Hi All,
Need your advice regarding this scenario:
Related companies A and B share the same office.
Office rental contract with landlord is signed with A only.
A pays the office rent to the landlord and bills B for usage of office as a way to allocate costs in budget.
However, from this year onwards, A no longer bills B for usage of office as budget is now directly tracked from A.
Question on recognition of office rent expense:
Is it right that B should no longer recognise rent expense due to no legal liability to pay office rent as contract is not signed with B?
OR
Must A bill B as B should recognise office rent as B is using the office?
Should office rent expense be recognised?
Re: Should office rent expense be recognised?
there is a policy choice really:sgaccountant wrote: ↑20 Jul 2022, 17:39 Is it right that B should no longer recognise rent expense due to no legal liability to pay office rent as contract is not signed with B?
1. don't recognise anything
2. recognise the expense along with imputed contribution from the parent via related entity (DR expense / CR equity)
it depends on local law really, tax law in particularsgaccountant wrote: ↑20 Jul 2022, 17:39 Must A bill B as B should recognise office rent as B is using the office?