Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Chapter 15, Problem 2P
To determine
Identify the statement which is true concerning the accounting for a
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Which one of the following statements is incorrect related to the liquidation of the company?
1. Liquidation shall be effected by all the partners
2. Liquidation is processed by an appointed liquidator
3. Two or more liquidators cannot be appointed to act jointly
4. Liquidator appointment need not be as per constitutive documents.
Statement I: When a Partnership's operations resulted to a net loss, a partner who contributed legal services, shall have share of loss in accordance to the losses agreement. However, if there is no losses agreement, he shall not be liable to any loss.Statement II: All withdrawals and investments shall be considered when computing for the weighted average capital balance.
Group of answer choices
S1 is true; S2 is false
Both statements are true
S1 is false; S2 is true
Both statements are false
In a partnership liquidation, if a partner has a debit capital balance in his or her capital account, he or she is responsible for contributing personal assets sufficient to eliminate the deficit.
Group of answer choices
True
False
Chapter 15 Solutions
Advanced Accounting
Ch. 15 - Prob. 1QCh. 15 - Prob. 2QCh. 15 - Prob. 3QCh. 15 - Prob. 4QCh. 15 - What is the purpose of a statement of liquidation?...Ch. 15 - Prob. 1PCh. 15 - Prob. 2PCh. 15 - Prob. 3PCh. 15 - Prob. 4PCh. 15 - A partnership is considering possible liquidation...
Ch. 15 - What is a predistribution plan? a. A list of the...Ch. 15 - Prob. 7PCh. 15 - Prob. 8PCh. 15 - Prob. 9PCh. 15 - Prob. 10PCh. 15 - Prob. 11PCh. 15 - Prob. 12PCh. 15 - Prob. 13PCh. 15 - Prob. 14PCh. 15 - Prob. 15PCh. 15 - Prob. 16PCh. 15 - Prob. 17PCh. 15 - Prob. 18PCh. 15 - Prob. 25PCh. 15 - Prob. 26PCh. 15 - March, April, and May have been in partnership for...Ch. 15 - Prob. 28PCh. 15 - Prob. 29P
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- In the liquidation of a partnership, it is necessary to (1) distribute cash to the partners, (2) sell noncash assets, (3) allocate any gain or loss on realization to the partners and (4) pay liabilities. These steps should be performed in the following order Select one: a. (2), (3), (1), (4). b. (2), (3), (4), (1). c. (3), (2), (1), (4). d. (3), (2), (4), (1).arrow_forwardIn the liquidation of a partnership it is important to (1) distribute cash to the partners, (2) sell noncash assets, (3) allocate any gain or loss on realization to the partners, and (4) pay liabilities. These steps should be performed in the following order: (3), (2), (4), (1) (3), (2), (1), (4) (2), (3), (1), (4) (2), (3), (4), (1)arrow_forwardWhich of the following is not correct with respect to an installment liquidation of a partnership? A.) All remaining liquidation expenses are anticipated. B.) All non-cash assets are assumed to be worthless. C.) Distributions to partners are always made according to their profit sharing percentages. D.) Partners with the greatest ability to absorb losses and expenses are the first to receive installment distributions.arrow_forward
- In the liquidation of a partnership, the gains and losses from assets sold are O divided equally among the partners. divided among the partners in the stated income ratio. divided among the partners in proportion to their capital equity interests. O ignored.arrow_forwardWrite a Sample Format of Statement of Liquidation (Lump Sump) Other Instruction (Assumptions) 1. Values should be written as XXX if positive and (XXX) if negative 2. 7 Partners [Jk, V, RM, Jimin, Hobi, Jin and Suga] 3. There is a gain in the realization of assets 4. There is liquidation expense. 5. V has receivables from partnership. 6. Jin and Suga have payables to the partnershiparrow_forwardAnswer if TRUE or FALSE. If the statement is FALSE provide at least a brief explanation why it's wrong. 1. Liquidation expenses which are incurred in the realization of non-cash assets affect cash but not partners' capital. 2. A partnership is generally liquidated when its term is terminated. 3. The outside creditors of the partnership have better claims over the personal assets of the partner. 4. Gains and losses arising from the sale of the assets in a partnership liquidation are always divided equally among partners.arrow_forward
- Accounting type Question: As per the decision in the Garner vs Murray case, when the partner's capital accounts are fixed, any loss arising due to the capital deficiency in the insolvent partner's capital account is to be borne by solvent partners in the ratio of ..... A. profit sharing ratio B. last agreed capital ratio C. sacrificing ratio D. gaining ratioarrow_forwardIn liquidation of LLP, for allocation of realization losses to partners, the journal entry includes: a. Debit each partner’s capital with his/her share in gains based final capital balances. b. Debit each partner’s capital with his/her share in gains based on income sharing ratios. c. Credit each partner’s capital with his/her share in gains based final capital balances. d. Credit each partner’s capital with his/her share in gains based on income sharing ratios.arrow_forwardWrite TRUE if the statement is correct and FALSE if the statement is wrong. Write your answers on the space provided before the number. Erasures are strictly NOT allowed. 1. The loss absorption balances represent the maximum loss that the partners could absorb without reducing their equity below zero. 2. Gains and losses on the sale of assets in liquidation are divided equally among partners. 3. A partnership maybe dissolved without being liquidated but liquidation is always preceded by dissolution. 4. Under the installment method of partnership liquidation, realization of non-cash assets is accomplished over an extended period of time. When cash is available, creditors may be partially or fully paid. Any excess maybe distributed to the partners in accordance with a program of safe payments or a cash priority program. This process persists until all the non-cash assets are sold. 5. Restricted interest are provided for assumed non-sale of remaining non-cash assets and…arrow_forward
- In a partnership liquidation, a gain from the sale of assets is allocated to the: a. Payment of partnership liabilities b. Partner with the lowest capital balances first c. Partners based on their capital balances d. Partners based on their profit and loss ratioarrow_forwardJust like Accounts Receivable being recorded at gross with the Allowance for Doubtful Accounts in the new set of partnership books, Depreciable assets are also recorded at gross with the Accumulated Depreciation in the new set of partnership books. O True O Falsearrow_forwardThere is a liquidation of assets of a partnership. Describe the order in which assets must be distributed upon liquidation of a partnership, and explain the "right-of-offset" concept.arrow_forward
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