Slide AKT 307 AKL 1 14
Baker / Lembke / King
Partnerships:
Liquidation
McGraw-Hill/ Irwin
16
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Major Causes of a Dissolution
2
A
Anew
new partner
partner isisadmitted
admitted or
oraa partner
partner withdraws.
withdraws.
The
The specified
specified term
term or
or task
task of
of the
the partnership
partnership has
has
been
been completed.
completed.
All
All partners
partners agree
agree to
to dissolve
dissolve the
the partnership.
partnership.
The
The partnership
partnership or
or an
an an
an individual
individual partner
partner isis
bankrupt.
bankrupt.
By
By court
court degree:
degree:
A partner is declared insane.
A partner is declared insane.
A partner seriously breaches the partnership agreement.
A partner seriously breaches the partnership agreement.
The court determines that a partnership may be
The court determines that a partnership may be
operated
operatedonly
onlyatataaloss.
loss.
Irwin/McGraw-
© The McGraw-Hill Companies, Inc., 1999
3
Partnership Terminates Immediately if--
• A court so decrees.
• The partnership is
bankrupt.
• The partnership’s
business becomes
illegal.
Irwin/McGraw-
© The McGraw-Hill Companies, Inc., 1999
Claims Against the Partnership Assets4
Partnership creditors other than
partners.
Partners’ claims other than
capital and profits, such as loans
payable and accrued interest
payable.
Partners’ claims to capital or
profits, to the extent of credit
balances in capital accounts.
Irwin/McGraw-
© The McGraw-Hill Companies, Inc., 1999
Claims Against Personal Assets
5
Personal creditors of
individual partners.
For general partners,
partnership creditors for
unpaid partnership
liabilities, regardless of
partner’s capital balance
in the partnership.
Irwin/McGraw-
© The McGraw-Hill Companies, Inc., 1999
6
Basic Facts at Liquidation
Aldi
Partners
Bayu
Citra
Profit and loss percentage
40%
40%
20%
Partnership capital account Rp34,000,000 Rp10,000,000 Rp14,000,000
Aldi
Bayu
Citra
Personal assets
Rp150,000,000 Rp12,000,000 Rp42,000,000
Personal liabilities
(86,000,000) (16,000,000) (14,000,000)
Net worth (deficit) Rp 64,000,000 Rp (4,000,000) Rp28,000,000
Irwin/McGraw-
© The McGraw-Hill Companies, Inc., 1999
Trial Balance on Liquidation Date
Cash
Noncash Assets
Liabilities
Aldi, Capital (40%)
Bayu, Capital (40%)
Citra, Capital (20%)
Total
Irwin/McGraw-
7
ABC Partnership
Trial Balance
May 1, 19X5
Rp 10,000,000
90,000,000
Rp100,000,000
Rp 42,000,000
34,000,000
10,000,000
14,000,000
Rp100,000,000
© The McGraw-Hill Companies, Inc., 1999
8
Partnership Solvent--No Deficits
ABC Partnership
Statement of Partnership Realization and Liquidation
Lump-Sum Liquidation (in 000’000)
Noncash
Cash Assets
Preliquidation balances
Sale of assets and distribution of Rp10 loss
Payment to o/s creditors
Lump-sum payments to
partners:
Partners’ capital
Postliquidation balance
Irwin/McGraw-
10
90
80
90
(42)
48
(90)
-0-
(48)
-0-
-0-
-0-
Aldi, Cap. Bayu, Cap Citra, Cap.
Liab.
40%
40%
20%.
