and I treat the Russian time as a `Sub Contractor' in my Cost of Sales.

I am now trying to produce some Consolidated accounts, and something is nagging at me about `Double Accounting'.  Am I right in thinking that the Sales for UK will be us Invoicing `Client X' for the Russia work, and the Russian Branch Office will show a Sale for Invoicing us for that work........I am not showing this twice then am I, as it is basically the same premise as any Sub Consultant working for us??

now I've written it down it seems easy!!!  but any pointers would be welcome

Thanks

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23rd Nov 2012 16:49

I am confused, too

Your question is headed "Inter-company Consolidation", but you then say "We are a UK Company and have a Branch Office in Moscow", so are you one company with a branch in Moscow (which would be an intra-company consolidation) or is the Moscow office a separate subsidiary company (requiring two separate individual company accounts, perhaps with the UK company producing consolidated accounts)?

How does "Our Branch Office in Moscow can only work with Clients who are based in Russia, so any Clients outside Russia have to be Invoiced via UK Office" square with "the Sales for UK will be us Invoicing `Client X' for the Russia work"?  Are you saying that the Russia branch does actually work (illegally?) on clients outside Russia and then invoices the UK company for that work?

If there are two separate companies, the individual company accounts would include the `Act of Transfer' as sales of the Russian company and cost of sales of the UK company.  If you were then preparing group consolidated accounts or if it is just the one company, the `Act of Transfer' would need to be eliminated from both sales and cost of sales to avoid, as you put it, `Double Accounting'.

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24th Nov 2012 11:12

Thanks for the reply, as you can tell it was a rather rushed question!

 Moscow is a `Branch' of the UK Company, that is how we had to set up the Company with the Russian authorities, and is registered with the Russian authorities, and has to file quarterly returns and pay relevant taxes etc. So although I name them as a branch, they are technically I suppose a seperate Comoany for accounting purposes.

As a Branch Office, they Clients who are based and have Land in Russia.  I was not clear with this, but Yes, they have landed a number of jobs where either Client or Land Base is outside Russia, therefore these jobs are `run' through the UK Office, where we Invoice the Client, and the Act of Transfer is an Invoice from Moscow to UK

So I think I have my answer, as Moscow are registered and have to file accounts with the Russin authorities, then these Acts of Transfer are a Sale for them, and a Cost of Sale for us, and should show as such in my consolidation of the Group Accounts

I think!! :-)

 

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