Reference no: EM132675076

PARTNERSHIP LIQUIDATION

Give the explanation of its answers or computation True or False:

Question 1. Dissolution and liquidation are the same.

Question 2. In the liquidation of a business, the business owners' claims are settled simultaneously with the creditors' claims.

Fact pattern A partnership has total assets of P5 (all non-cash), total liabilities of P1, and the following capital balances: A, Capital (50%) P2 and B, Capital (50%) P2. Scenario 1: Cash distributions to partners

Question 3. The cash available for distribution to the partners is P3.

Question 4. The loss on the sale is P2.

Question 5. A's share in the final cash distribution is P1. Scenario 2: Reconstruction of information

Question 6. If the loss on the sale of the assets is P3, the sale proceeds must be P1.

Question 7. If the cash available for distribution to the partners is P2, A's share is P1.

Question 8. If the cash available for the partners' claims is P2, the sale proceeds must have been P1.

Question 9. If A's share in the final cash distribution is P0.75, the loss on the sale of assets must have been P1.

Question 10. If the assets are realized, and the liabilities are settled, at carrying amounts, B's share in the final distribution will be P1.