(42)
(42)
42
-0-
-0-
(34)
(10)
(14)
4
(30)
4
(6)
2
(12)
(30)
(6)
(12)
30
-0-
6
-0-
12
-0-
© The McGraw-Hill Companies, Inc., 1999
Partnership Solvent--No Deficits
9
May 15, 19X5
Cash
Aldi, Capital
Bayu, Capital
Citra, Capital
Noncash Assets
80,000,000
4,000,000
4,000,000
2,000,000
Distribution of
Rp10,000,000 loss
90,000,000
May 20, 19X5
Liabilities
Cash
40,000,000
40,000,000
Pay outside
creditors
May 30, 19X5
Aldi, Capital
Bayu, Capital
Citra, Capital
Cash
Irwin/McGraw-
30,000,000
6,000,000
12,000,000
Lump-sum
payments to
48,000,000 partners
© The McGraw-Hill Companies, Inc., 1999
Partnership Solvent--Deficit Created
10
ABC Partnership
Statement of Partnership Realization and Liquidation
Lump-Sum Liquidation (in 000,000)
Noncash
Cash Assets
Preliquidation balances
Sale of assets and distribution of Rp55 loss
Payment to o/s creditors
Distribution of deficit of
insolvent partner:
40/60 x Rp12
20/60 x Rp12
(to next slide)
Irwin/McGraw-
10
90
35
45
(42)
3
(90)
-0-0-
Aldi, Cap. Bayu, Cap Citra, Cap.
Liab.
40%
40%
20%.
(42)
(42)
42
-0-
(34)
(10)
(14)
22
(12)
22
12
11
(3)
(12)
12
(3)
(12)
8
3
-0-
-0-
(4)
-0-
4
1
© The McGraw-Hill Companies, Inc., 1999
Partnership Solvent--Deficit Created
11
ABC Partnership
Statement of Partnership Realization and Liquidation
Lump-Sum Liquidation (in 000,000)
Noncash
Cash Assets
(from previous slide)
Contribution by Citra
to remedy capital deficit
Lump-sum payments to
partners:
Partner’s capital
Postliquidation balance
Irwin/McGraw-
3
1
2
(4)
-0-
-0-
-0-
-0-
Aldi, Cap. Bayu, Cap Citra, Cap.
Liab.
40%
40%
20%.
-0-
(4)
-0-
1
-0-
(4)
-0-
(1)
-0-
-0-
4
-0-
-0-
-0-
© The McGraw-Hill Companies, Inc., 1999
Partnership Insolvent--Deficit Created12
ABC Partnership
Statement of Partnership Realization and Liquidation
Lump-Sum Liquidation (in 000,000)
Noncash
Cash Assets
Preliquidation balances
Sale of assets and distribution of Rp70 loss
10
90
20
30
(90)
-0-
Aldi, Cap. Bayu, Cap Citra, Cap.
Liab.
40%
40%
20%.
(42)
(34)
(10)
(14)
(42)
28
(6)
28
18
14
-0-
Distribution of deficit of
insolvent partner:
40/60 x Rp18
20/60 x Rp18
(18)
12
30
-0-
(42)
6
-0-
6
6
(to next slide)
Irwin/McGraw-
© The McGraw-Hill Companies, Inc., 1999
Partnership Insolvent--Deficit Created13
ABC Partnership
Statement of Partnership Realization and Liquidation
Lump-Sum Liquidation (in 000,000)
Noncash
Cash Assets
(from previous slide)
Contribution by
Citra
Payment to outside
creditors
Postliquidation balances
Irwin/McGraw-
30
-0-
Aldi, Cap. Bayu, Cap Citra, Cap.
Liab.
40%
40%
20%.
(42)
6
12
42
-0-
(42)
(6)
-0-
(42)
-0-
-0-0-
42
-0-
-0-0-
-0-
6
-0-
(6)
-0-
-0-0-
-0-0-
© The McGraw-Hill Companies, Inc., 1999
Installment Liquidation--May 19X5
14
ABC Partnership
Statement of Partnership Realization and Liquidation
Lump-Sum Liquidation (in 000,000)
Noncash
Cash Assets
Preliquidation balances
Sale of assets and distribution of Rp10 loss
Payment to o/s creditors
10
90
45
55
(42)
13
(55)
35
35
Aldi, Cap. Bayu, Cap Citra, Cap.
Liab.
40%
40%
20%.
