For now I am limiting my scope to the build out (pre-operations revenue) phase, as I do not really know how to term the accounting of those revenues.
GTEM does not have the equipment sitting in a warehouse somewhere so they have not yet paid for it out of their own books yet. It appears they are going to invoice for it and get money out of the Company (from VPN payments into the Company) then manufacture and deliver it.
Ok, so at that point GTEM has sold equipment to the Company and for the sake of illustration is on the outside as a vendor looking in. GTEM's books show expenses, revenues and profits for that transaction.
Now the company says "we just paid this much for this equipment with money that VPN put into the pot. Now we need x amount to finish the project, bringing the total to x plus the amount we already spent on buying equipment from Globetel, the vendor. Here's the total GTEM, to get your share of the Company, you shall pay in 49% of that total."
Now GTEM must come up with that money. They must use cash on hand (from previous, hopefully profitable transactions with the Company and/or others) plus borrowed money to come up with it. Will they have the cash or will they have to borrow money? What's your opinion? Mine is borrow money.
AI
