CH16 Safe Payments Schedule and Cash Distribution Plan Summary BB

CH16 Safe Payments Schedule and Cash Distribution Plan Summary BB

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Safe Payments Are Distributions To Partners That Can Be Made With Assurance That The Resources Distributed Will Not Have To Be Returned To The Partnership A In calculating safe payments, the following assumptions are made: 1 All partners are considered personally insolvent. 2 All noncash assets are considered losses. 3 Some cash may be withheld to cover liquidating expenses, unrecorded liabilities, and general contingencies. The cash withheld is considered a loss in determining safe payments. B The safe payments schedule for determining advance distributions to partners is prepared after nonpartner liabilities have been paid. 1 The schedule begins with partners’ equity which is each partner’s capital account plus loans to the partnership and less loans from the partnership. 2 Possible losses (from noncash assets and cash withheld balances) are allocated to the partners in the profit and loss sharing ratios and deducted from the equity balances. 3
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CH16 Safe Payments Schedule and Cash Distribution Plan Summary BB

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