AFAR - PARTNERSHIP FORMATION (202001 - 202017)
IN ORDER OF PRIORITY:
202001 - METHOD OF DIVISION OF PARTNERSHIP PROFITS
AND LOSSES
202002 - IS THE RATIO IN WHICH PARTNERSHIP PROFITS AND
LOSSES ARE DIVIDED
202003 - POSSIBLE METHODS OF DIVIDING NET INCOME OR
LOSS AMONG PARTNERS (6 ITEMS)
202004 - FORMULA FOR SIMPLE AVERAGE CAPITAL BALANCE
OF A PARTNER
202005 - FORMULA FOR WEIGHTED AVERAGE CAPITAL
BALANCE
202006 - IS A SCHEDULE USED TO COMPUTE THE
DISTRIBUTION OF NET INCOME OR LOSS TO THE PARTNERS
ACCORDING TO THEIR AGREEMENT.
202007 - IS AN INSTRUMENT OF DISTRIBUTING PROFITS TO
PARTNERS USED TO ENCOURAGE CAPITAL INVESTMENTS.
202008 - IS AN INSTRUMENT OF DISTRIBUTING PROFITS TO
PARTNERS FOR THE SERVICES THEY RENDER FOR THE
PARTNERSHIP.
202009 - IS AN INSTRUMENT OF DISTRIBUTING PROFITS TO
MANAGING PARTNERS EQUAL TO A SPECIFIED PERCENTAGE
OF INCOME.
202010 - FORMS OF BONUS THAT MAY BE ALLOWED TO
MANAGING PARTNERS (4 ITEMS)
1. METHOD AS STIPULATED BY THE PARTNERS
2. IN PROPORTION TO THE ORIGINAL CAPITAL
CONTRIBUTION OF THE PARTNERS
PROFIT AND LOSS RATIO (OR P/L RATIO)
1. EQUALLY
2. UNEQUAL OR ARBITRARY RATIO
3. RATIO OF PARTNERS' CAPITAL ACCOUNT BALANCES ON A
PARTICULAR DATE
4. RATIO OF THE PARTNERS' AVERAGE CAPITAL ACCOUNT
BALANCES DURING THE YEAR
5. INTEREST
6. SALARIES
7. BONUS
SIMPLE AVERAGE CAPITAL BALANCE = (BEGINNING CAPITAL
BALANCE + ENDING CAPITAL BALANCE) / 2
WEIGHTED AVERAGE CAPITAL BALANCE = SUMMATION OF
(CAPITAL BALANCE AT EACH DATE OF PARTNER
INVESTMENT OR WITHDRAWAL * FRACTION OF THE YEAR
UNCHANGED)
PROFIT DISTRIBUTION SCHEDULE OR PROFIT DISTRIBUTION
TABLE
INTEREST
SALARY
BONUS
1. BONUS AS PERCENTAGE OF NET INCOME
2. BONUS AS PERCENTAGE OF NET INCOME AFTER
SALARIES
3. BONUS AS PERCENTAGE OF NET INCOME AFTER
INTEREST
4. BONUS AS PERCENTAGE OF NET INCOME AFTER BONUS
5. COMBINATION OF ANY OF ITEMS 2-4
202011 - FORMULA FOR BONUS AS A PERCENTAGE OF NET
INCOME
202012 - FORMULA FOR BONUS AS A PERCENTAGE OF NET
INCOME AFTER SALARIES
202013 - FORMULA FOR BONUS AS A PERCENTAGE OF NET
INCOME AFTER INTEREST
202014 - FORMULA FOR BONUS AS A PERCENTAGE OF NET
INCOME AFTER BONUS
202015 - IS A PHRASE THAT MEANS NO FURTHER
DISTRIBUTION OF PROFITS USING INTEREST, SALARY OR
BONUS SHALL BE MADE IF THE VALUE OF REMAINING NET
INCOME GOES BELOW ZERO.
202016 - PROCEDURE TO BE MADE IF THERE IS A CHANGE IN
THE PROFIT AND LOSS RATIO OF THE PARTNERS
202017 - PROCEDURE TO BE MADE TO CORRECT
PARTNERSHIP NET INCOME OR LOSS OF PRIOR PERIOD
BONUS = BONUS RATE * (NET INCOME)
BONUS = BONUS RATE * (NET INCOME - SALARIES)
BONUS = BONUS RATE * (NET INCOME - INTEREST)
BONUS = BONUS RATE * (NET INCOME - BONUS)
UP TO THE EXTENT OF RANKING ONLY
1. ADJUST ALL ASSETS AND LIABILITIES TO REFLECT THEIR
FAIR VALUES.
2. RECORD ANY UNRECORDED ASSETS OR LIABILITIES, IF
ANY.
3. THESE SHOULD BE MADE TO THE PARTNERS' CAPITAL
ACCOUNT IN ACCORDANCE WITH THEIR OLD PROFIT AND
LOSS RATIO.
1. DETERMINE THE CORRECT NET INCOME OR LOSS OF THE
PRIOR PERIOD.
2. COMPUTE THE PROPER SHARE OF EACH PARTNER USING
THE PROFIT AND LOSS RATIO IN THE YEAR IN WHICH THE
ERROR OCCURRED.
3. COMPUTE THE DIFFERENCE BETWEEN THE SHARE IN THE
PROFIT THAT EACH PARTNER ACTUALLY RECEIVED AND THE
SHARE EACH WOULD HAVE RECEIVED FROM NO. 2.
4. ADJUST THE PARTNERS' CAPITAL ACCOUNTS BY THE
AMOUNT IN NO. 3.