LECTURE1ACCT202MANAGERIALACCOUNTING.pptVIP

LECTURE 1ACCT 202MANAGERIAL ACCOUNTING Asst Prof ?zlem OLGU Room: 202 Tel No: 0212 338 1457 E-Mail: oolgu@ku.edu.tr Partnerships Chapter 12 CHAPTER OBJECTIVES Identify characteristics of a partnership Account f?r the partners ?nvestments in a partnership Allocate profits and losses to the partners Account for the admission of a new partner Account for a partners w?thdrawal from the firm Account for the liq?idation of a partnership Prepare partnership financial statements O 1:Characteristics of a Partnership It is an association of two or more persons who co-own a business for a profit. A partnership combines: capital talent experience Characteristics of a Partnership written agreement limited life mutual agency unlimited liability co-ownership of property non-taxpaying entity partnership accounting Types of Partnerships There are two basic types of partnerships. General partnerships Limited partnerships S corporations are taxed in the same way that a partnership is taxed. Objective 2 The Partnership Start-up Example David Cohen and Krysta Lugo formed a partnership on June 1, 20xx, to sell advanced technological devices. David’s contributions are cash of $300,000 and equipment costing $40,000 which has a book value of $27,000 and a current market value of $30,000. What is the journal entry? Journal Entry 1 Example Continues... Krysta’s contributions are cash of $10,000 and a building costing $290,000 which has a book value of $245,000 and a current market value of $400,000. What is the journal entry? Journal Entry 2 The Partnership Start-up Objective 3 Fraction Allocation Example David and Krysta agreed to split profits and losses as follows: 60% to David and 40% to Krysta How do we allocate $180,000 net income for the year? $180,000 × 60% = $108,000 to David $180,000 × 40% = $ 72,000 to Krysta Fraction Allocation Example Assume that they incurred a $40,000 loss for the year (60% David, 40% Krysta). Capital Contributions Example Capital Contributions Example