ACYAVA Critique Paper

presented
to the Accountancy Department
De La Salle University

In partial fulfillment
of the course requirement
In ACYAVA1

Submitted to:
Mr. Rainiel C. Soriano

Submitted By:
Acierto, Elian Justin L.
ACYAVA1 – K35
June 04, 2021
 I. Introduction
This reflection paper will concentrate on the topics covered in Advanced Financial
Accounting and Reporting, specifically my understanding of (1) Partnership Accounting, (2)
Corporation Liquidation, (3) IFRS15, (4) Long Term Construction Contracts, (5) Franchise
Accounting, (6) Joint Arrangements, and (7) Consignment Sales. To further discuss the topics
mentioned, it is best to discuss each topic one at a time. Therefore, for the first concept,
according to Investopedia, a partnership is a legally binding agreement between two or more
people to manage and operate a business and share profits. Partnerships come in a variety of
shapes and sizes. In a partnership business, for example, all partners share equal liability and
profits, although in other businesses, partners may have limited liability. Subsequently, in finance
and economics, liquidation is the process of closing a firm and allocating its assets to claimants.
It is a common occurrence when a firm is insolvent, meaning it is unable to meet its
commitments when they are due. When a company's operations come to an end, the leftover
assets are used to pay creditors and shareholders in order of precedence. On the other hand, IFRS
15 prescribes how and when an IFRS reporter must recognize revenue, as well as requiring such
companies to give more useful and relevant disclosures to financial statement readers. The
standard lays out a five-step approach based on concepts that can be used to any client contracts.
IFRS 15 also includes the other topics covered, such as Long-Term Construction Contracts and
Franchise Accounting, all of which are concerned with recognizing income from contracts.
Following this, joint arrangement is one in which two or more people are jointly in charge. Joint
control is the agreed-upon sharing of control of an arrangement by a binding agreement, which
exists only when choices on the relevant activities necessitate the parties sharing control's
unanimous assent. Lastly, Contingent sales comes under the Merchandising Accounting category,
with the key difference being that a third party or agent is permitted to sell the items.

All of these subjects are important, and they draw on previous knowledge from Basic
Accounting and Financial Accounting and Reporting to help students understand the material.
However, this paper focuses on partnership in which I will criticize an article of my choice to
further give insights and learn more about partnership. In the article, Mark J. Kohler, an american
entrepreneur, discusses the things you need to know about business partnerships which includes
setting up a business partnership, what are the best entities for a partnership, and some
partnership management tips that may help other people who want to start their own business
partnership.

II. Synthesis
The article thoroughly discussed the things you need to know about business
partnerships. It includes setting up a partnership, best entity for a partnership, and partnership
management tips. To go in further detail, let us first discuss the things we need to know about
setting up a partnership. In creating a partnership, the two most critical processes in the
partnership process are drafting the partnership agreement and establishing the suitable
entity/structure for the partnership. The key to establishing and recording your partnership
agreement and terms is to understand the mechanics of how your business will be managed. To
narrow it down, the article cited ten ways to set up a partnership which are (1) Partner roles in
signing and authorizations, (2) Duties and responsibilities of each partner, (3) Contributions of
capital, (4) Rights to distributions, profits, compensation, and losses, (5) Unanimous vote
requirements, (6) Dissolution or exit strategy, (7) A buy-sell provision or separate buy-sell
agreement, (8) Expulsion provision, (9) Non Compete provision, (10) Miscellaneous provisions.

