Installment liquidationis typically require several months to complete liquidation, it includes installment, payments to partners during liquidation period because they require funds for the personal purposes. Most liquidations take place over an extended period in order to obtain the large possible amount from the realization of the assets.Some partnerships using installment liquidations prepare a plan of liquidation and dissolution prior to beginning the liquidation. Installment liquidations involve distributing cash to partners before complete liquidation of assets occurs. To ensure fairness in making cash distributions a schedule of safe payments to partners and the cash distribution plan is followed To choose: Correct answer and amount of cash partner A should receive.
Installment liquidationis typically require several months to complete liquidation, it includes installment, payments to partners during liquidation period because they require funds for the personal purposes. Most liquidations take place over an extended period in order to obtain the large possible amount from the realization of the assets.Some partnerships using installment liquidations prepare a plan of liquidation and dissolution prior to beginning the liquidation. Installment liquidations involve distributing cash to partners before complete liquidation of assets occurs. To ensure fairness in making cash distributions a schedule of safe payments to partners and the cash distribution plan is followed To choose: Correct answer and amount of cash partner A should receive.
Solution Summary: The author explains that installment liquidations require several months to complete, and that they involve distributing cash to partners before complete liquidation of assets.
Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.
Chapter 16, Problem 16.2.6E
To determine
Introduction: Installment liquidationis typically require several months to complete liquidation, it includes installment, payments to partners during liquidation period because they require funds for the personal purposes. Most liquidations take place over an extended period in order to obtain the large possible amount from the realization of the assets.Some partnerships using installment liquidations prepare a plan of liquidation and dissolution prior to beginning the liquidation. Installment liquidations involve distributing cash to partners before complete liquidation of assets occurs. To ensure fairness in making cash distributions a schedule of safe payments to partners and the cash distribution plan is followed
To choose:Correct answer and amount of cash partner A should receive.
Required information
[The following information applies to the questions displayed below.]
Megan and Matthew are equal partners in the J & J Partnership (a calendar-year-end entity). On January 1 of the current
year, they decide to liquidate the partnership. Megan's basis in her partnership interest is $100,000, and Matthew's is
$35,000. The two partners receive identical distributions, with each receiving the following assets: (Leave no answer
blank. Enter zero if applicable.)
Cash
Inventory
Land
Totals
Cash
Inventory
Land
Tax Basis
Basis
$ 30,000
5,000
500
$ 35,500
b. What is Megan's basis in the distributed assets?
FMV
$ 30,000
6,000
1,000
$ 37,000
Required information
[The following information applies to the questions displayed below.]
Turner, Roth, and Lowe are partners who share income and loss in a 2:3:5 ratio (in percents: Turner, 20%; Roth, 30%; and
Lowe, 50% ). The partners decide to liquidate the partnership. Immediately before liquidation, the partnership balance
sheet shows total assets, $164,400; total liabilities, $110,000; Turner, Capital, $5,700; Roth, Capital, $15,600; and Lowe,
Capital, $33,100. The liquidation resulted in a loss of $98,400.
Required:
a. Allocate the loss to the partners.
b. Determine how much each partner should contribute to the partnership to cover any remaining capital deficiency.
Complete this question by entering your answers in the tabs below.
Required A Required B
Allocate the loss to the partners.
Note: Losses and deficits should be indicated with a minus sign.
Initial capital balances
Allocation of gains (losses)
Capital balances after gains (losses)
2/10
Turner
$
5,700
3/10
33,100 $…