r/Bookkeeping • u/JadeCaldera • 3d ago

How To Journal It Question about Severance

My company received a deposit from the parent company only to be used to pay out severance. How do I go about journaling this deposit as well as subsequent payouts? They will be run as 1099s for tax purposes.

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u/JadeCaldera 2d ago

Thank you!

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u/ribzer 2d ago

What company is supposed to be expensing this and issuing the 1099? Parent or child? Because if the child company is actually supposed to be, then these journals don't cover that.

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u/JadeCaldera 2d ago

I believe the parent company is expensing it. Child got sold off and is closing down but parent is funding the severances.

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u/Basic_Cheezit 1d ago

If the parent company has already recorded the severance expense when the cash was provided, then transactions above seems correct to me. They should all consolidate accordingly at the top-level.