1. ADMISSION OF NEW PARTNERS 2. RETIREMENT/WITMORAWAL OF EXISTING PARTNER 3, DEATH OF EXISTING PARTNER, 4, INCORPORATION OF PARTNERSHIP ‘A. BY PURCHASE WITHOUT REVALUTION (If Silent) [ Payment = Interest acquired | + Personal transaction between old and new partners + NO Goodwill recognition + Total Assets and Total Capital remains unchanged «The purchase transaction is not recorded in paetnership’s book. What shall be recorded is only the transfer of interest from old to new partner dA OB = -Newl Total Contribution wx 200 ox Transfer of Interest (rox) 00K Agreed Capital 20 00k 200 200 WITH REVALUATION [ Indicator: Payment >< interest acquired | «2 Steps to determine the balance of old partners AFTER ADMISSION 1. Determine the revaluation (over/under) AND distribute to old partners using. their PL ratio 2. Transfer Capital to the new partner OidA OB New Total Contributions 00 vox 00% Revaluation sent roo) 20ex(dOxx) seen 8X) Balance 30K 0 OK ‘Transfer of interest (roex) 0K - Agreed Capital 70 20x wax 00 NOTE: If osset reveluation is the appropriate method, but the amount of over/under velvation (ar edjustment in assets) is nat given. The BALANCE AFTER REVALUATION OF THE SELLING PARTNER Is computed as follows: [ New Partner Payment / acquired interest (36) from selling partner J. Then, SQUEEZEDSPECIAL CASE: ASSET REVALUATION AND BONUS COMBINED + Total Contributed Capital (TCC) NOT EQUAL Total Agreed Capital (TAC) + Partners’ contributed capital (before admission} NOT EQUAL the'r agreed capital {after admission) + Old partners accounts ere adjusted twice, (1) for asset revaluaticn (2) for bonus + New partner account is adjusted ONLY by Bonus OA Old New Total Contributions 20x 200% soot 70x Revaluation robo’) _100x(:00%) rexbboor) Balance 30K soo 30% Bonus soorbrood) _voorbon) _aorhoor = Agreed Capital 20 200 soo 30x NOTE: If asset revaluation is an appropriate methed, but the amount of ever/under valuation {or adjustment in assets) is nat given, TOTAL AGREED CAPITAL is, computed as follows: [ Mew Partner Contribution / acquired interest (3) in the firm J [RETIREMENT / WITHDRAWAL OF OLD PARTNER | '¢ At date of retirement, partners capital accounts shall be adjusted for: ~Their share In Profit or Loss as of the date of retirement ~Their share in Asset Revaluation (not implied, thus must be indicated) -Loan aalances ‘+ The Adjusted Capital of the retiring partner may be recovered thru: 1. Sale to Outsider ~ mere transfer of interest (same with admission by purchase) 2. Sale to remaining partners - mere transfer of interest between partners 3. Payment of his share by the partnership: Settlernent Price = Adjusted Capital Settlement Price > Adjusted Capital Settlement Price < Adjusted Capital NO BONUS Bonus to RETIRING partner Bonus to REMAIN NG partners Step 1: Adjust capital accounts Step 2: Close Adjusted capital accaunts into Share Capital and APIC if any. ‘+ Settlement is EITHER: Option t BEG OF THE YEAR DATE OF DEATH SETTLEMENT Pro-rata share in Profits plus; Interest on Capital Balance Option 2 Share in the Profit for the WHOLE YEAR