Chapter 05, Partnership, termination and liquidation

Date liabilities liabilities rremainingto be emaining

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Unformatted text preview: ons to Transactions to date. date. Liabilities Liabilities rremainingto be emaining to be paid. paid. Property still being Property still being held by the held by the partnership. partnership. Current cash and Current cash and ccapitalbalances. apital balances. Page 17 Schedule of Liquidation Interim Cash Distributions Prior to making a cash Prior to making a cash distribution to the partners, distribution to the partners, assume: assume: 1. All noncash assets will be 1. All noncash assets will be complete losses. complete losses. 2. All liabilities will be paid. 2. All liabilities will be paid. 3. All deficit partners will be 3. All deficit partners will be written off. written off. Even though Even though Even assumptions #1 assumptions #1 and #3 may be and #3 may be unrealistic, they unrealistic, they allow the allow the computation of computation of “safe” balances. “safe” balances. “safe” “safe” Page 18 Deficit Capital Balance Deficit balances can be resolved two Deficit balances can be resolved two ways: ways: ways: ways: q The deficit partner can make a contribution qThe deficit partner can make...
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