(42)
(42)
42
-0-
(34)
(10)
(14)
4
(30)
4
(6)
2
(12)
(30)
(6)
(12)
Safe payment to partners
Irwin/McGraw-
© The McGraw-Hill Companies, Inc., 1999
15
Schedule of Safe Payments to Partners
ABC Partnership
Schedule of Safe Payments to Partners, May 31, 19X5
Partner
Aldi.
Bayu
40%
40%
Citra
20%
Capital balances, May 31,before cash distr. (30,000,000)(6,000,000)(12,000,000)
Assume full loss of Rp35,000,000 on
remaining noncash assets and
Rp10,000,000 in possible future
liquidation expenses
18,000,000 18,000,000 9,000,000
(12,000,000)12,000,000 (3,000,000)
Assume Bayu’s potential deficit must
be absorbed by Aldi and Citra:
(12,000,000)
40/60 x Rp12,000,000
8,000,000
20/60 x Rp12,000,000
4,000,000
(4,000,000)
-0- 1,000,000
Assume Citra’s potential deficit must be
absorbed by Aldi
1,000,000
(1,000,000)
Safe payment to partners, May 31
(3,000,000)
-0-0©
Irwin/McGraw-
The McGraw-Hill Companies, Inc., 1999
Installment Liquidation--May 19X5
16
ABC Partnership
Statement of Partnership Realization and Liquidation
Lump-Sum Liquidation (in 000,000)
Noncash
Cash Assets
Preliquidation balances
Sale of assets and distribution of Rp10 loss
Payment to o/s creditors
Safe payment to partners
(to next slide)
Irwin/McGraw-
10
90
45
55
(42)
13
(3)
10
(55)
35
Aldi, Cap. Bayu, Cap Citra, Cap.
Liab.
40%
40%
20%.
(42)
35
(40)
42
-0-
35
-0-
(34)
(10)
(14)
4
(30)
4
(6)
2
(12)
(30)
3
(27)
(6)
(12)
(6)
(12)
© The McGraw-Hill Companies, Inc., 1999
Installment Liquidation--June 19X5
17
ABC Partnership
Statement of Partnership Realization and Liquidation
Lump-Sum Liquidation (in 000,000)
Noncash
Cash Assets
(from previous slide)
Sale of assets and distribution of Rp15 loss
10
35
15
25
(30)
5
Aldi, Cap. Bayu, Cap Citra, Cap.
Liab.
40%
40%
20%.
-0-
(27)
(6)
(12)
-0-
6
(21)
6
-0-
3
(9)
Safe payment to partners
Irwin/McGraw-
© The McGraw-Hill Companies, Inc., 1999
18
Schedule of Safe Payments to Partners
ABC Partnership
Schedule of Safe Payments to Partners, June 30, 19X5
Partner
Aldi.
Bayu
40%
Capital and loan balances, June 30
Assume full loss of Rp5,000,000 on
remaining noncash assets and
Rp10,000,000 in possible future
liquidation expenses
Assume Bayu’s potential deficit must
be absorbed by Aldi and Citra:
40/60 x Rp6,000,000
20/60 x Rp6,000,000
Safe payment to partners, June 30
Irwin/McGraw-
(21,000,000)
40%
Citra
20%
-0- (9,000,000)
6,000,000 6,000,000 3,000,000
(15,000,000) 6,000,000 (6,000,000)
(6,000,000)
4,000,000
(11,000,000)
2,000,000
-0- (4,000,000)
© The McGraw-Hill Companies, Inc., 1999
Installment Liquidation--June 19X5
19
ABC Partnership
Statement of Partnership Realization and Liquidation
Lump-Sum Liquidation (in 000,000)
Noncash
Cash Assets
(from Slide 17)
Sale of assets and distribution of Rp15 loss
Safe payment to partners
(to next slide)
Irwin/McGraw-
Aldi, Cap. Bayu, Cap Citra, Cap.
Liab.
40%
40%
20%.
