Deficit in partner’s capital account: may occur if its credit balance it too low to absorb losses. Such deficits may be rectified by either, the partner invests cash or other assets or the capital deficit is distributed to the other partners in loss sharing ratio. The approach used depends on the solvency of the partner with the capital deficit. If the partner is solvent capital deficit must be rectified by additional investment and if the partner is personally insolvent, section 807 of UPA 1997 requires the remaining partners to absorb the insolvent partner’s deficit by allocating their capital accounts in their resulting loss sharing ratio. how is deficit in partner’s capital account is eliminated if he or she is personally insolvent.

Question

Want to see the full answer?

Answer 1

Question

Chapter 16, Problem 16.6Q

To determine

Deficit in partner’s capital account: may occur if its credit balance it too low to absorb losses. Such deficits may be rectified by either, the partner invests cash or other assets or the capital deficit is distributed to the other partners in loss sharing ratio. The approach used depends on the solvency of the partner with the capital deficit. If the partner is solvent capital deficit must be rectified by additional investment and if the partner is personally insolvent, section 807 of UPA 1997 requires the remaining partners to absorb the insolvent partner’s deficit by allocating their capital accounts in their resulting loss sharing ratio.

how is deficit in partner’s capital account is eliminated if he or she is personally insolvent.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

The actual cost of direct materials is $37.50 per pound, while the standard cost per pound is $35.25. During the current period, 5,200 pounds were used in production. What is the direct materials price variance?

Please provide the accurate answer to this financial accounting problem using valid techniques.

What is the gearing ratio

Answer 2

Question

Chapter 16, Problem 16.6Q

To determine

Deficit in partner’s capital account: may occur if its credit balance it too low to absorb losses. Such deficits may be rectified by either, the partner invests cash or other assets or the capital deficit is distributed to the other partners in loss sharing ratio. The approach used depends on the solvency of the partner with the capital deficit. If the partner is solvent capital deficit must be rectified by additional investment and if the partner is personally insolvent, section 807 of UPA 1997 requires the remaining partners to absorb the insolvent partner’s deficit by allocating their capital accounts in their resulting loss sharing ratio.

how is deficit in partner’s capital account is eliminated if he or she is personally insolvent.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 16, Problem 16.6Q

To determine

Deficit in partner’s capital account: may occur if its credit balance it too low to absorb losses. Such deficits may be rectified by either, the partner invests cash or other assets or the capital deficit is distributed to the other partners in loss sharing ratio. The approach used depends on the solvency of the partner with the capital deficit. If the partner is solvent capital deficit must be rectified by additional investment and if the partner is personally insolvent, section 807 of UPA 1997 requires the remaining partners to absorb the insolvent partner’s deficit by allocating their capital accounts in their resulting loss sharing ratio.

how is deficit in partner’s capital account is eliminated if he or she is personally insolvent.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 16, Problem 16.6Q

To determine

Deficit in partner’s capital account: may occur if its credit balance it too low to absorb losses. Such deficits may be rectified by either, the partner invests cash or other assets or the capital deficit is distributed to the other partners in loss sharing ratio. The approach used depends on the solvency of the partner with the capital deficit. If the partner is solvent capital deficit must be rectified by additional investment and if the partner is personally insolvent, section 807 of UPA 1997 requires the remaining partners to absorb the insolvent partner’s deficit by allocating their capital accounts in their resulting loss sharing ratio.

how is deficit in partner’s capital account is eliminated if he or she is personally insolvent.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 16, Problem 16.6Q

To determine

Deficit in partner’s capital account: may occur if its credit balance it too low to absorb losses. Such deficits may be rectified by either, the partner invests cash or other assets or the capital deficit is distributed to the other partners in loss sharing ratio. The approach used depends on the solvency of the partner with the capital deficit. If the partner is solvent capital deficit must be rectified by additional investment and if the partner is personally insolvent, section 807 of UPA 1997 requires the remaining partners to absorb the insolvent partner’s deficit by allocating their capital accounts in their resulting loss sharing ratio.

how is deficit in partner’s capital account is eliminated if he or she is personally insolvent.

Answer 6

Chapter 16, Problem 16.6Q

To determine

Deficit in partner’s capital account: may occur if its credit balance it too low to absorb losses. Such deficits may be rectified by either, the partner invests cash or other assets or the capital deficit is distributed to the other partners in loss sharing ratio. The approach used depends on the solvency of the partner with the capital deficit. If the partner is solvent capital deficit must be rectified by additional investment and if the partner is personally insolvent, section 807 of UPA 1997 requires the remaining partners to absorb the insolvent partner’s deficit by allocating their capital accounts in their resulting loss sharing ratio.

how is deficit in partner’s capital account is eliminated if he or she is personally insolvent.

Answer 7

Chapter 16, Problem 16.6Q

To determine

Deficit in partner’s capital account: may occur if its credit balance it too low to absorb losses. Such deficits may be rectified by either, the partner invests cash or other assets or the capital deficit is distributed to the other partners in loss sharing ratio. The approach used depends on the solvency of the partner with the capital deficit. If the partner is solvent capital deficit must be rectified by additional investment and if the partner is personally insolvent, section 807 of UPA 1997 requires the remaining partners to absorb the insolvent partner’s deficit by allocating their capital accounts in their resulting loss sharing ratio.

how is deficit in partner’s capital account is eliminated if he or she is personally insolvent.

Answer 8

Expert Solution & Answer

Answer 9

Expert Solution & Answer

Answer 10

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 11

Ch. 16 - What are the major causes of a dissolution? What...Ch. 16 - Prob. 16.2Q Ch. 16 - Prob. 16.3Q Ch. 16 - Prob. 16.4Q Ch. 16 - Contrast a lump-sum liquidation with an...Ch. 16 - Prob. 16.6Q Ch. 16 - Prob. 16.7Q Ch. 16 - Prob. 16.8Q Ch. 16 - Prob. 16.9Q Ch. 16 - Prob. 16.10Q

Solution Summary: The author explains how deficit in partner's capital account is eliminated if he or she is personally insolvent.

Concept explainers

Want to see the full answer?

Chapter 16 Solutions