Partnership Accounting Flashcards
Partner will contribute MPI
What is the valuation for MPI?
Money - Face Value
Property - AV, FMV
Industry - memo entry only
Steps in Formation
- Adjust
- Close real accounts
- Open partnership books (AR @ gross, PPE @ net)
- BS of partnership
How to know
- if net investment method
- if bonus method
- if revaluation method
Net Investment
- CC = AC
Bonus
- CC ≠ AC
- TCC = TAX
Revaluation
- CC ≠ AC
- TCC ≠ TAX
Template for Solving Revaluation and Bonus
Refer to Notes
Priority rule to follow in
- Distribution of Profit / Loss
Agreement muna
If no agreement on loss, what to follow?
- Agreement on profit
- Capital contribution
If silent, what to follow
- average capital
- original capital
Original Capital
Temporary Withdrawal will be included in the computation for average capital. True or False?
False
Template for Solving Partnership Operation
Refer to Notes
What to do before recording dissolution?
- Distribute P/L
- Account for adjustments or revaluation
- Revaluation → existing partners lang maghahati
If retirement → only include to retiring partner
There is a partnership gain/loss in case of purchase of interest. True or False?
False (personal transaction only)
In which case will the TCC increase
- purchase
- investment
Only if investment
Loan balances will be included in computation of capital interest when it comes to admission. True or False?
False (only include it in case of retirement or liquidation)
3 Easy Steps in Liquidation
- Sell non-cash assets
- Pay 3rd party obligations
- Distribute to partners
Formula for CAFD
Refer to Notes
Whoever has the highest loss absorption capacity (Capital Interest / P&L) will be the one to have priority in cash distribution. True or False?
True
