For any subsidiary that was the original recipient of a Targeted Distribution payment reporting on a payment spent by a parent entity, the expense worksheet(s) in the subsidiary report must include any expenses applied to the payment, whether those were the expenses of the subsidiary or the entity to which the payments were transferred. For any subsidiary Reporting Entity reporting on how a payment was used to reimburse lost revenues, the subsidiary Reporting Entity can use the alternative method for calculating lost revenues and demonstrate in their method how the lost revenues of the parent or other subsidiary entity to which the payment was transferred was considered in the lost revenues calculation.
Using the alternative reasonable methodology will allow Reporting Entities to reduce the parent entity’s report by the amount of lost revenues accounted for by the Targeted Distribution payment originally received by the subsidiary. The subsidiary Reporting Entity that originally received the Targeted Distribution should report the exact amount of lost revenues as the Targeted Distribution payment and the same dollar amount by which the parent entity’s lost revenues were reduced. The deductions and reconciliations must be accounted for in each methodology calculation for the parent and subsidiary that originally received the Targeted Distribution payment. Both reports together should be sufficient for audit purposes.
(Added 1/27/2022)