TTM 9 Akuntansi Partnership

ACCOUNTING
—INDONESIA ADAPTATION Volume 2
Carl S. Warren 4th EDITION

James M. Reeve
Jonathan E. Duchac
Ersa Tri Wahyuni
Amir Abadi Jusuf
CHAPTER 12
ACCOUNTING FOR PARTNERSHIP
Describe the
Learning Objectives
characteristics of
proprietorships,
partnerships, CV, and
After studying this chapter, you
Firm. should be able to:
Describe and illustrate the

accounting for forming a
Analyze and interpret
partnership and for
employee efficiency.
dividing the net income
and net loss of a
partnership.
LEARNING
OBJECTIVES
Describe and illustrate

Prepare the statement the accounting for
of partnership equity. partner admission and
withdrawal.
Describe and illustrate

the accounting for
liquidating a
partnership.
www.penerbitsalemba.com
Legal Forms of Business in Indonesia
Civil Partnership
Proprietorships
Firm
Corporation
Cooperative Limited
Partnership (CV) Village-Owned
Social Enterprise
(BUMDes)
Partnerships (slide 1 of 2)
o A partnership is an
association of two or
more persons who
own and manage a Firm
business for profit.
Civil
Partnership
Partnerships (slide 2 of 2)
1. Nontaxable entity 1. A partnership has a limited

2. A partnership is relatively life
easy to form 2. The partners have
3. A partnership is relatively unlimited liability
easy and inexpensive to 3. Partners have co-
organize, requiring only an ownership of partnership
agreement between two or property
more persons (partnership 4. Another characteristic of a
agreement) partnership is mutual agency
Limited Partnership (CV)
o CV is a partnership consisting of one or more general partner (active
partner) and one or more silent partner (or passive partner).
ACTIVE PARTNER
- personally liable for the - contributes capital to
PASSIVE PARTNER
entire debt of the the partnership, is liable
partnership only to the extent of his
contribution
- gains or losses only to
the extent of his
contribution
Firm (Fa)
o Firma is another common form of All the

partners have
partnership that uses the name of equal
the partner as their business responsibility
identity. according to
the law
o The example of a law firm is Oto
C. Kaligis and Associates Advocate
and Legal Consultant where OC. Characteristics Required by the
Kaligis is one of the firm’s All partners
law to have
separate
partners. may act for the bookkeeping
name of the
o The example of accounting firm firm
from the owner
(partner)
for example is KAP Morhan &
Rekan (member of Allinial Global).
Cooperatives
o Cooperatives or Koperasi in Indonesia (or popular as Co-Op in other

countries) are enterprises who are operating mainly to serve their own
members.
o Each member contributes equity capital.
o Own the control of the cooperatives on the basis of one-member, one-
vote principle (and not in proportion to his or her equity contribution).
o Example:
o Farmer’s cooperatives, such as KPBS (Koperasi Peternakan Bandung
Selatan Pangalengan) in West Java.
o Cooperatives for small entrepreneurs such as Koperasi Pengusaha
Batik Djakarta (Jakarta Batik Entrepreneurs Cooperatives).
Comparing Proprietorships and Partnerships
Proprietorship Partnership
Complexity of formation:
Complexity of formation: Simple
Moderate
Legal liability: No limitation Legal liability: No limitation
Taxation: Nontaxable entity Taxation: Nontaxable entity
Limitation on life of entity : Limitation on life of entity:

Limited Limited
Access to capital: Limited Access to capital: Limited
Forming a Partnership (slide 1 of 3)
The investments of each The assets contributed by a
1 partner are recorded in 2 partner are debited to the
separate entries partnership asset accounts
If any liabilities are assumed

by the partnership, the
3 partnership liability accounts
The partner’s
capital account
are credited 4 is credited for
the net amount
Example Exercise 12-1: Journalize Partner’s
Original Investment (slide 1 of 2)
 Renaldi Hariyadi contributed equipment, inventory, and

