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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.
Dillings Ltd is a wholesaler and distributor of catering of office equipment. The following list of balances was extracted from its books at 31 March 2004: 1428_Prepare the Income
Camp Corp had the following balances in its stockholders'' equity at jan 1: Common stock, $2, par value, 450,000 shares issued $900,000 Additional pd in capial 1,200,000 Retained
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Illustrations of Accounting Policies A Ltd., has decided to change its policy of writing off borrowing costs to capitalizing the same. As at 31st December, 2003, the company had
Q. Describe about Backdating? i) Exercise price is based on a lower share price prior to option grant date. Practice of marking a document with a date that precedes actual date
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Which of the following is not a measurement issue in accouting a. when to record a business transaction b. how to classify the items of a businesss transaction c. when to classify
What have been the dividends per share? What is the CAGR of dividends per share from 2008 to 2010? What was the retention ratio for 2008 to 2010? Calculate the DPS growth
MarmadukeMuffett once had a girlfriend who ran an antiques business in London'sKings Road. Ever since then, he has been hooked on the furniture trade and now runsMarmaduke'sMarvell
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