10
35
-0-
15
25
(15)
10
(30)
5
-0-
5
-0-
(27)
(6)
(12)
6
(21)
11
(10)
6
-0-
3
(9)
4
(5)
-0-
© The McGraw-Hill Companies, Inc., 1999
Installment Liquidation--July 19X5
20
ABC Partnership
Statement of Partnership Realization and Liquidation
Lump-Sum Liquidation (in 000,000)
Noncash
Cash Assets
(from previous slide)
Sale of assets at book
value
Payment of Rp7,5 in
liquidation cost
Distribution of deficit
of insolvent partner:
40/60 x Rp3
20/60 x Rp3
Payment to partners
Irwin/McGraw-
Aldi, Cap. Bayu, Cap Citra, Cap.
Liab.
40%
40%
20%.
10.0
5
-0-
(10)
-0-
(5.0)
5.0
15.0
(5)
-0-
-0-
(10)
-0-
(5.0)
-0-
3
(7)
3
3
1.5
(3.5)
(7.5)
7.5
-0-
(3)
2
7.5
(7.5)
-0-
-0-
(5)
5
-0-
1
(2.5)
2.5
© The McGraw-Hill Companies, Inc., 1999
Cash Distribution Plan (in Rp000)
Profit and loss sharing percentage
Capital and loan balances
21
Aldi
Bayu
Citra
40%
40%
20%
(34,000,000)(10,000,000)(14,000,000)
Loss absorption power (LAP)
[(Capital + loan balances) Profit %] (85,000,000)(25,000,000)(70,000,000)
Decrease highest LAP to next-highest:
Decrease Aldi by Rp15,000,000
(cash distribution of Rp6,000,000) 15,000,000
(70,000,000)(25,000,000)(70,000,000)
Decrease LAP to next-highest level:
Decrease Aldi by Rp45,000,000,
45,000,000
(cash distribution of Rp22,000,000)
Decrease Citra by Rp45,000,000
45,000,000
(cash distribution of Rp11,000,000)
(25,000,000)(25,000,000)(25,000,000)
Further payments
40%
40%
20%
Irwin/McGraw-
© The McGraw-Hill Companies, Inc., 1999
22
Citrapter Seventeen
The
The
End
End
Irwin/McGraw-
© The McGraw-Hill Companies, Inc., 1999
Partnerships:
Liquidation
McGraw-Hill/ Irwin
16
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Major Causes of a Dissolution
2
A
Anew
new partner
partner isisadmitted
admitted or
oraa partner
partner withdraws.
withdraws.
The
The specified
specified term
term or
or task
task of
of the
the partnership
partnership has
has
been
been completed.
completed.
All
All partners
partners agree
agree to
to dissolve
dissolve the
the partnership.
partnership.
The
The partnership
partnership or
or an
an an
an individual
individual partner
partner isis
bankrupt.
bankrupt.
By
By court
court degree:
degree:
A partner is declared insane.
A partner is declared insane.
A partner seriously breaches the partnership agreement.
A partner seriously breaches the partnership agreement.
The court determines that a partnership may be
The court determines that a partnership may be
operated
operatedonly
onlyatataaloss.
loss.
Irwin/McGraw-
© The McGraw-Hill Companies, Inc., 1999
3
Partnership Terminates Immediately if--
• A court so decrees.
• The partnership is
bankrupt.
• The partnership’s
business becomes
illegal.
Irwin/McGraw-
© The McGraw-Hill Companies, Inc., 1999
Claims Against the Partnership Assets4
Partnership creditors other than
partners.
Partners’ claims other than
capital and profits, such as loans
payable and accrued interest
payable.
Partners’ claims to capital or
profits, to the extent of credit
balances in capital accounts.
Irwin/McGraw-
© The McGraw-Hill Companies, Inc., 1999
Claims Against Personal Assets
5
Personal creditors of
individual partners.
For general partners,
partnership creditors for
unpaid partnership
liabilities, regardless of
partner’s capital balance
in the partnership.
