Chapter 12, Problem E12.17E

To determine

Allocation of profits & losses among Partners: The profits & losses of a partnership are distributed among the partners on the basis of methods given in the partnership agreement. For example: on the basis of partner’s capital investment, service performed by the partners, combination of investment, service etc. If the partnership agreement is silent with regard to profit sharing or there is no agreement among the partners, then as per the law, the profits & losses shall be distributed equally among them.

The profits and losses of a partnership can be allocated among the partners based on different parameters. These allocation parameters are as follows:

a. On the basis of a mutually agreed Profit Sharing Ratio

b. On the basis of Partners Capital Contributions

c. On the basis of Services Performed by the partners

d. On the basis of a combination of Fraction, Capital Contribution, Service, etc.

e. If the partnership agreement is silent with regard to profit sharing or there is no agreement among the partners, then as per the law, the profits & losses shall be distributed equally among them.

To Determine:

Determine share of net income or net loss for ach of independent cases.