Partnership Accounting Flashcards Preview

FAR 2014 > Partnership Accounting > Flashcards

Flashcards in Partnership Accounting Deck (17)
Loading flashcards...

How are capital contributions with a mortgage attached recorded in a partnership for financial statement purposes?

Calculating the capital balance when property contributed has a mortgage results in the FV of the Asset being netted against the Liability


If no goodwill is recorded upon admission of a new partner - which method is used for recording the new partner's interest?

The bonus method:

Old Partnership Equity
+ New Partner Contribution
: New Partnership Equity
x New Partner %
: New Partner Equity Amount

New Partner Contribution
- New Partner Equity Amount
: Bonus to Prior Partners using same allocation as P/L


If goodwill is recorded upon admission of a new partner - how is the partner's interest recorded?

Using the goodwill method:

New Contribution / New Equity % : Partnership Value

Implied Value of Partnership
- Capital Accounts of all partners
: Goodwill to Old Partners

Under the Goodwill Method - the new Partner is paying an amount for a certain percentage stake in the partnership. For instance if they pay $1000 for a 25% stake - then it is assumed that the Partnership is worth $4 -000 ($1 -000/25%)


At what value should assets contributed to a partnership be recorded? What value for liabilities assumed by the partnership?

Fair Value for assets contributed.

Present value of remaining cash flows for liabilities assumed.


How are capital account credited for contributions

FV of property less liabilities


When are unidentifiable assets recognized

Using goodwill method, not bonus method


What amounts credit partner accounts wen allocated income

Credits to parent account based earnings after interest, salary and bonus


Calculate allocation of income

Beg cap bal + interest + salary + bonus +/- distribution of residual


Calculate weighted average capital balance

Cap bal (until change made) x months/12 + cap bal until another change made x months/12


How is the distribution of cash decided in a liquidation

Based on capital balance after income , advances, gain, loss


Calculate statement of liquidation

Beg bal - loans due to partner - allocation of g/l on sale of assets - allocation of income = adjusted capital balances


what percentages are used to allocate bonus in bonus method

Old profit and loss percentages


How is bonus paid to exiting partner calculated

Cash paid for interest - (payment of loan balance + capital balance )


What are steps in calculating bonus or goodwill

Restate assets to FV

Adjust withdrawing partner capital account for amount received


How is any payment in excess of retired partners capital balance treated

Reduce other capital accounts


What is the liquidation safe installment method

Unsold assets are reported at $0 and book value of loss is distribute ld to partners based on profit and loss ratios


How is the value of stock calculate when incorporating

Assets and liabilities revalued to FV at thee date of incorporation

CS - par x shares
APIC- FMV - par x shares