Hello everyone

I came across a question during the audit of one of our company's clients.

Company A has 60% of the total shares of Company B.
In exchange for the stocks, Company A pays $10,000(which is only a partial amount of the 60% of stocks) as a contributed capital for Company B, and agrees to contribute capital for the rest of the stocks by agreeing to pay for Company B's all operating expenses for the next 18 months.

So.. is this concept of 'paying expenses on behalf of a related party as a contributed capital'
in compliance with GAAP? If so, where would I be able to find any legal evidence(literature) on this matter?


In addition, here comes the tricky part.
Company B 'forecasts' the amount of operating expenses it expects to incurr for the next 18 month, and sets it up as a 'Accounts Receivable'. Company B will credit the A/R account when it actually receives the money from Company A, and debit Cash account.

Is this method in compliance with GAAP? What we were thinking was that Company B would have to ask for reimbursements to Company A everytime an operating expense incurrs, instead of 'projecting' the estimated amount of expenses to come, and deducting from that account.


Any thoughts would be helpful

Thanks in advance