Jerah Y.

Torrejos

Home Office Ledger account and Investment in Branch Ledger Account are
reciprocal accounts used by the Branch and Home Office respectively. The Home
Office account is the only equity account in the books of the branch and represents
the ownership of the Home Office to the branch. On the other hand, Investment in
Branch account represents the extent of the investment of the home office to a
branch.
The Home Office account is used to credit for all merchandise, cash, or assets that
are provided by the home office and is debited for all cash, merchandise, or other
assets sent to by the branch to the home office or to other branches. Investment in
Branch which is in books of the home office is debited for cash, merchandise, or
assets provided to by the home office to the branch; it is credited by the amount of
cash or asset the branch gives to the home office including the net loss reported by
the branch.
The balances of the accounts should be the same, hence the need for adjustments.
These reciprocal accounts which are also called Intracompany accounts are
reconciled to reduce the chances of inaccuracies in the company’s financial
statements.

References:

Larsen, J. (2005). Modern Advance Accounting (10th ed.). McGraw-Hill Companies.

Guerrero, P. P., & Peralta, J. F. (2019). Home Office and Branch Accounting- General
Procedures. In Advance Accounting (13th ed., Vol. 2, p. 4). Manila: GIC Enterprise.