Scribd
Upload
291 views

Accounting For Special Transactions

This document provides an overview of accounting for partnerships. It discusses key topics like partnership formation, valuation of partner contributions, accounting for initial investments, partnership ledger accounts, and bonuses on initial investments. The objectives are to differentiate partnership accounting from sole proprietorships and corporations, state valuation and initial accounting for partner investments, and identify partnership-specific accounts and transactions that affect them. Examples of partnership characteristics and considerations for partnership equity accounting are also provided.

Uploaded by

john carlo
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
291 views

Accounting For Special Transactions

This document provides an overview of accounting for partnerships. It discusses key topics like partnership formation, valuation of partner contributions, accounting for initial investments, partnership ledger accounts, and bonuses on initial investments. The objectives are to differentiate partnership accounting from sole proprietorships and corporations, state valuation and initial accounting for partner investments, and identify partnership-specific accounts and transactions that affect them. Examples of partnership characteristics and considerations for partnership equity accounting are also provided.

Uploaded by

john carlo
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 11

ACCOUNTING FOR SPECIAL

TRANSACTIONS
(Advanced Accounting 1)

LECTURE AID

2018

ZEUS VERNON B. MILLAN


Chapter 1 Partnership Formation
Learning Objectives

• Differentiate between the accounting for


partnerships, sole proprietorships, and
corporations.
• State the valuation of contributions of
partners.
• Account for the initial investments of the
partners to the partnership.
• State the peculiar accounts used in a
partnership and identify the transactions
ACCOUNTING FOR SPECIAL
that affect these accounts.TRANSACTIONS (Advanced
Accounting 1) - (by: MILLAN)
Partnership

• A partnership is an unincorporated association of two or


more individuals to carry on, as co-owners, a business,
with the intention of dividing the profits among
themselves.

ACCOUNTING FOR SPECIAL


TRANSACTIONS (Advanced
Accounting 1) - (by: MILLAN)
Characteristics of a partnership

1. Ease of formation 
2. Separate legal personality  
3. Mutual agency
4. Co-ownership of property
5. Co-ownership of profits
6. Limited life
7. Transfer of ownership
8. Unlimited liability (this is applicable to a general
partnership)
ACCOUNTING FOR SPECIAL
TRANSACTIONS (Advanced
Accounting 1) - (by: MILLAN)
Accounting for partnerships

• The following are the major considerations in the


accounting for the equity of a partnership:
1. Formation – accounting for initial investments to the
partnership
2. Operation – division of profits or losses
3. Dissolution – admission of a new partner and withdrawal,
retirement or death of a partner
4. Liquidation – winding-up of affairs

ACCOUNTING FOR SPECIAL


TRANSACTIONS (Advanced
Accounting 1) - (by: MILLAN)
Valuation of contributions of partners

• All assets contributed to (and related liabilities


assumed by) the partnership shall be measured
at fair value.

ACCOUNTING FOR SPECIAL


TRANSACTIONS (Advanced
Accounting 1) - (by: MILLAN)
Partners’ ledger accounts

1. Capital accounts
2. Drawing accounts
3. Receivable from/ Payable to a partner

ACCOUNTING FOR SPECIAL


TRANSACTIONS (Advanced
Accounting 1) - (by: MILLAN)
Bonus on initial investments

• A bonus exists when the capital account of a partner is


credited for an amount greater than or less than the fair
value of his contributions.
• The bonus is treated as adjustment to the capital
accounts of the other partners.

ACCOUNTING FOR SPECIAL


TRANSACTIONS (Advanced
Accounting 1) - (by: MILLAN)
APPLICATION OF CONCEPTS
 

PROBLEM 2: FOR CLASSROOM DISCUSSION

ACCOUNTING FOR SPECIAL TRANSACTIONS (Advanced Accounting 1) - (by:


MILLAN)
OPEN FORUM
QUESTIONS????
REACTIONS!!!!!

ACCOUNTING FOR SPECIAL TRANSACTIONS (Advanced Accounting 1) - (by:


MILLAN)
END
ACCOUNTING FOR SPECIAL TRANSACTIONS (Advanced Accounting 1) - (by:
MILLAN)

You might also like