Rp34,000,000 cash to a partnership. The equipment had a book
value of Rp23,000,000 and a market value of Rp29,000,000. The
inventory had a book value of Rp60,000,000, but only had a
market value of Rp15,000,000, due to obsolescence. The
partnership also assumed a Rp12,000,000 note payable owed
by Renaldi that was used originally to purchase the equipment.
Provide the journal entry for Renaldi’s contribution to the

partnership.
Follow My Example 12-1 (slide 2 of 2)
 Journal Entry to the Partnership

Apr. 1 Cash 34,000,000
Inventory 15,000,000
Equipment 29,000,000
Notes Payable 12,000,000
Journal Entry
Renaldi Hariyadi , Capital 66,000,000
Dividing Income
o Income or losses of the

partnership are divided as
Service of specified in the partnership
the partners
agreement.
Common
methods
o If there is no specification
Services and or agreement, income and
investments
of the losses are divided equally.
partners
Dividing Income—Services of Partners
(slide 1 of 3)
These services are often

recognized by partner Such allowances are
Dividing partnership
salary allowances that recorded as divisions of
income is based on the
reflect differences in net income and are
services provided by each
partners’ abilities and credited to the partners’
partner to the partnership
time devoted to the capital accounts
partnership
Example: Dividing Income—Services of
Partners (slide 2 of 3)
 Assume that the partnership agreement of Jeni Maharani and Citra
Kirana provides for the following.
Monthly Salary Allowance
Jeni Maharani Rp5,000,000
Citra Kirana 4,000,000
Remaining net income: Divided Equally
 Division of net income:

Net income ………………………………………………………………………………………………………… Rp150,000,000
J. Maharani C. Kirana Total
Annual salary allowance Rp60,000,000 Rp48,000,000 Rp108,000,000
Remaining income Rp21,000,000 Rp21,000,000 Rp 42,000,000
Net income Rp81,000,000 Rp69,000,000 Rp150,000,000
Partners (slide 2 of 3)
 The entry for closing Income Summary and dividing net income is as
follows:
Dec.
31 Income Summary 150,000,000
Journal Entry
Jeni Maharani, Capital 81,000,000
Citra Kirana , Capital 69,000,000
If Jeni and Citra withdraw their salary allowances monthly, the withdrawals
are debited to their drawing accounts. At the end of the year, the drawing
account debit balances of Rp60,000,000 and Rp48,000,000 are then closed
to the partners’ capital accounts.
Dividing Income—Services of Partners and
Investments (slide 1 of 3)
One such method of dividing

partnership income would be as
Dividing partnership > Investment follows:
income is based upon 1. Partner salary allowances
interest on capital balances = 2. Interest on capital
of each partner investments
> Income
3. Any remaining income
equally
Partners and Investments (slide 2 of 3)
 Assume that the partnership agreement for Jeni and Citra provides for
the following:
Monthly Salary Allowance
1 Jeni Maharani
Citra Kirana
Rp5,000,000
4,000,000
Interest of 12% on each partner’s capital balance as of January 1.

2 Jeni Maharani, Capital
Citra Kirana, Capital
Rp160,000,000
Rp120,000,000
3Remaining income: Divided Equally

Partners and Investments (slide 3 of 3)
Net income………………………………………………………………………………………………………….… Rp150,000,000
Interest allowance Rp19,200,000 Rp14,400,000 Rp 33,600,000
Total Rp79,200,000 Rp62,400,000 Rp141,600,000
Remaining income Rp 4,200,000 Rp 4,200,000 Rp 8,200,000
12% × Rp160,000,000 12% × Rp120,000,000
 The entry for closing Income Summary and dividing net income is as follows:
Dec.
Journal Entry
Citra Kirana, Capital 66,600,000
Allowances Exceed Net Income (slide 1 of 2)
 The total of the salary (Rp108,000,000) and interest

