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(208)-DISSOLUTION OF PARTNERSHIPS

Sunday, September 19, 2010

Dissolution of Partnerships

Presidential realization and interim distributions

When assets are realized piecemeal, the partners may desire, as soon as all liabilities have been discharged, to withdraw immediately such as is available for decision between them rather than wait until all the assets have been sold. In such circumstances, subject to any contrary agreement between the partners, the interim payments to the partners should be of such amounts that even though the remaining assets prove to be worthless no partner will receive more than the amount to which he is ultimately found to be entitled after being debited with his proper share of the total loss sustained on realization of all assets. To enable this to be done the proceeds of realization of assets must first be applied in repaying to partners any sums necessary to reduce their capitals to amounts which will bear the same proportion to the total capital as those in which profits and losses are shared.

Amalgamation of firms

Where members of two or more partnerships decide to amalgamate, the transaction resolves itself into the dissolution of the existing partnerships and the formation of a new one. For the purposes of the amalgamation, it is probable that the goodwill and other assets of the original firms will be revalued, and the capitals of the respective partners adjusted by reference to the profit or loss arising on such revaluation, before arriving at the amount of capital introduced by each partner into the new firm. Where the capital of the new firm is a fixed amount, to be provided by the partners in specified proportions or sums, it may be necessary, after giving effect to the agreed revaluation of assets, for cash to be withdrawn or paid in by one or more of the partners in order to adjust the capitals to the agreed amounts.


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