Wiley Practitioner's Guide to GAAP 2022

12ASC 272 LIMITED LIABILITY ENTITIES

• Perspective and Issues
  • Subtopic
• Definitions of Terms
• Concepts, Rules, and Examples
  • Reporting by Limited Liability Companies and Partnerships
    • Presentation
    • Members’ Equity
    • Comparative Statements
    • Disclosures
  • Other Sources

PERSPECTIVE AND ISSUES

Subtopic

ASC 272, Limited Liability Entities, contains one subtopic:

• ASC 272-10, Overall, that contains guidance for limited liability entities organized in the United States that prepare financial statements under U.S. GAAP.

DEFINITIONS OF TERMS

ASC 272 does not contain a glossary. However, it does define a limited liability company as having the following characteristics:

• It is an unincorporated association of two or more persons
• Its members have limited personal liability for the obligations or debts of the entity
• It is classified as a partnership for federal income tax purposes.

Further, ASC 272 states that for a limited liability company to be classified as a partnership for federal tax purposes, it must lack at least two of the following characteristics:

• Limited liability
• Free transferability of interests
• Centralized management
• Continuity of life.

  (ASC 272-10-5-6)

CONCEPTS, RULES, AND EXAMPLES

Reporting by Limited Liability Companies and Partnerships

Accounting theory and practice have overwhelmingly developed within the context of businesses organized as traditional corporations. Accordingly, there is little official guidance for entities organized as partnerships ...