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Fac 1602 assignment 2 solution
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Question 1Which one of the following alternatives is correct?
a.
From the legal perspective, the activities of a dissolved and a subsequent new
partnership are not separately accounted for and reported on.
b.
Since a partnership is a legal entity, the ownership of a partnership is vested in the
partners, and not in the partnership.
c.
The retirement of a partner from a partnership does not require the calculation of a new
profit-sharing ratio but a simple reallocation of a retired partner’s share.
d.
When a change in the ownership structure of a partnership occurs, a new partnership
agreement is entered into by the new partners which causes the existing partnership to
continue with its business operations without any interruptions.
e.
Since partnerships are not governed by a law requiring that IFRS be applied, it is not
possible to introduce a standardised accounting procedure according to which changes
in the ownership structure of partnerships ought to be recorded.
Question 2
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Which one of the following alternatives is correct?
a.
The fair value of the assets of a partnership is equal to the total equity of a partnership.
b.
When recording the valuation adjustments, if the value of a liability is decreased, the
valuation account is credited with the amount of the decrease.
c.
To ensure that compliance is followed, the financial statements of partnerships must
not be prepared according to IFRS.
d.
The selling price of the partnership business is determined by the value of its assets.
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, Question 3
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Which one of the following alternatives is incorrect?
a.
When recording the valuation adjustments, if the value of a liability is decreased, the
valuation account credited with the amount of a decrease.
b.
To ensure that compliance is followed, the financial statements of partnerships must be
prepared according to IFRS.
c.
The change in the ownership structure of the partnership is effectively the same as the
dissolution.
d.
The selling price of the partnership business is determined by the value of its net assets
Question 4
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A change in the ownership structure of the partnership occurs when
1. When the partnership changes to operate in a completely new industry or market
2. When a new partner is admitted to the partnership
3. When a one of the partners dies
4. When a one of the partners retires
5. When a new profit-sharing ratio of the partnership is agreed upon and effected
Which one of the following alternatives form part of the instances of a changes in
partnership ownership structure?
a.
1, 3, 4 and 5
b.
1, 2, 4 and 5
c.
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