(Rp33,600,000) allowances is Rp141,600,000 with the net
income is Rp100,000,000.
 In this case, the total of the allowances of Rp141,600,000
exceeds the net income by Rp41,600,000 (Rp100,000,000 2
Rp141,600,000). This amount is divided equally between Jeni
and Citra.
 Thus, Rp20,800,000 (Rp41,600,000/2) is deducted from each
partner’s share of the allowances. The final division of net
income between Jeni and Citra is as follows.
Example: Allowances Exceed Net Income
(slide 2 of 2)
Net income………………………………………………………………………………………………………………………. Rp100,000,000

Interest allowance Rp19,200,000 Rp14,400,000 Rp 33,600,000
Total Rp79,200,000 Rp62,400,000 Rp141,600,000
Deduct excess of allowance over income Rp20,800,000 Rp20,800,000 Rp 41,600,000
Net income* Rp58,400,000 Rp41,600,000 Rp100,000,000
*In the event of a net loss, the amount deducted from the total allowances would be the “excess of allowances over loss” or the sum of the net loss and the allowances, divided according to the sharing ratio.
 The entry for closing Income Summary and dividing net income is as follows:
Dec.
Journal Entry
Citra Kirana, Capital 41,600,000
Example Exercise 12-2: Dividing Partnership
Net Income (slide 1 of 2)
 Sinta Permatasari and Clara Putri formed a partnership, dividing
income as follows:
1. Annual salary allowance to Sinta of Rp42,000,000.
2. Interest of 9% on each partner’s capital balance on January 1.
3. Any remaining net income divided equally.
 Sinta and Clara had Rp20,000,000 and Rp150,000,000 in their
January 1 capital balances, respectively. Net income for the year
was Rp240,000,000.
How much net income should be distributed to Sinta and Clara?
 Divisionof net income:

Net income………………………………………………………………………………………………………… Rp240,000,000
S. Permatasari Clara Putri Total
Annual salary allowance Rp 42,000,000 Rp 0 Rp 42,000,000

Interest allowance Rp 1,800,000 Rp 13,500,000 Rp 15,300,000
Total Rp 43,800,000 Rp 13,500,000 Rp 57,300,000
Remaining income Rp 91,350,000 Rp 91,350,000 Rp182,700,000
9% × Rp20,000,000
9% × Rp150,000,000
(Rp240,000,000 – Rp42,000,000 – Rp15,300,000) × 50%
Admitting a Partner (slide 1 of 5)
Purchasing
Purchasing an
an interest
interest from
from one
one Contributing
Contributing assets
assets to
to the
the
or
or more
more of
of the
the existing
existing partners
partners partnership
partnership
Existing Partner New Partner New Partner
Ownership Interest Ownership Interest
No change in partnership assets Partnership assets increase

Revaluation of Assets (slide 1 of 2)
o Before a new partner is admitted, the balances of a

partnership’s asset accounts should be stated at
current values. If necessary, the accounts should be
adjusted.
o Any net adjustment (increase or decrease) in asset
values is divided among the capital accounts of the
existing partners, similar to the division of income.
Example Exercise 12-3: Revaluing and Contributing
Assets to a Partnership (slide 1 of 2)
 Rahmat Subagja invested Rp45,000,000 in the Lucky & Karina

partnership for ownership equity of Rp45,000,000. Prior to
the investment, land was revalued to a market value of
Rp260,000,000 from a book value of Rp200,000,000. Lucky
Perdana and Karina Thamrin share net income in a 1:2 ratio.
a) Provide the journal entry for the revaluation of land.
b) Provide the journal entry to admit Rahmat.
a) Journal Entry for the Revaluation of Land 1/3 × Rp60,000,000
xxx xx Land 60,000,000

