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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 project requires a net investment of $450,000. It has a profitability index of 1.25 based on the firm's 12 percent cost of capital. Determine the net present value of the project
A village ordered supplies for its Fire Department at an estimated cost of $16,700. The supplies were received with an invoice for $16,800. The village accepted the shipment and th
ACCOUNTS UNDER TRUSTEE (a) Authorised investments The investments which trustees are permitted to hold may be specifically stated in the will or deed constituting the se
What is financial Accounting
Example of FNSD Inventory
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Purchase price $2.15 Exercised Price: $37.50 Currently Trading at $37.00 In order to make the decision on the best course of action, two tables of calculations are needed:
explain accounting concepts and conventions?
The company pays its employees at the end of the day Friday for work done during that five-day work-week. Total wages for a week are $16,000. In the current year, December 31 occur
In this method the minimum and maximum level for all items of inventory are fixed. These levels function as an origin for initiating action so that the quantity of all items is con
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