actpaco 4 - Unit 4 PARTNERSHIP DISSOLUTION WITHOUT...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Unit 4 PARTNERSHIP DISSOLUTION WITHOUT LIQUIDATION A partnership depends upon the contractual agreement between or among partners; therefore, the existence of the partnership business may be somewhat uncertain since it depends on the personalities, moods, relationships of partners, etc. Any events or happenings that cause the technical termination of a partnership may lead to a permanent dissolution or liquidation, if the partners decide. Dissolution and liquidation in relation to partnerships are not synonymous. A partnership is said to be dissolved when the original association for purposes of carrying on activities has ended. A partnership is said to be liquidated when the business is terminated. Dissolution 1. The change in the relation of the partners caused by any partner ceasing to be associated in the carrying out of the business (Article 1825, Civil Code of the Philippines). 2. The termination of the life of an existing partnership. Dissolution of an old partnership may be followed by: 1. the formation of a new partnership – new partnership continues the business activities of the dissolved partnership without interruption. 2. liquidation – termination of business activities and winding up of partnership affairs preparatory to going out of business. Reasons why a partnership may be dissolved 1. Admission of a new partner 2. Retirement or withdrawal of a partner 3. Death, incapacity or insolvency of a partner 4. Incorporation of a partnership Admission of a New Partner 1. The consent of all the partners is necessary. 2. There is a need to update the capital balances of the partners by a. determining profit share of each partner from the last balance sheet date to dissolution date. b. revaluing/ adjusting partnership assets and liabilities using a temporary account called the Capital Adjustment account. Marivic Valenzuela-Manalo 1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
a. Determine profit share of partners. Date P A R T I C U L A R S P/R Dec. 31 Income Summary X X X X Rose, drawing X X X X Guada, drawing X X X X Rose, drawing X X X X Guada, drawing X X X X Rose, drawing X X X X Guada, drawing X X X X DEBIT CREDIT b. Revaluing/ adjusting partnership assets and liabilities Increase in value of an asset without a contra-asset account Date P A R T I C U L A R S P/R July 1 Asset X X X X Capital Adjustmnet X X X X DEBIT CREDIT Decrease in value of an asset without a contra-asset account Date P A R T I C U L A R S P/R July 1 Capital Adjustment X X X X Asset X X X X DEBIT CREDIT Increase in value of an asset with a contra-asset account Date P A R T I C U L A R S P/R July 1 Contra-asset X X X X Capital Adjustmnet X X X X DEBIT CREDIT Decrease in value of an asset with a contra-asset account Date P A R T I C U L A R S P/R July 1 Capital Adjustment X X X X Contra-asset X X X X DEBIT CREDIT Increase in value of a liability account Date P A R T I C U L A R S P/R July 1 Capital Adjustment X X X X Liability X X X X DEBIT CREDIT Marivic Valenzuela-Manalo 2
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 9

actpaco 4 - Unit 4 PARTNERSHIP DISSOLUTION WITHOUT...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online