Scribd Logo
Upload

Welcome to Scribd!

  • 37 views

    Partnership Dissolution Admission of Partner

    Uploaded by

    Adan Eve
    This document discusses accounting considerations for partnership dissolution. It begins by defining partnership dissolution and outlining causes like a partner ceasing business association. Key accounting topics are then covered in more depth, including admitting a new partner through purchasing interest or contributing assets, a partner withdrawing or retiring, death of a partner, and incorporating the partnership. Worked problems demonstrate calculating new capital balances and profit/loss ratios under different dissolution scenarios.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd

    Partnership Dissolution Admission of Partner

    Uploaded by

    Adan Eve
    37 views63 pages
    This document discusses accounting considerations for partnership dissolution. It begins by defining partnership dissolution and outlining causes like a partner ceasing business association. Key accounting topics are then covered in more depth, including admitting a new partner through purchasing interest or contributing assets, a partner withdrawing or retiring, death of a partner, and incorporating the partnership. Worked problems demonstrate calculating new capital balances and profit/loss ratios under different dissolution scenarios.

    Copyright

    © © All Rights Reserved

    Available Formats

    PPTX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This document discusses accounting considerations for partnership dissolution. It begins by defining partnership dissolution and outlining causes like a partner ceasing business association. Key accounting topics are then covered in more depth, including admitting a new partner through purchasing interest or contributing assets, a partner withdrawing or retiring, death of a partner, and incorporating the partnership. Worked problems demonstrate calculating new capital balances and profit/loss ratios under different dissolution scenarios.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    37 views63 pages

    Partnership Dissolution Admission of Partner

    Uploaded by

    Adan Eve
    This document discusses accounting considerations for partnership dissolution. It begins by defining partnership dissolution and outlining causes like a partner ceasing business association. Key accounting topics are then covered in more depth, including admitting a new partner through purchasing interest or contributing assets, a partner withdrawing or retiring, death of a partner, and incorporating the partnership. Worked problems demonstrate calculating new capital balances and profit/loss ratios under different dissolution scenarios.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    You are on page 1of 63

    Who’s Reporting?

    Sanita, Canengneng, Natividad,


    Shaira Mica Annalyn Mary Ann
    Home TV Shows Movies Latest My List

    INTRODUCTION | ACCOUNTING CONSIDERATIONS|


    PROBLEM-SOLVING

    PARTNERSH
    IP
    DISSOLUTI
    How to account dissolution of partnership

    START
    PART
    INTRODUCTI
    1:
    ON
    WHAT TO KNOW?
    • Definition of Dissolution
    • Causes of Partnership Dissolution
    • Accounting Considerations
    • Methods/Procedures
    WHAT IS PARTNERSHIP DISSOLUTION

    Is the change in the relation


    of the parties caused by any
    partner ceasing to be
    associated in the carrying on
    of the business
    (Article 1828 of Civil Code)

    Part 1: Introduction
    CAUSES OF PARTNERHSIP DISSOLUTION

    PARTNERS
    LAW
    JUDICIAL DECREE
    Part 1: Introduction
    ACCOUNTING CONSIDERATIONS

    ADMISSION
    WITHDRAWAL/RETIREMEN
    DEATH
    T
    INCORPORATION
    Part 1: Introduction
    METHODS/PROCEDURES TO CONSIDER

    UPDATE
    ASCERTAIN
    RECORD AND REVISE
    Part 1: Introduction
    PART
    ACCOUNTING
    2:
    CONSIDERATIONS
    WHAT TO KNOW?
    • ADMISSION OF NEW PARTNER
    • WITHDRAWAL/RETIREMENT
    • DEATH
    • INCORPORATION
    ADMISSION OF A NEW PARTNER

    PURCHASE OF INTEREST
    INVESTMENT/ASSET
    CONTRIBUTION
    Part 2: ACCOUNTING CONSIDERATIONS
    ADMISSION OF A NEW PARTNER: PURCHASE OF INTEREST

    WITHOUT WITH
    • Transfer of ownership Partnership assets will
    • Personal transaction be affected
    • Current P/L ratio
    should be revised

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: PURCHASE OF INTEREST

    WITHOUT WITH
    • Transfer of ownership Partnership assets will
    • Personal transaction be affected
    • Current P/L ratio
    should be revised

    Part 2: ACCOUNTING CONSIDERATIONS


    THINGS TO REMEMBER

    ANY CONSIDERATION
    PAID/RECEIVED IS NOT
    RECORDED IN THE
    PARTNERSHIP’S BOOKS
    Part 2: ACCOUNTING CONSIDERATIONS
    THINGS TO REMEMBER

    NO GAIN OR LOSS
    IS RECOGNIZED IN THE
    PARTNERSHIP’S BOOKS

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: PURCHASE OF INTEREST

    ILLUSTRA
    TION
    The capital balances and profit/loss ratio of the
    partners in ABC Co. are as follows:

