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    Afar - Partnership Accounting

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    farah mae raquinio
    The document outlines the key processes in partnership accounting including formation, operation, dissolution, and liquidation. Formation involves valuing assets and realigning capital. Operation includes computing net income/loss, allocating shares, and updating partner capital balances. Dissolution can occur due to changes in ownership or partner events like retirement, admission, incapacity or death. Liquidation winds up the business by distributing cash first to external then internal creditors and partners according to preset schedules that consider assumed losses and expenses.

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    © All Rights Reserved
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    Afar - Partnership Accounting

    Uploaded by

    farah mae raquinio
    6 views3 pages
    The document outlines the key processes in partnership accounting including formation, operation, dissolution, and liquidation. Formation involves valuing assets and realigning capital. Operation includes computing net income/loss, allocating shares, and updating partner capital balances. Dissolution can occur due to changes in ownership or partner events like retirement, admission, incapacity or death. Liquidation winds up the business by distributing cash first to external then internal creditors and partners according to preset schedules that consider assumed losses and expenses.

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    AFAR_PARTNERSHIP ACCOUNTING

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    The document outlines the key processes in partnership accounting including formation, operation, dissolution, and liquidation. Formation involves valuing assets and realigning capital. Operation includes computing net income/loss, allocating shares, and updating partner capital balances. Dissolution can occur due to changes in ownership or partner events like retirement, admission, incapacity or death. Liquidation winds up the business by distributing cash first to external then internal creditors and partners according to preset schedules that consider assumed losses and expenses.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    6 views3 pages

    Afar - Partnership Accounting

    Uploaded by

    farah mae raquinio
    The document outlines the key processes in partnership accounting including formation, operation, dissolution, and liquidation. Formation involves valuing assets and realigning capital. Operation includes computing net income/loss, allocating shares, and updating partner capital balances. Dissolution can occur due to changes in ownership or partner events like retirement, admission, incapacity or death. Liquidation winds up the business by distributing cash first to external then internal creditors and partners according to preset schedules that consider assumed losses and expenses.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    Advanced Financial Accounting & Reporting

    PARTNERSHIP ACCOUNTING
    FORMATION OPERATION DISSOLUTION LIQUIDATION
     Valuation of Assets  Computation of Net Income /Net loss Change in ownership not resulting to TERMINATION Winding up of the business
     Re-Alignment of Capital  Allocation of share in Net/Net Loss  Retirement of Partner  Lump-sum
     Periodic updating of Partner’s Capital Balances  Admission of new Partner  Installment
     Incorporation /Incapacity of a Partner 1. Safe Payment Schedule
     Death of a Partner-before & after (ASSUMED LOSSES & ASSUMED
    CONTINGENT EXPENSES)
    2. Cash Priority Program
     Valuation of Assets  Computation of Net Income /Net loss Partnership Personal
    ASSETS  Admission of new Partner 1. External Creditors Personal Creditors
    Cash -Face Value Sales Revenue xx Purchase(New vs. Old Pr) 2. Internal Creditors PPs Creditors
    Non-Cash Less : Expenses (xx)  Book Value 3. Partners’ Capital Partnersd
    1. AR -Net of ADA Net Income/Loss BEFORE BIS xx  Revaluation 4. Partners’ profit
    2. Inventory -LCRNV Less : BIS (xx) Under/Over Valuation 5. Partners
    3. Land/Bldg -AFAB Net Income AFTER BIS xx BY PURCHASE: BY INVESTMENT:
    4. CA/NCA Bonus -there is a bonus if the BASE IS POSITIVE Purchase Price Purchase Price
    Liabilities -assumed by PP only Interest - Simple vs nominal rate Divided by: Capital Interest % Div. by: Capital Interest %
    Salaries - Proprietary theory (ALLOCATE TO PROFIT) Fair Value Fair Value
    Capital -Assets -Liabilities -Entity Theory ( EXPENSE) Less : Book Value Less : Investment
    Under/Over Total
    Less : Book Value
     Re-Alignment of Capital  Allocation of share in Net/Net Loss Under/Over
    Profit Investment (New vs. PP)
    TCC= TAC 1. Profit Sharing
    TCC > TAC - WITHDRAWAL 2. Original Capital TCC= TAC
    TCC<TAC -INVESTMENT Loss TCC > TAC - WITHDRAWAL
    1. Bonus w/ Cash Settlement 1. Loss Sharing TCC<TAC -INVESTMENT
    2. Bonus w/out Cash Settlement 2. Proft Sharing 1. Bonus w/ Cash Settlement
    3. Original Capital 2. Bonus w/out Cash Settlement
    *Goodwill is not allowed*  Periodic updating of Partner’s Capital Balances
    Possible if the partner brings good image to Beginning Balance xx  Retirement of Partner & Incapacity of a Partner
    the partnership. + Investments xx 1. Sold to 3rd parties
    -Withdrawals (xx) 2. Sold to partners
    -Drawings (xx) 3. Sold to the PP
    +- Share in Net Loss/Income xx  Death of a Partner & Incorporation -before & after
    Ending Balance xx

    1
    Advanced Financial Accounting & Reporting
    PARTNERSHIP ACCOUNTING

    LUMPSUM

    Cash NCA Liabilities Capital 1 Capital 2 Capital 3

    Balances

    Realization

    Contribution

    Liquidation Expenses

    Payment to EXTERNAL CREDITORS

    BALANCE

    Absorption

    Balance

    Payment to partners

    BALANCE

    2
    Advanced Financial Accounting & Reporting
    PARTNERSHIP ACCOUNTING

    SAFEPAYMENT SCHEDULE

    Cash NCA Liabilities Capital 1 Capital 2 Capital 3

    Balances

    Collection of AR Partnership Liquidation Schedule (ACTUAL)


    Realization

    Payment to External

    BALANCE

    ASSUMED LOSSES -NCA

    ASSUMED LOSSES -CE SAFE PAYMENT SCHEDULE


    BALANCE

    Absorption

    Balance, Capital

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