F2-M9 - Partnerships Flashcards
Contributions by a partner to a partnership are recorded at _______ less the present value of liabilities assumed by the partnership.
Fair value
Contributions by a partner to a partnership are recorded at fair value less the _______________
present value of liabilities assumed by the partnership.
Admission of new partners may be accounted for using what methods (3)
the exact, bonus, or goodwill method
The ________ method adjusts the partners’ capital accounts for any difference
bonus method
The _______ method adjusts the assets (goodwill) and the existing partners’ capital accounts for the difference
goodwill
No adjustment is required to the partners’ capital accounts under the ______ method.
exact method
Income or loss is distributed among the partners in accordance with ____________,
their agreement,
In the absence of an agreement all partners share _________ irrespective of what their capital accounts reflect or the amount of time each partner spends on partnership affairs.
equally
Withdrawals of partners also use the ________ methods. (2)
bonus and goodwill
When a partnership is liquidated, ____ are sold, gains or losses are allocated to the partnership, _______ are paid, and the partners are entitled to receive the balance in their ______ account.
assets, liabilities, capital account
Partners who wind up with debit (overdrawn) balances owe that ____________ to the partnership and ___________
deficiency to the partnership and the other partners.
If the capital deficiency remains outstanding, the deficiency must be _______ by the remaining partners.
absorbed by the remaining partners.
For the Exact Method - What is the question you must ask?
How much should new parter contribute in order to have a ___ % interest
Bonus Method -Bonus goes to ______ if the new parter paid more than he got
Existing partners
Bonus Method -Bonus goes to ______ if the new parter paid less than what he got
New partners
For Goodwill Method - you must split up the goodwill tot the _____ partners based on their percentage
Existing
What is the formula to calculate the goodwill
Implied value (amount given X # of partners) - Total partners’ capital accounts = Goodwill
For withdrawal of a partner - The bonus method - is the difference between the balance of the withdrawing partner’s capital account and the amount the person is
paid is the amount of bonus
What are the steps for the bonus method for withdrawal of partner
1) revaluate the assets to FV. 2) JE to pay off withdrawing partnership 3) other partners have to make up different.
What are the steps for Goodwill Method for withdrawal of partners?
1) Revalue the asset to FV 2) Goodwill is Distribution to partners. 3) JE to pay off drawing partners
What is the JE for the reevaluating the assets to fair value during to withdrawal of Partner
DR Asset, CR each partners capital account
What is the JE to payoff withdrawing Partner under Bonus Method
DR Other parters capitals (Make up difference) DR Withdrawing capital CR Cash
What is the JE to record Goodwill to make withdraw partners account equal - Under Goodwill Method
DR Goodwill, CR each partners capital account
What is the JE to record Pay off of withdrawing partner Under Goodwill Method
DR Capital account of Withdrawing partner, CR Cash
Under the liquidation of partnership, What are the steps (3)
1) All non cash assets are converted to cash, 2) all liabilities and credits are paid 3) Remainder is distributed to partners.
Assets contributed are reported at what value
Fair value
What is the JE to record assets contributed
DR asset (FV) , CR Partners capital account (FV)
Liabilities transferred are recorded at what value
Present value of the amount
What is the JE to record liabilities assumed by the partnership
DR Partners capital account (PV) CR Liabilities (PV)