Moving on to the best entity for a partnership, the limited liability company is the
optimum structure for a partnership (LLC). I understand that there are some unusual
circumstances in which a corporation or limited partnership makes sense; nonetheless, these are
the exception rather than the rule. In fact, if you want to save money on taxes, it is common to
have an S corporation own each member's portion of the LLC. There are three major reasons
why the LLC is such an efficient instrument for forming partnerships. Here's a brief breakdown:

1. Its limited liability protection protects you from your partner's actions (and vice versa).
You have infinite vicarious culpability if you don't have it.
2. The operational agreement, as well as the founding minutes and formation documents,
are excellent documents for defining all partnership terms.
3. The LLC's flexibility is advantageous for allocating earnings, losses, and capital, as well
as letting individual partners undertake their own tax planning after receiving their
allocated profit share.
 As for the partnership management tips, the following are three habits that will help the
business succeed according to the article:
1. Communication and documentation are essential. As your business partnership grows,
keep track of everything that isn't in line with your original partnership/operating
agreement. Revisions to a good partnership/operating agreement should always be
written and signed by each business partner due to changing circumstances.
2. Participate in your company's operations. Never consider a partnership to be a turnkey
operation. People who do not communicate with their spouses on a regular basis may
quickly find themselves on the outside looking in and in a conflict. Understand your roles
and tasks, and meet or exceed your partners' expectations, or rethink what those
expectations should be.
3. Bookkeeping and tax deposits are two of the most important aspects of every business.
Don't scrimp on your bookkeeping or finances. This is your company's lifeblood, and it
will determine when and how revenues are delivered. The backbone of proper tax
planning in your partnership is making sure your tax deposits are done on time and in the
correct amounts. Be wary of "phantom income," which refers to partnership income that
exists on paper but does not correspond to distributions. Without adequate recordkeeping
and planning, this can cause havoc on a partner's individual tax return.

III. Conclusion and Recommendation

In conclusion, the life cycle of a partnership might take many different shapes. It is
critical to understand the unique rules and laws that apply to each step of the collaboration. As a
result, the partners will be able to run their firm effectively and respond to issues quickly.
Challenges and disagreements are unavoidable, especially when partners disagree on particular
decisions and prioritize distinct aims. This does not always refer to a partnership's liquidation or
dissolution. Partners, on the other hand, have the option of starting a business with people who
are willing to set the groundwork for a long-term and thriving enterprise. Aside from that, it's
critical that partners be constantly given consent and kept informed about business operations.
This will help with effective communication, trust, and problem-solving abilities for dealing with
unanticipated challenges.
 Based on my learnings, it is critical to collaborate with business partners who share the
same vision, share the same values, and have complimentary abilities. Despite the fact that
disagreements are unavoidable, commitment and respect are critical elements that can assist
foster and strive for growth. The ability of the partners to retain and nurture long-term
connections is critical to the success of the company. First and foremost, I recognized the
importance of forming a relationship.

IV. Reflection
To reflect on my learnings, this ACYAVA1 course has taught me how to better myself in
a variety of ways, such as: controlling time and developing study habits. I came to know that
listening in class, taking notes, and combined with self-motivation was going to take me a long
way. With regard to the content of the course, in the early accounting topics, I understood more
thoroughly the topics we were addressing. In a way, due to the positive results of my exams, I
was satisfied. But I do think it's myself adapting to the accounting program's demand that made
me perform well on this topic. During this course, it was a fun learning experience. There were
moments when I doubted myself, but I was able to understand it and enjoy it with the aid of my
ACYAVA1 teacher and my classmates. I would also like to express my gratitude to my teacher,
Sir Rain for leading us through all of our online sessions. Although it was hard for each and
every one of us to adapt to the new standard, in this course, they always managed to support us
all. I liked his style of teaching, which was simple but effective. When discussing the subjects
that effectively influenced our learning, he gave realistic and very relatable examples. To
conclude, I look forward to the BSA program's upcoming topics and I hope to do well as I did in
my ACYAVA1. With this, I am pleased that during this topic, I gave my best in everything and
will bring with me all the learning as part of the journey to becoming a CPA.

V. References

Kohler, M. J. (2015, May 28). Everything You Need to Know About Business Partnerships.

Entrepreneur. https://www.entrepreneur.com/article/244632.
Kopp, C. M. (2021, May 19). Partnerships: What You Should Know. Investopedia.
https://www.investopedia.com/terms/p/partnership.asp#:~:text=A%20partnership%20is%20a%2
0formal,partners%20may%20have%20limited%20liability.