Hello,
I had a question about financial statement presentation for an audit. In 2017, an LLC converted to a Corporation mid-year. At the time of the conversion, the net income to date was closed and allocated to the Corporation's equity. On the financial statements, I am unsure if we need to treat the LLC and the Corporation as two different entities and only show the financial information from the date of the conversion to year end or should the financial statement show the financial information for the entire year as one company (LLC & Corporation combined)? If combined, how would I present the equity and the conversion on the financial statements?
In addition, since the company is in the R&D stage with significant losses every year, some of the LLC members had negative equity at the time of the conversion. How should this be treated? When they converted, the negative equity investors were still given shares in the corporation based on the initial investment amount. Is this treatment correct?
Thank you,
Taewon
I had a question about financial statement presentation for an audit. In 2017, an LLC converted to a Corporation mid-year. At the time of the conversion, the net income to date was closed and allocated to the Corporation's equity. On the financial statements, I am unsure if we need to treat the LLC and the Corporation as two different entities and only show the financial information from the date of the conversion to year end or should the financial statement show the financial information for the entire year as one company (LLC & Corporation combined)? If combined, how would I present the equity and the conversion on the financial statements?
In addition, since the company is in the R&D stage with significant losses every year, some of the LLC members had negative equity at the time of the conversion. How should this be treated? When they converted, the negative equity investors were still given shares in the corporation based on the initial investment amount. Is this treatment correct?
Thank you,
Taewon