20xx Lucky Perdana, Capital 20,000,000
Journal Entry
Karina Thamrin, Capital 40,000,000
2/3 × Rp60,000,000
b) Journal Entry to Admit Rahmat Subagja

xxx xx Cash 45,000,000
20xx Rahmat Subagja , Capital 45,000,000
Journal Entry
Partner Bonuses (slide 1 of 7)
Bonus
Bonus to
to existing
existing partner
partner Bonus
Bonus to
to new
new partner
partner
New Partner Existing Partner New Partner Existing Partner
Ownership interest is less Ownership interest is greater
than amount paid than amount paid
Bonus Bonus
Example Exercise 12-4: Partner Bonus
 Lusiana has a capital balance of Rp51,000,000 after adjusting

assets to fair market value. Qonita contributes Rp24,000,000
to receive a 30% interest in a new partnership with Lusiana.
Determine the amount and recipient of the partner bonus.
Equity of Lusiana Rp51,000,000

Qonita’s contribution 24,000,000
Total equity after admitting Qonita 75,000,000
Qonita’s equity interest × 30%
Qonita’s equity after admission Rp22,500,000
Qonita’s contribution Rp24,000,000
Qonita’s equity after admission Rp25,500,000
Bonus paid to Lusiana Rp 1,500,000
Withdrawal of a Partner (slide 1 of 2)
o The withdrawing partner’s interest is normally sold to the:

If the existing partners purchase the withdrawing partner’s interest, the purchase and sale of the
partnership interest is between the partners as individuals.
If the partnership purchases the withdrawing partner’s interest, the assets and the owners’ equity of the partnership are reduced by
the purchase price. Before the purchase, the asset accounts should be adjusted to current values.
EXISTING PARTNERS
PARTNERS HIP
Withdrawal of a Partner (slide 2 of 2)
 Existing partners purchase the withdrawing partner’s interest

Capital of the Partner Withdrawing xxx
Journal Entry
Capital of the Partners Buying the Additional
Interest xxx
 Partnership purchases the withdrawing partner’s interest

Capital of the Partner Withdrawing xxx
Journal Entry
Cash xxx
If not enough partnership cash is
available to pay the withdrawing
partner, a liability may be created
(credited) for the amount owed the
withdrawing partner
Death of a Partner
The partnership accounts should be closed as of the date of
1
●
death
The net income for the current period should then be determined
2
●
and divided among the partners’ capital accounts
3 The asset accounts should also be adjusted to current values and the amount of
●
any adjustment divided among the capital accounts of the partners

JOURNAL ENTRY
RECORDING
Deceased Partner’s Capital xxx

Journal Entry
Liability (which is payable to the deceased’s
estate) xxx
Liquidating Partnerships
When a partnership goes out of business, it

sells the assets, pays the creditors, and
distributes the remaining cash or other assets
to the partners. This winding-up process is
called the liquidation of the partnership.
Steps in Liquidating a Partnership
PE
RS
EK
Step 1 Sale of Assets UT
U AN
Realization
Step 2 Division of Gain or Loss Gain or Loss

on Realization
Income-
sharing
Ratio
Pay
me BANK
Liab nt of
ilitie
s
Step 3
Capital Account
Balances
Distribution to CAPITAL A
Step 4 Partners Bal.
CAPITAL Bxxx
Bal.
xxx
Example Exercise 12-5: Liquidating Partnerships
 Prior to liquidating their partnership, Thamrin and Ganjar had capital accounts of
Rp50,000,000 and Rp100,000,000, respectively. Prior to liquidation, the partnership
had no other cash assets than what was realized from the sale of assets. These assets
were sold for Rp220,000,000. The partnership had Rp20,000,000 of liabilities.
Thamrin and Ganjar share income and losses equally. Determine the amount received
by Ganjar as a final distribution from the liquidation of the partnership.
Ganjar’s equity prior to liquidation Rp100,000,000