Irwin/McGraw-
© The McGraw-Hill Companies, Inc., 1999
6
Basic Facts at Liquidation
Aldi
Partners
Bayu
Citra
Profit and loss percentage
40%
40%
20%
Partnership capital account Rp34,000,000 Rp10,000,000 Rp14,000,000
Aldi
Bayu
Citra
Personal assets
Rp150,000,000 Rp12,000,000 Rp42,000,000
Personal liabilities
(86,000,000) (16,000,000) (14,000,000)
Net worth (deficit) Rp 64,000,000 Rp (4,000,000) Rp28,000,000
Irwin/McGraw-
© The McGraw-Hill Companies, Inc., 1999
Trial Balance on Liquidation Date
Cash
Noncash Assets
Liabilities
Aldi, Capital (40%)
Bayu, Capital (40%)
Citra, Capital (20%)
Total
Irwin/McGraw-
7
ABC Partnership
Trial Balance
May 1, 19X5
Rp 10,000,000
90,000,000
Rp100,000,000
Rp 42,000,000
34,000,000
10,000,000
14,000,000
Rp100,000,000
© The McGraw-Hill Companies, Inc., 1999
8
Partnership Solvent--No Deficits
ABC Partnership
Statement of Partnership Realization and Liquidation
Lump-Sum Liquidation (in 000’000)
Noncash
Cash Assets
Preliquidation balances
Sale of assets and distribution of Rp10 loss
Payment to o/s creditors
Lump-sum payments to
partners:
Partners’ capital
Postliquidation balance
Irwin/McGraw-
10
90
80
90
(42)
48
(90)
-0-
(48)
-0-
-0-
-0-
Aldi, Cap. Bayu, Cap Citra, Cap.
Liab.
40%
40%
20%.
(42)
(42)
42
-0-
-0-
(34)
(10)
(14)
4
(30)
4
(6)
2
(12)
(30)
(6)
(12)
30
-0-
6
-0-
12
-0-
© The McGraw-Hill Companies, Inc., 1999
Partnership Solvent--No Deficits
9
May 15, 19X5
Cash
Aldi, Capital
Bayu, Capital
Citra, Capital
Noncash Assets
80,000,000
4,000,000
4,000,000
2,000,000
Distribution of
Rp10,000,000 loss
90,000,000
May 20, 19X5
Liabilities
Cash
40,000,000
40,000,000
Pay outside
creditors
May 30, 19X5
Aldi, Capital
Bayu, Capital
Citra, Capital
Cash
Irwin/McGraw-
30,000,000
6,000,000
12,000,000
Lump-sum
payments to
48,000,000 partners
© The McGraw-Hill Companies, Inc., 1999
Partnership Solvent--Deficit Created
10
ABC Partnership
Statement of Partnership Realization and Liquidation
Lump-Sum Liquidation (in 000,000)
Noncash
Cash Assets
Preliquidation balances
Sale of assets and distribution of Rp55 loss
Payment to o/s creditors
Distribution of deficit of
insolvent partner:
40/60 x Rp12
20/60 x Rp12
(to next slide)
Irwin/McGraw-
10
90
35
45
(42)
3
(90)
-0-0-
Aldi, Cap. Bayu, Cap Citra, Cap.
Liab.
40%
40%
20%.
(42)
(42)
42
-0-
(34)
(10)
(14)
22
(12)
22
12
11
(3)
(12)
12
(3)
(12)
8
3
-0-
-0-
(4)
-0-
4
1
© The McGraw-Hill Companies, Inc., 1999
Partnership Solvent--Deficit Created
11
ABC Partnership
Statement of Partnership Realization and Liquidation
Lump-Sum Liquidation (in 000,000)
Noncash
Cash Assets
(from previous slide)
Contribution by Citra
to remedy capital deficit
Lump-sum payments to
partners:
Partner’s capital
Postliquidation balance
Irwin/McGraw-
3
1
2
(4)
-0-
-0-
-0-
-0-
Aldi, Cap. Bayu, Cap Citra, Cap.
Liab.
40%
40%
20%.
