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Lecture Accounting principles (12th Edition): Chapter 12 - Weygandt, Kimmel, Kieso

Chapter 12 - Accounting for partnerships. In this chapter, the learning objectives are: Discuss and account for the formation of a partnership, explain how to account for net income or net loss of a partnership, explain how to account for the liquidation of a partnership. | Accounting for Partnerships 12 Learning Objectives Discuss and account for the formation of a partnership. Explain how to account for net income or net loss of a partnership. Explain how to account for the liquidation of a partnership. 3 2 1 Partnership, an association of two or more persons to carry on as co-owners of a business for profit. Type of Business: Small retail, service, or manufacturing companies. Accountants, lawyers, and doctors. LEARNING OBJECTIVE Discuss and account for the formation of a partnership. 1 LO 1 ASSOCIATION OF INDIVIDUALS Legal entity. Accounting entity. Net income not taxed as a separate entity. MUTUAL AGENCY Act of any partner is binding on all other partners, so long as the act appears to be appropriate for the partnership. Characteristics of Partnerships LO 1 LIMITED LIFE Dissolution occurs whenever a partner withdraws or a new partner is admitted. Dissolution does not mean the business ends. UNLIMITED LIABILITY Each partner is personally and individually liable for all partnership liabilities. Characteristics of Partnerships LO 1 CO-OWNERSHIP OF PROPERTY Each partner has a claim on total assets. This claim does not attach to specific assets. All net income or net loss is shared equally by the partners, unless otherwise stated in the partnership agreement. Characteristics of Partnerships LO 1 All of the following are characteristics of partnerships except: co-ownership of property. mutual agency. limited life. limited liability. Question Characteristics of Partnerships LO 1 Special forms of business organizations are often used to provide protection from unlimited liability. Special partnership forms are: Limited Partnerships, Limited Liability Partnerships, and Limited Liability Companies. Organizations with Partnerships Characteristics Helpful Hint In an LLP, all partners have limited liability. There are no general partners. LO 1 Major Advantages Simple and inexpensive to create and operate. Major Disadvantages Owners (partners) | Accounting for Partnerships 12 Learning Objectives Discuss and account for the formation of a partnership. Explain how to account for net income or net loss of a partnership. Explain how to account for the liquidation of a partnership. 3 2 1 Partnership, an association of two or more persons to carry on as co-owners of a business for profit. Type of Business: Small retail, service, or manufacturing companies. Accountants, lawyers, and doctors. LEARNING OBJECTIVE Discuss and account for the formation of a partnership. 1 LO 1 ASSOCIATION OF INDIVIDUALS Legal entity. Accounting entity. Net income not taxed as a separate entity. MUTUAL AGENCY Act of any partner is binding on all other partners, so long as the act appears to be appropriate for the partnership. Characteristics of Partnerships LO 1 LIMITED LIFE Dissolution occurs whenever a partner withdraws or a new partner is admitted. Dissolution does not mean the business ends. UNLIMITED LIABILITY Each partner is personally and .