partnership

1. owned by two or more individuals (pr. only one) 2. created by agreement (coop operation of law) 3. continuing in nature (joint venture- formed for a limited purpose)

1. ease of formation 2. separated legal personality 3. mutual agency 4. co-ownership of property 5. co-ownership of profit 6. limited life 7. transfer of ownership 8. unlimited liability

easily dissolved 1. express will of any partner 2. termination of a definited term 3. any events which makes it unlawful to carry out the partnership 4. specific thing promised to contribute perishes before the delivery 5. expulsion, death, insolvency, civil interdiction

1. ease of formation 2. shared responsibilities of running the business 3. flexibility in decision making 4. greater capital compare to sole proprietorship 5. relative lack of regulation by the government compared to corpo.

1. limited life/easily dissolved 2. unlimited liability 3. conflict among partners 4. lesser capital compare to corporations 5. taxed like a corpo except GGP

1. conceptual framework for financial reporting 2. PFRS 3. Main distinction lies on the accounting for equity 4. major considerations (formation, operations, dissolution, liquidation)

initial investment

division of profits or losses

1. admission of new partner 2. withdrawal 3. retirement 4. death

1. consensual 2. oral or written 3. public instrument (immov. or real rights 3k or more) 4. signed and attached to the public instrument (inventory of any imm. property) 5. valuation of contributions

1. fair value 2. cash and cash equivalents = face amount (PAS 7) 3. inventory = LCNRV (PAS 2) 4. each partner’s capital account is credited for the fair value of his net contributions 5. each partner’s contribution shall be adjusted accordingly before recognition in the partnership books

1. capital account 2. drawing account 3. receivable from/payable to a partner

1. problem exists when a partner’s capital account is credited for an amount greater than the FV of his contribution 2. the additional credit to the partner’s capital (bonus) is accounted for as a deduction from the capital of the other partner

1. a partnership agreement may stipulate a certain ratio 2. increase or decrease to the capital credit of a partner is not deducted from his co-partner’ s capital accounts. 3. instead 3.1 cash settlement among the partners 3.2 additional investment or withdrawal of investment

1. partnership agreement 2. if only the share in the profits has been agreed, losses shall be on the same portion 3. absence: based on contribution (excep. losses- industrial partner not liable) 4. may also stipulate the following (salaries, bonuses, interest on capital contribution)

1. admission 2. withdrawal, retirement,death 3. incorporation of a partnership

1. purchase of interest in the partnership 2. investment in the partnership

1. the corporation acquires the net assets of the partnership and in return issues shares of stocks to the owners 2. if fair value of net assets exceeds the aggregate par value of the shared issues, the excess is credited to the share premium

1. purchase by remaining partners 2. settlement by partnership

termination of business operations/winding up 1. assets are converted into cash 2. liabilities are settled 3. any remaining amount is distributed to the owners

1. lump sum 2. installment