USA Splitting Revenue between two companies

[akurhonor]

Company A receives daily revenue from a gaming company. Company B is the investor that has helped company A start up. It was agreed that Company A would receive 35% of the revenue and company B would get the remaining 65%. Would 100% of the revenueshow as income on company A's income statement with an expense to company B or would only 35% show on Company A's income statement and the 65% would be in a payable account? Any help would be greatly appreciated.

 

[kirby]

Need more info
Does Company B own any part of Company A? or vice versa - if so there are consolidation issues.
Is there an agreement that specifies that when A sends 65% to B that this is an expense?

 

[akurhonor]

No, Company B does not own any part of Company A. I am not aware of any agreement that specifes that.

 

[bklynboy]

Company B is the investor that has helped company A start up. .

From the first point you made Company B sounds like they own part of Company A so I am not clear why you then state they do not. What is the agreement that entitles them to a share of the revenue if they are not an owner?

My guess is that Company A books 100% of the revenue as they are providing the services solely in pursuit of the revenue. If Company B is an investor, then the payment to them is not an expense but woudl be treated as a dividend or capital return depending on how its structured.

Please advise what the agreement is and what the "investment" made by B was and if they are actually an owner.