Chapter 20
Partnerships and Joint Ventures
The editors wish to acknowledge the previous contribution to this chapter by George N. Dietz, CPA, American Institute of Certified Public Accountants; Gerard L. Yarnall, CPA, Deloitte & Touche; and Ronald J. Patten, PhD, CPA, DePaul University.
20.1 Nature and Organization of The Partnership Entity
(b) Advantages and Disadvantages of a Partnership
(d) Importance of the Partnership
(e) Formation of a Partnership
20.2 Accounting for Partnership Operations
(a) Peculiarities of Partnership Accounting
(b) Methods of Dividing Profits and Losses
(c) Example Using Average Capital Ratio
(d) Treatment of Transactions Between Partner and Firm
(i) Interest on Invested Capital
(iv) Debtor–Creditor Relationship
(v) Landlord–Tenant Relationship
(e) Closing Operating Accounts
(i) Division of Profits Illustrated
(ii) Statement of Partners' Capitals Illustrated
20.3 Accounting for Changes in Firm Membership
(a) Effect of Change in Partners
(b) New Partner Purchasing an Interest
(ii) Purchase at More than Book Value
(iii) Purchase at Less than Book Value
(c) New Partner's Investment to Acquire an Interest
(ii) Investment at More than Book Value
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