Chapter 18 Partnership Changes

Question 1

18.2 Changes in profit ratios

Answer 1

Partners may change their profit allocation ratios part way through an accounting period. When we allocate profits, we need to split the AP around the change and deal with the periods separately and use the ratios applying to those separate periods. The combined profit will give the whole allocation for the period.

Question 2

18.3 Further Issues

Answer 2

When partners are given salaries or interest on capital in a non-12-month period, we must prorate those annual figures.