-0-
(4)
-0-
1
-0-
(4)
-0-
(1)
-0-
-0-
4
-0-
-0-
-0-
© The McGraw-Hill Companies, Inc., 1999
Partnership Insolvent--Deficit Created12
ABC Partnership
Statement of Partnership Realization and Liquidation
Lump-Sum Liquidation (in 000,000)
Noncash
Cash Assets
Preliquidation balances
Sale of assets and distribution of Rp70 loss
10
90
20
30
(90)
-0-
Aldi, Cap. Bayu, Cap Citra, Cap.
Liab.
40%
40%
20%.
(42)
(34)
(10)
(14)
(42)
28
(6)
28
18
14
-0-
Distribution of deficit of
insolvent partner:
40/60 x Rp18
20/60 x Rp18
(18)
12
30
-0-
(42)
6
-0-
6
6
(to next slide)
Irwin/McGraw-
© The McGraw-Hill Companies, Inc., 1999
Partnership Insolvent--Deficit Created13
ABC Partnership
Statement of Partnership Realization and Liquidation
Lump-Sum Liquidation (in 000,000)
Noncash
Cash Assets
(from previous slide)
Contribution by
Citra
Payment to outside
creditors
Postliquidation balances
Irwin/McGraw-
30
-0-
Aldi, Cap. Bayu, Cap Citra, Cap.
Liab.
40%
40%
20%.
(42)
6
12
42
-0-
(42)
(6)
-0-
(42)
-0-
-0-0-
42
-0-
-0-0-
-0-
6
-0-
(6)
-0-
-0-0-
-0-0-
© The McGraw-Hill Companies, Inc., 1999
Installment Liquidation--May 19X5
14
ABC Partnership
Statement of Partnership Realization and Liquidation
Lump-Sum Liquidation (in 000,000)
Noncash
Cash Assets
Preliquidation balances
Sale of assets and distribution of Rp10 loss
Payment to o/s creditors
10
90
45
55
(42)
13
(55)
35
35
Aldi, Cap. Bayu, Cap Citra, Cap.
Liab.
40%
40%
20%.
(42)
(42)
42
-0-
(34)
(10)
(14)
4
(30)
4
(6)
2
(12)
(30)
(6)
(12)
Safe payment to partners
Irwin/McGraw-
© The McGraw-Hill Companies, Inc., 1999
15
Schedule of Safe Payments to Partners
ABC Partnership
Schedule of Safe Payments to Partners, May 31, 19X5
Partner
Aldi.
Bayu
40%
40%
Citra
20%
Capital balances, May 31,before cash distr. (30,000,000)(6,000,000)(12,000,000)
Assume full loss of Rp35,000,000 on
remaining noncash assets and
Rp10,000,000 in possible future
liquidation expenses
18,000,000 18,000,000 9,000,000
(12,000,000)12,000,000 (3,000,000)
Assume Bayu’s potential deficit must
be absorbed by Aldi and Citra:
(12,000,000)
40/60 x Rp12,000,000
8,000,000
20/60 x Rp12,000,000
4,000,000
(4,000,000)
-0- 1,000,000
Assume Citra’s potential deficit must be
absorbed by Aldi
1,000,000
(1,000,000)
Safe payment to partners, May 31
(3,000,000)
-0-0©
Irwin/McGraw-
The McGraw-Hill Companies, Inc., 1999
Installment Liquidation--May 19X5
16
ABC Partnership
Statement of Partnership Realization and Liquidation
Lump-Sum Liquidation (in 000,000)
Noncash
Cash Assets
Preliquidation balances
Sale of assets and distribution of Rp10 loss
Payment to o/s creditors
Safe payment to partners
(to next slide)
Irwin/McGraw-
10
90
45
55
(42)
13
(3)
10
(55)
35
Aldi, Cap. Bayu, Cap Citra, Cap.
Liab.
40%
40%
20%.
(42)
35
(40)
42
-0-
35
-0-
(34)
(10)
(14)
4
(30)
4
(6)
2
(12)
(30)
3
(27)
(6)
(12)
(6)
(12)
© The McGraw-Hill Companies, Inc., 1999
Installment Liquidation--June 19X5
17
ABC Partnership
Statement of Partnership Realization and Liquidation
Lump-Sum Liquidation (in 000,000)
Noncash
Cash Assets
(from previous slide)
Sale of assets and distribution of Rp15 loss
10
35
15
25
(30)
5
Aldi, Cap. Bayu, Cap Citra, Cap.
