ACC_401_Chapter_3 - CHAPTER 3 PARTNERSHIP LIQUIDATION AND...

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CHAPTER 3 PARTNERSHIP LIQUIDATION AND INCORPORATION; JOINT VENTURES ANSWERS TO REVIEW QUESTIONS 2. Assuming that the partner with a debit balance has no loan account or that the balance of the partner’s loan account is insufficient to eliminate the debit balance of the partner’s capital account when the right of offset is exercised, the partner is obligated to pay sufficient cash to the LLP to eliminate the capital deficit. If the partner is unable to do so, the capital deficit must be absorbed by the other partners as an additional loss to be shared in the same proportion as they previously have shared net income and loss among themselves. 4. Fin's position cannot be supported; Fin is responsible for all unpaid liabilities of the general partnership. Partnership creditors may demand payment in full from any partner and are not concerned with the status of a partner's capital account or with the terms of the partnership contract for sharing net income or losses.
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  • Spring '08
  • Smith
  • Corporation, Types of business entity, Limited liability partnership

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