Chapter 05, Partnership, termination and liquidation

Absorb a loss of 45000 absorb absorb lets determine

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Unformatted text preview: n see above, Scales can only As As absorb a loss of $45,000. absorb a loss of $45,000. absorb absorb Let’s determine new capital balances for Let’s determine new capital balances for Let’s Let’s a loss of $45,000. oss a lloss of $45,000. loss Page 36 Pre-distribution Plan With Gill and Scales both wiped out, With Gill and Scales both wiped out, and Finn remaining as the only and Finn remaining as the only partner, we can now determine the partner, we can now determine the pre-distribution plan. pre-distribution plan. Page 37 Pre-distribution Plan Page 38 Summary Partnerships may be terminated for a variety of reasons When terminated, partnership assets must be systematically liquidated Actual liquidation can require an extended period to accomplish. This promotes the use of proposed schedules of liquidation Marshaling of assets may be necessary when one or more partners have negative capital balances Page 39 Possible Criticisms Development of pre-distribution plans and schedules of liquidation may involve speculation. Some critics feel that this violates the traditionally conservative role of accountants WHAT DO YOU THINK? Page 40...
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