Liab.
40%
40%
20%.
-0-
(27)
(6)
(12)
-0-
6
(21)
6
-0-
3
(9)
Safe payment to partners
Irwin/McGraw-
© The McGraw-Hill Companies, Inc., 1999
18
Schedule of Safe Payments to Partners
ABC Partnership
Schedule of Safe Payments to Partners, June 30, 19X5
Partner
Aldi.
Bayu
40%
Capital and loan balances, June 30
Assume full loss of Rp5,000,000 on
remaining noncash assets and
Rp10,000,000 in possible future
liquidation expenses
Assume Bayu’s potential deficit must
be absorbed by Aldi and Citra:
40/60 x Rp6,000,000
20/60 x Rp6,000,000
Safe payment to partners, June 30
Irwin/McGraw-
(21,000,000)
40%
Citra
20%
-0- (9,000,000)
6,000,000 6,000,000 3,000,000
(15,000,000) 6,000,000 (6,000,000)
(6,000,000)
4,000,000
(11,000,000)
2,000,000
-0- (4,000,000)
© The McGraw-Hill Companies, Inc., 1999
Installment Liquidation--June 19X5
19
ABC Partnership
Statement of Partnership Realization and Liquidation
Lump-Sum Liquidation (in 000,000)
Noncash
Cash Assets
(from Slide 17)
Sale of assets and distribution of Rp15 loss
Safe payment to partners
(to next slide)
Irwin/McGraw-
Aldi, Cap. Bayu, Cap Citra, Cap.
Liab.
40%
40%
20%.
10
35
-0-
15
25
(15)
10
(30)
5
-0-
5
-0-
(27)
(6)
(12)
6
(21)
11
(10)
6
-0-
3
(9)
4
(5)
-0-
© The McGraw-Hill Companies, Inc., 1999
Installment Liquidation--July 19X5
20
ABC Partnership
Statement of Partnership Realization and Liquidation
Lump-Sum Liquidation (in 000,000)
Noncash
Cash Assets
(from previous slide)
Sale of assets at book
value
Payment of Rp7,5 in
liquidation cost
Distribution of deficit
of insolvent partner:
40/60 x Rp3
20/60 x Rp3
Payment to partners
Irwin/McGraw-
Aldi, Cap. Bayu, Cap Citra, Cap.
Liab.
40%
40%
20%.
10.0
5
-0-
(10)
-0-
(5.0)
5.0
15.0
(5)
-0-
-0-
(10)
-0-
(5.0)
-0-
3
(7)
3
3
1.5
(3.5)
(7.5)
7.5
-0-
(3)
2
7.5
(7.5)
-0-
-0-
(5)
5
-0-
1
(2.5)
2.5
© The McGraw-Hill Companies, Inc., 1999
Cash Distribution Plan (in Rp000)
Profit and loss sharing percentage
Capital and loan balances
21
Aldi
Bayu
Citra
40%
40%
20%
(34,000,000)(10,000,000)(14,000,000)
Loss absorption power (LAP)
[(Capital + loan balances) Profit %] (85,000,000)(25,000,000)(70,000,000)
Decrease highest LAP to next-highest:
Decrease Aldi by Rp15,000,000
(cash distribution of Rp6,000,000) 15,000,000
(70,000,000)(25,000,000)(70,000,000)
Decrease LAP to next-highest level:
Decrease Aldi by Rp45,000,000,
45,000,000
(cash distribution of Rp22,000,000)
Decrease Citra by Rp45,000,000
45,000,000
(cash distribution of Rp11,000,000)
(25,000,000)(25,000,000)(25,000,000)
Further payments
40%
40%
20%
Irwin/McGraw-
© The McGraw-Hill Companies, Inc., 1999
22
Citrapter Seventeen
The
The
End
End
Irwin/McGraw-
© The McGraw-Hill Companies, Inc., 1999