Accounting Double Entry - Liability Transfer

Transfer of a liability from sub to parent

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Hi,

Could someone please advise the correct accounting treatment. The subsidiary company I work for holds tenant deposits which are refunded at the end of the lease terms. My director now wishes to derecognise these from the sub's balance sheet and transfer the liability across to our parent company. What are the correct journal entries to do this, given that there will be no actual transfer of the cash? Any help would be much appreciated!

Thanks

S

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By taxdigital
23rd Nov 2023 11:52

The subsi holds the deposits means the subsi may be owning the properties. The deposits received in may have been credited to a 'deposit account'.

In order for the ParentCo to pocket the deposits, I think, the lease agreement between the tenants and the Subsi should carry a clause requiring the tenants to hold the deposits with the ParentCo.

Post these changes the deposit account should be debited and the ParentCo account credited, with inter-company balances reconciled at year end.

Having said that may I ask why is it that you have to seek bookkeeping help from an internet forum? Don't you have someone up the foodchain within your business?

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Replying to taxdigital:
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By Leywood
23rd Nov 2023 12:12
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Replying to Leywood:
By Ruddles
23rd Nov 2023 13:24

To be fair, there have been a few instances recently of questions being asked more than once, due to posting difficulties it would appear. (Just as we often see responses appearing multiple times.)

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Replying to Ruddles:
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By Leywood
23rd Nov 2023 13:39

Although, to be fair, with multiple postings it’s more usual that you get several on the same day.
If there are multiples on different days, the first ones are completely ignored by the OP as they think it’s not been posted.

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Replying to Leywood:
By Ruddles
23rd Nov 2023 13:51

As in this case? Both versions of the question posted yesterday.

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