Realization of asset sale Rp220,000,000
Book value of assets
(Rp50,000,000 + Rp100,000,000 + Rp20,000,000) 170,000,000
Gain on liquidation Rp 50,000,000
Ganjar’s share of gain (50% × Rp50,000,000) 25,000,000
Ganjar’s cash distribution Rp125,000,000
Capital Deficiency
The share of a loss on realization may be

greater than the balance in a partner’s capital
account. The resulting debit balance in the
capital account is called a deficiency. It
represents a claim of the partnership against
the partner.
Example Exercise 12-6: Liquidating Partnerships—
Deficiency (slide 1 of 2)
 Prior to liquidating their partnership, Susan and Beni had
capital accounts of Rp20,000,000 and Rp80,000,000,
respectively. The partnership assets were sold for
Rp40,000,000. The partnership had no liabilities. Susan and
Beni share income and losses equally.
a) Determine the amount of Susan’s deficiency.
b) Determine the amount distributed to Beni, assuming
Susan is unable to satisfy the deficiency.
a) The amount of Susan’s deficiency:

Susan’s equity prior to liquidation Rp20,000,000
Realization of asset sale Rp 40,000,000
Book value of assets
(Rp20,000,000 + Rp80,000,000) 100,000,000
Loss on liquidation Rp 60,000,000
Susan’s share of loss (50% × Rp50,000,000) 30,000,000
Susan’s deficiency (Rp10,000,000)
b) The amount distributed to Beni, assuming Susan is unable to

satisfy the deficiency:
Rp40,000,000 = Rp80,000,000 – Rp30,000,000 share of loss –
Rp10,000,000 Sarah deficiency.
Statement of Partnership Equity (slide 1 of 2)
o Reporting changes in partnership capital accounts is

similar to that for a proprietorship. The primary
difference is that there is a capital account for each
partner.
o The changes in partner capital accounts for a period of
time are reported in a statement of partnership
equity.
Statement of Partnership Equity (slide 2 of 2)
Investors Associates
Statement of Partnership Equity
For the Year Ended December 31, 2016
Desi Sekarwati, Kania Ayuningtias, Total Partnership
Capital Capital Capital
Balance, January 1, 2016 Rp245,000,000 Rp365,000,000 Rp610,000,000

Capital additions 50,000,000 50,000,000
Net income for the year 40,000,000 80,000,000 120,000,000
Less partner withdrawals (5,000,000) (45,000,000) (50,000,000)
Balance, December 31, 2016 Rp330,000,000 Rp400,000,000 Rp730,000,000
Each partner’s capital account is shown as a separate column. The

partner capital accounts may change due to capital additions, net
income,www.penerbitsalemba.com
or withdrawals.
Financial Analysis and Interpretation: Revenue per
Employee
o Revenue per employee is a measure of the efficiency of the

business in generating revenues.
o It is computed as follows:
𝑹𝒆𝒗𝒆𝒏𝒖𝒆
𝑹𝒆𝒗𝒆𝒏𝒖𝒆 𝒑𝒆𝒓 𝒆𝒎𝒑𝒍𝒐𝒚𝒆𝒆=
𝑵𝒖𝒎𝒃𝒆𝒓 𝒐𝒇 𝑬𝒎𝒑𝒍𝒐𝒚𝒆𝒆𝒔
Example Exercise 12-7: Revenue per Employee (slide 1 of
3)
 KAP Rama dan Rekan earned Rp4,200,000,000 during 2016

using 20 employees. During 2017, the firm grew revenues to
Rp4,560,000,000 and expanded the staff to 24 employees.
a) Determine the revenue per employee for each year.
b) Interpret the results.
a) 𝑅𝑒𝑣𝑒𝑛𝑢𝑒
𝑅𝑒𝑣𝑒𝑛𝑢𝑒
𝑝𝑒𝑟 𝐸𝑚𝑝𝑙𝑜𝑦𝑒𝑒 ¿ 𝑁𝑢𝑚𝑏𝑒𝑟
𝑜𝑓 𝐸𝑚𝑝𝑙𝑜𝑦𝑒𝑒𝑠
Revenue per employee, 2016:
𝑝𝑒𝑟 𝐸𝑚𝑝𝑙𝑜𝑦𝑒𝑒 ¿ 20Rp4,200,000,000

