Building (Asset) account will be debited only if the renovation increases the useful life of the building than already estimated.
General renovation expenses are to be expensed off irrespective of the ownership of the building.
We can evaluate two options then:
Since the cost will be borne by the parent here onwards, the liability should no longer exist in the books of subsidiary. In that case the company should debit the Liability account and give the credit to Equity.
In the books of parent, a liability...
Lets break down answer to your question on point by point basis:
Firstly, accounting the business as a separate entity is a very good idea. Inflow of cash in the business can be treated as CFF in the for the business and CFF out from the family.
Considering the opportunity cost of salaries and...
I have certain questions before I could answer yours:
1. If the cost is now to be borne by the Parent, instead of the subsidiary, how do we plan to extinguish the remaining liability from the books of subsidiary? (One option is to take it to equity in the books of subsidiary and create a deemed...
As per AASB 137, where the time value of money is material, the provision is discounted to reflect the present value of the estimated expenditures (using a pre-tax rate, such as the government bond rate).
Using WACC as a discount rate may not be appropriate for the provision.