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RSquared
Level 1

Recording investment in another company

Hello,

 
My S corp will invest some funds in an LLC  (the funds are an investment not loan) however after a while the invested amount will incur income, so how do I manage the followings:
 
- Recording the outgoing amount (the invested funds)
- Managing the income from the investment
 
I want to do it correctly from the beginning so I don't run into issues later.
Would appreciate detailed steps as I'm a newbie!  Thank you!

 

2 Comments
Rustler
Level 15

Recording investment in another company

Create an asset account named for the company you are investing in

enter your payment to the company and use that asset account as the expense (reason) for the payment

 

income received is just that, income, I would create an income account named asset investment income as an Other Income type (unless this is your business main type of income) and post income to that account.  Income received does nothing to the basis of the investment, cost is what you pay.

RSquared
Level 1

Recording investment in another company

Thank you so much for your response!

 

In my Chart of Accounts, do I select Account Type --> Other Assets?

For the Detail Type-->Other Long Term Assets?

 

Again, I appreciate your help!!

 

 

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