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: PURCHASE OF INTEREST

    80 000 x 50%

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: PURCHASE OF INTEREST

    50 000 – 40 000= 10 000 gain 30% x 50%

    IS NOT RECOGNIZED
    Part 2: ACCOUNTING CONSIDERATIONS
    ADMISSION OF A NEW PARTNER: PURCHASE OF INTEREST

    40 000 x 25%

    60 000 x 25%

    80 000 x 25% 180 00 x 25%

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: PURCHASE OF INTEREST

    P/L x 25%

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: PURCHASE OF INTEREST

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: PURCHASE OF INTEREST

    40 000 x 20%

    60 000 x 20%

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: PURCHASE OF INTEREST

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: PURCHASE OF INTEREST

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: PURCHASE OF INTEREST
    36 000 x (40%/70%)

    36 000 x (30%/70%)

    40% - (20% x 4/7)

    30% - (20% x 3/7)

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: PURCHASE OF INTEREST

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: PURCHASE OF INTEREST

    50 000 x 40%

    50 000 x 60%

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: PURCHASE OF INTEREST

    150 000 x 20%

    250 000 x 20%

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: PURCHASE OF INTEREST

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: PURCHASE OF INTEREST

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: PURCHASE OF INTEREST
    20 000 x 50%

    20 000 x 30%

    20 000 x 20%

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: PURCHASE OF INTEREST

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: PURCHASE OF INTEREST

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: PURCHASE OF INTEREST

    50 000 x P/L

    75 000 x P/L

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: PURCHASE OF INTEREST

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: PURCHASE OF INTEREST

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: PURCHASE OF INTEREST

    50 000 x P/L
    Ratio

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: PURCHASE OF INTEREST

    Interest x 30%

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: INVESTMENT/ASSET CONTR
    TERMINOLOGIES
    • Total Contributed Capital (TCC)- sum of capital
    balances of the old partners and the actual investment of
    the new partner

    • Total Agreed Capital- total capital of the partnership after


    considering the capital credit given to each of the partners

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: INVESTMENT/ASSET CONTR
    TERMINOLOGIES
    • Agreed Capital New Partner -amount credited to the new
    partner after adjustments
    • Agreed Capital Old Partners -amount credited old partner after
    adjustments
    • Asset Revaluation –needs adjustment in asset values upon
    admission of new partner. The adjustment in assets may be
    determined as the difference of TAC and TCC. Given to Old
    Partner
    Part 2: ACCOUNTING CONSIDERATIONS
    ADMISSION OF A NEW PARTNER: INVESTMENT/ASSET CONTR
    TERMINOLOGIES
    • Goodwill- amount given to any partner (old or new) for
    the intangible benefits he will contribute to the
    partnership

    • Bonus- amount of capital or equity transferred by one


    partner to another partner (old to new – new to old)

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: INVESTMENT/ASSET CONTR
    TCC = TAC ----> CC-NP = AC-NP
    (No, Revaluation, Goodwill and Bonus)

    TCC ≠ TAC ----> CC-NP = AC-NP


    (With Revaluation/Goodwill, no Bonus)

    TCC = TAC ----> CC-NP ≠ AC-NP


    (No Revaluation/Goodwill, with Bonus)

    TCC ≠ TAC ----> CC-NP ≠ AC-NP


    (with Revaluation/Goodwill, with Bonus)

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: INVESTMENT/ASSET CONTR

    1 000 000 x 50%

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: INVESTMENT/ASSET CONTR

    Revaluation

    1 250 000 x 40%

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: INVESTMENT/ASSET CONTR

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: INVESTMENT/ASSET CONTR

    P/L x 40%

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: INVESTMENT/ASSET CONTR

    Bonus

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: INVESTMENT/ASSET CONTR

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: INVESTMENT/ASSET CONTR

    50% x 40%

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: INVESTMENT/ASSET CONTR

    1 375 000 x 50%

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: INVESTMENT/ASSET CONTR

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: INVESTMENT/ASSET CONTR

    Part 2: ACCOUNTING CONSIDERATIONS


    ADMISSION OF A NEW PARTNER: INVESTMENT/ASSET CONTR

    Part 2: ACCOUNTING CONSIDERATIONS


    Admission of Withdrawal/Retirement/ Incorporation
    Partner Death

    Problem-Solving
    PROBLEM SOLVING

    Part 3: PROBLEM SOLVING


    PROBLEM SOLVING

    Capital Interest x 80%

    Part 3: PROBLEM SOLVING


    PROBLEM SOLVING

    Part 3: PROBLEM SOLVING


    PROBLEM SOLVING

    Revaluation

    Transfer
    of
    Interest

    Part 3: PROBLEM SOLVING


    PROBLEM SOLVING

    Part 3: PROBLEM SOLVING


    PROBLEM SOLVING

    Part 3: PROBLEM SOLVING


    PROBLEM SOLVING

    Part 3: PROBLEM SOLVING


    Thank you
    For listening!
    100% Done 19+ 3 Members
    Sign
    Sign In
    In
    Reporters: Sanita – Canengneng – Natividad
    Subject: Accounting for Special Transaction
    Sign
    Sign Out
    Out
    Code: AFAR 2

    Questions? Clarifications FAQ About Us Help Center

    You might also like