𝐸𝑚𝑝𝑙𝑜𝑦𝑒𝑒𝑠

𝑝𝑒𝑟 𝐸𝑚𝑝𝑙𝑜𝑦𝑒𝑒 ¿ Rp210,000,000 per employee
Revenue per employee, 2017:

Rp4,560,000,000
𝑝𝑒𝑟 𝐸𝑚𝑝𝑙𝑜𝑦𝑒𝑒 ¿ 24 𝐸𝑚𝑝𝑙𝑜𝑦𝑒𝑒𝑠

𝑝𝑒𝑟 𝐸𝑚𝑝𝑙𝑜𝑦𝑒𝑒 ¿ Rp190,000,000 per employee
b) While KAP Rama dan Rekan grew revenues by

Rp360,000,000 (Rp4,560,000,000 – Rp4,200,000,000), or
8.6% (Rp360,000,000/Rp4,200,000,000), the number of
employees expanded by 4, or 20% (4/20). The growth in
revenue was less than the growth in the number of
employees; thus, the revenue per employee declined
between the two years. The firm was less efficient in
generating revenues from its employees in 2017.
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ACCOUNTING

—INDONESIA ADAPTATION Volume 2

Carl S. Warren 4th EDITION

Describe and illustrate the

Describe and illustrate

Describe and illustrate

1. Nontaxable entity 1. A partnership has a limited

o Firma is another common form of All the

o Cooperatives or Koperasi in Indonesia (or popular as Co-Op in other

Legal liability: No limitation Legal liability: No limitation

Taxation: Nontaxable entity Taxation: Nontaxable entity

Limitation on life of entity : Limitation on life of entity:

Access to capital: Limited Access to capital: Limited

If any liabilities are assumed

 Renaldi Hariyadi contributed equipment, inventory, and

Provide the journal entry for Renaldi’s contribution to the

 Journal Entry to the Partnership

o Income or losses of the

These services are often

 Division of net income:

One such method of dividing

Interest of 12% on each partner’s capital balance as of January 1.

3Remaining income: Divided Equally

 The total of the salary (Rp108,000,000) and interest

Annual salary allowance Rp60,000,000 Rp48,000,000 Rp108,000,000

 Divisionof net income:

S. Permatasari Clara Putri Total

Annual salary allowance Rp 42,000,000 Rp 0 Rp 42,000,000

(Rp240,000,000 – Rp42,000,000 – Rp15,300,000) × 50%

Ownership Interest Ownership Interest

No change in partnership assets Partnership assets increase

o Before a new partner is admitted, the balances of a

 Rahmat Subagja invested Rp45,000,000 in the Lucky & Karina

a) Journal Entry for the Revaluation of Land 1/3 × Rp60,000,000

xxx xx Land 60,000,000

b) Journal Entry to Admit Rahmat Subagja

New Partner Existing Partner New Partner Existing Partner

Ownership interest is less Ownership interest is greater

than amount paid than amount paid

 Lusiana has a capital balance of Rp51,000,000 after adjusting

Equity of Lusiana Rp51,000,000

o The withdrawing partner’s interest is normally sold to the:

 Existing partners purchase the withdrawing partner’s interest

 Partnership purchases the withdrawing partner’s interest

and divided among the partners’ capital accounts

any adjustment divided among the capital accounts of the partners

Deceased Partner’s Capital xxx

When a partnership goes out of business, it

Step 2 Division of Gain or Loss Gain or Loss

Ganjar’s equity prior to liquidation Rp100,000,000

The share of a loss on realization may be

a) The amount of Susan’s deficiency:

b) The amount distributed to Beni, assuming Susan is unable to

o Reporting changes in partnership capital accounts is

Balance, January 1, 2016 Rp245,000,000 Rp365,000,000 Rp610,000,000

Each partner’s capital account is shown as a separate column. The

o Revenue per employee is a measure of the efficiency of the

 KAP Rama dan Rekan earned Rp4,200,000,000 during 2016