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CONVERSION INTO A COMPANYThe partners may convert their business and trade in form of a company. This may be due to some of the advantages a company has over a partnership. E.g. Limited liability of members and the number of members of a company can be more than twenty with an exception to professional firms.The objective of accounting for conversions is to ensure that nay profit or loss on conversion is reported and shared between the partners and the opening position of the company is ascertained.The procedure therefore involves closing off the books of the partnership and preparing the opening balance sheet of the company. A realization account thus used to facilitate the process and the balance on the realization account is the profit or loss on conversion which is closed off to the partners capital accounts.The book values of the assets being taken over by the company will be posted to the debit side and the liabilities will be posted to the credit side. The purchase consideration paid by the company to the partners will be posted on the credit side of the realization account. If the expenses of formation are to be borne of the partners or the partnership, then this will be posted to the debit side of the realization account.
a. Create a worksheet in your excel file and name it "Part A Q2". In column A to E set up general journal and input the necessary journal entries to record the transactions and eve
On January 1, 2010, Solis Co. issued its 10% bonds in the face amount of $3,000,000, which mature on January 1, 2020. The bonds were issued for $3,405,000 to yield 8%, resulting in
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How to calculate fair value of long-lived asset when the information about fair value is not available?
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IAS 1 rules IAS 1 requires companies to observe the following rules in preparing published financial statements: 1) The financial statements should reflect a true and fair v
Following are Nintendo's revenue and expense accounts for a recent calendar year. Net sales ¥2,008,622 Cost of sales 1,864,981 Advertising expense 118,908 Other expense, net 397
The discount rate used must normally reflect the weighted average cost of equity and debt taking into account the systematic risk of the investment. A company's weighted average co
ACTS OF BANKRUPTCY The following are the acts of bankruptcy on which a petition may be founded: (a) Assignment of property to trustee: whereby one gives up all his proper
QUESTION 1: The Alpha Company Ltd was registered with Nominal Capital of 60,000 Equity shares of Rs.10 each. The following were the ledger balances on 31st March 2011.
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