Flipping houses with investor money

1 Reply

I have a question I'm trying to wrap my head around. I have a client that has a parent company that flips houses. An LLC collected private investments to invest in the parent to pay for the fix and flip in order to hope for a gain at time of sale.

My question is: if the LLC wants to send out investor statements during the time the house is still being rehabbed, I feel like I should record an unrealized gain on the investor side in the LLC because the value of their investment is going up while the parent is fixing up the property. Clients are on the accrual method and follow gaap.

Any advice would be awesome.

Thank you in advance! Roxie

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