Canada Tough question for GAAP experts - Who's GAAP revenue is it?

[JamesTaylor]

We (let's call it "ABC") recently sold a business division to another company (let's call it "NewCo") including all the digital assets of the division - it is a online gaming site. Sale closed sept 30

For the last 3 months, and probably for the next few as well, we (ABC) have not yet transitioned the finance side of the sale to NewCo - it is taking more time than expected. ABC is still using its resources to promote the product online and ABC is still using its support services to support new customers. All funds are still deposited into the ABC bank account and ABC is still paying 3rd party royalties.

ABC is only paying the net profit over to NewC at the end of each month. .

The question:
- Is the revenue collected and deposited into ABC bank account the GAAP revenue of ABC or NewCo?
- How should ABC accounted for the revenue?

 

[kirby]

No big mystery here. Any transactions recorded by ABC for the sold division after 9/30/14 belong to Newco. So on ABC's books when the sold division makes a cash sale of $1,000 then ABC records it as
DR. Cash. $1,000
CR. Liability to Newco. $1,000