Company A Parent company Own land and lease out to a company B a subsidiary. Company A will construct hotel for B. Construction cost will be debited to fixed assets. Company B has entered into an agreement with Company C for hotel operation.

Land leased will be an operating lease for both A and B

Hotel building will be capitalized in company A however will be used by company B for earning revenue

Is this correct.

What if company B has to incur some techincal expense during constrcution and pay to COMPANY C can these be accounted in company A as construction cost.

Hemant