US-CN Companies & Securities Law Assignment

Partnerships—Formation, Operations, and Changes in Ownership Interests 1. Explain why the noncash investments of partners should be recorded at their fair values. Noncash investments of partners should be recorded at their fair values in order to provide equitable treatment to the individual partners. The recording of noncash assets at less than fair value will result in allocating the amount of understatement between the partners in their relative profit and loss sharing ratios as the undervalued assets are used for partnership business or when they are sold by the partnership. 2. Is there a conceptual difference between partner drawings and withdrawals? Is there a practical difference? Conceptually, there is no difference between the drawings and the withdrawals of partners since both represent disinvestments of resources from the partnership entity. From a practical viewpoint, the distinction between withdrawals and drawings may be important because allowable drawings a...

Partnership Liquidation 1. How does partnership liquidation differ from partnership dissolution? Dissolution of a partnership terminates the partnership as a legal entity, but the partnership business may continue under a new agreement. When a partnership is liquidated, however, the partnership is terminated both as a legal and as a business entity. Thus, a partnership may be dissolved without liquidation, but it may not be liquidated without dissolution. 2. What is simple partnership liquidation, and how are distributions to partners computed? A simple partnership liquidation is the liquidation of a solvent partnership in which all partners have equity capital and all gains and losses are realized and recognized before any distributions are made to the partners. In simple partnership liquidations, only one cash distribution is made and the amounts distributed to individual partners are equal to their predistribution capital account balances. 3. UPA specifies a priority ra...