TAILIEUCHUNG - Lecture Advanced accounting (11/e): Chapter 14 - Hoyle, Schaefer, Doupnik

Chapter 14 - Partnerships: Formation and operation. After completing this unit, you should be able to: Discuss the advantages and disadvantages of the partnership versus the corporate form of business; describe the purpose of the articles of partnership and list specific items that should be included in this agreement; prepare the journal entry to record the initial capital investment made by a partner. | Chapter Fourteen Partnerships: Formation and Operation McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Partnership Advantages A partnership is defined as “an association of two or more persons to carry on a business as co-owners for profit.” (Section 6 of Uniform Partnership Act). Flexibility in defining relationships Profits and losses, and management operating decisions, may be shared independent of ownership percentages Ease of formation and dissolution Taxes “flow-through” the partnership (conduit) to the partners, and are taxed to the individuals (no double- taxation). LO 1 14- Partnership Advantages Flexibility in defining relationships Profits and losses, and management operating decisions, may be shared independent of ownership percentages Ease of formation and dissolution Taxes “flow-through” the partnership (conduit) to the partners, and are taxed to the individuals (no double- taxation). Partnership Disadvantages Unlimited liability incurred by each partner (they are “jointly and severally” liable) Mutual agency (each partner has the right to incur liabilities in the name of the partnership) Inability to participate in various corporate tax benefits 14- Partnership Disadvantages Unlimited liability incurred by each partner (they are “jointly and severally” liable) Mutual agency (each partner has the right to incur liabilities in the name of the partnership) Inability to participate in various corporate tax benefits Articles of Partnership Partnerships can exist even in the absence of a written partnership agreement. The Uniform Partnership Act establishes standards and rules for partnerships. A written agreement will supersede the UPA standards. LO 2 14- Articles of Partnership Partnerships can exist even in the absence of a written partnership agreement. The Uniform Partnership Act establishes standards and rules for partnerships. A written agreement will supersede the UPA standards. Accounting for

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• Advanced accounting
• Lecture Advanced accounting
• Advanced financial accounting
• Financial statements
• Accounting valuation
• Partnership advantages
• Equity method of accounting
• International accounting diversity
• Accounting for legal reorganizations
• Accounting for state
• Accounting for leases
• Accounting for estates
• Investment accounting
• Consolidation of financial information
• Consolidated financial statements
• Intra entity asset transactions
• Variable interest entities
• Income taxes
• Interim reporting
• Foreign currency transactions
• Foreign currency financial statements
• Exchange commission
• Statement of liquidation