Accounting for Partnerships

2. Identify the characteristics of the partnership form of business organization. Explain the accounting entries for the formation of a partnership. Identify the bases for dividing net income or net loss. Describe the form and content of partnership financial statements. Study Objectives 1. On the topic, �Challenges Facing Financial Accounting,� what did the AICPA Special Committee on Financial Reporting suggest should be included in future financial statements? Non-financial Measurements (customer satisfaction indexes, backlog information, and reject rates on goods purchases). Forward-looking Information Soft Assets (a company�s know-how, market dominance, marketing setup, well-trained employees, and brand image). Timeliness (no real time financial information) 1. On the topic, �Challenges Facing Financial Accounting,� what did the AICPA Special Committee on Financial Reporting suggest should be included in future financial statements? Non-financial Measurements (customer satisfaction indexes, backlog information, and reject rates on goods purchases). Forward-looking Information Soft Assets (a company�s know-how, market dominance, marketing setup, well-trained employees, and brand image). Timeliness (no real time financial information)

3. Explain the effects of the entries when a new partner is admitted. Describe the effects of the entries when a partner withdraws from the firm. Prepare the entries to record the liquidation of a partnership. Study Objectives 1. On the topic, �Challenges Facing Financial Accounting,� what did the AICPA Special Committee on Financial Reporting suggest should be included in future financial statements? Non-financial Measurements (customer satisfaction indexes, backlog information, and reject rates on goods purchases). Forward-looking Information Soft Assets (a company�s know-how, market dominance, marketing setup, well-trained employees, and brand image). Timeliness (no real time financial information) 1. On the topic, �Challenges Facing Financial Accounting,� what did the AICPA Special Committee on Financial Reporting suggest should be included in future financial statements? Non-financial Measurements (customer satisfaction indexes, backlog information, and reject rates on goods purchases). Forward-looking Information Soft Assets (a company�s know-how, market dominance, marketing setup, well-trained employees, and brand image). Timeliness (no real time financial information)

4. Service Cost - Actuaries compute service cost as the present value of the new benefits earned by employees during the year. Future salary levels considered in calculation. Interest on Liability - Interest accrues each year on the PBO just as it does on any discounted debt. Actual Return on Plan Assets - Increase in pension funds from interest, dividends, and realized and unrealized changes in the fair market value of the plan assets. Amortization of Unrecognized Prior Service Cost - The cost of providing retroactive benefits is allocated to pension expense in the future, specifically to the remaining service-years of the affected employees. Gain or Loss - Volatility in pension expense can be caused by sudden and large changes in the market value of plan assets and by changes in the projected benefit obligation. Two items comprise the gain or loss: difference between the actual return and the expected return on plan assets and, amortization of the unrecognized net gain or loss from previous periodsService Cost - Actuaries compute service cost as the present value of the new benefits earned by employees during the year. Future salary levels considered in calculation. Interest on Liability - Interest accrues each year on the PBO just as it does on any discounted debt. Actual Return on Plan Assets - Increase in pension funds from interest, dividends, and realized and unrealized changes in the fair market value of the plan assets. Amortization of Unrecognized Prior Service Cost - The cost of providing retroactive benefits is allocated to pension expense in the future, specifically to the remaining service-years of the affected employees. Gain or Loss - Volatility in pension expense can be caused by sudden and large changes in the market value of plan assets and by changes in the projected benefit obligation. Two items comprise the gain or loss: difference between the actual return and the expected return on plan assets and, amortization of the unrecognized net gain or loss from previous periods

5. Partnership Form of Organization

6. Characteristics of Partnerships Question 12-1 (textbook) ( a ) Association of individuals. A partnership is a voluntary association of two or more individuals based on as simple an act as a hand shake. Preferably, however, the agreement should be in writing. A partnership is a legal entity and an accounting entity, but it is not a taxable entity. (b) Limited life. A partnership does not have unlimited life. A partnership may be ended voluntarily or involuntarily. Thus, the life of a partnership is indefinite. Any change in the members of a partnership results in the dissolution of the partnership. (c) Co-ownership of property. Partnership assets are co-owned by all the partners. If the partnership is terminated, the assets do not legally revert to the original contributor. Each partner has a claim on total assets equal to his or her capital balance. This claim does not attach to specific assets the individual partner contributed to the firm.Question 12-1 (textbook) ( a ) Association of individuals. A partnership is a voluntary association of two or more individuals based on as simple an act as a hand shake. Preferably, however, the agreement should be in writing. A partnership is a legal entity and an accounting entity, but it is not a taxable entity. (b) Limited life. A partnership does not have unlimited life. A partnership may be ended voluntarily or involuntarily. Thus, the life of a partnership is indefinite. Any change in the members of a partnership results in the dissolution of the partnership. (c) Co-ownership of property. Partnership assets are co-owned by all the partners. If the partnership is terminated, the assets do not legally revert to the original contributor. Each partner has a claim on total assets equal to his or her capital balance. This claim does not attach to specific assets the individual partner contributed to the firm.

7. Characteristics of Partnerships



10. Characteristics of Partnerships

11. Characteristics of Partnerships

12. Advantages And Disadvantages of Partnerships

14. Organizations with Partnership Characteristics




18. Partnership Agreement

19. Forming a Partnership





24. Dividing Net Income or Net Loss














40. Partnership Financial Statements

43. Purchase of a Partner�s Interest

45. Investment of Assets in a Partnership

46. Investment of Assets in a Partnership

53. Withdrawal of a Partner

54. Payment From Partners� Personal Assets

55. Payment From Partners� Personal Assets

56. Payment From Partnership Assets

57. Bonus to Retiring Partner



60. Bonus to Remaining Partners



64. Death of a Partner

65. Death of a Partner

66. Liquidation of a Partnership













Accounting for Partnerships

Accounting for Partnerships

Presentation Transcript

Partnerships for Success

PARTNERSHIPS FOR CARE

ACCOUNTING FOR PARTNERSHIPS

Partnerships for Change

Partnerships for Success

Partnerships for Recreation

Partnerships for Peace:

ACCOUNTING FOR PARTNERSHIPS

Partnerships for the Future

Partnerships for Life

ACCOUNTING FOR PARTNERSHIPS

CH 1 2 ACCOUNTING FOR PARTNERSHIPS Lecture 3, 4, 5, 6

Accounting for Partnerships and Limited Liability Companies

Local Partnerships for Employment

Accounting for Partnerships and Limited Liability Companies

Partnerships for Protection

ACCOUNTING FOR PARTNERSHIPS

Partnerships for Inclusion

Accounting for Partnerships

Accounting for Partnerships and Limited Liability Companies