Accounting, Warren, Reeve, Duchac CH 12 - solutions Essay example

| The partners are jointly and severally liable for business debts and obligations. The partners are held personally responsible for the business and may be sued personally for liability. Partners’ personal assets are subject to lawsuit(s) made against the business. Lack of continuity; death of a partner may end the partnership/business if a buy/sell agreement is not in place. Disagreements may be difficult to resolve.

General Partnerships are not without their disadvantages. Without being an incorporated company the owners are still subject to issues such as liability, control, and location issues.

Convenience/Burden- Like a general partnership a limited partnership is easily formed and can enjoy pass through-taxation. It can also be easier to get financing with a limited partnership. A downfall of the limited partnership is that the death of a general partner can dissolve the partnership unless a prior agreement has been established.

34. The limited liability provided to limited partners means that they are not responsible for the debts of the business

The company dose not use a third party designee and the tax returns are signed by the president, Carlos Cruz.

According to the fact of this case, Parent Co. (Parent) wholly owns Poor Son Co. (Poor Son) as a legal subsidiary, and both of them all nonpublic companies. However, in January 2007 Poor Son filed a voluntary bankruptcy under Chapter 11 of the U.S. bankruptcy code because of its inability of meet obligations as they became due. Then, Parent claimed the loss of control of Poor Son and deconsolidated Poor Son from its financial statement. Through the bidding process in May 2009, Poor Son and OtherCo, the winning sponsor, filed a joint plan of reorganization to the bankruptcy court, but the plan was rescinded by OtherCo later due to significant market value shrink of Poor Son. After that, the

Assess the degree to which the firm’s accounting reflects the underlying business reality. Identify accounting distortions and evaluate their impact on profits and the sustainability of profits.

A partnership is a business that has 2 or more people working in it like Starbucks is a business that is in a partnership. The advantages are you have more capita available to you and the company you have combined skills with other workers simple to set up you have tax advantages the disadvantages are unlimited liability you have to share your profit with the other owners you can have conflicts with owners or workers that do not agree partnership ends to death and possible

In order to minimize cost, the 500,000 gallons of cleaning fluid from the Cincinnati plant will be distributed as follows:

1. Tutti’s Sandwich Shop has the following information regarding costs at various levels of monthly sales. Help Tutti separate her costs into fixed costs and variable costs so that she can predict and evaluate costs at varying levels of guests served.

To overcome this problem, the partnership may take on as many Sleeping (or Silent) Partners as they wish - these people will provide finance for the business to use, but will not have any input into how the business is run. In other words, they have purely put the money into the business as an investment. These Sleeping Partners face limited liability for the debts of the partnership. A partnership, just like a sole trader, is an unincorporated business. What are the advantages and disadvantages of a Partnership?

One major disadvantage of the partnership is taxation, partners will pay the tax same way as a sole trader. Therefore they will pay the corporation tax in addition to this they will have to pay income tax. Another disadvantage is liability partners are still subject to unlimited liability same with a sole trader if the business can’t pay its

Pratt Company owns 80% of Storey Company’s common stock. During 2008, Storey sold $400,000 of merchandise to Pratt. At December 31, 2008, one-third of the merchandise remained in Pratt’s inventory. In 2008, gross profit percentages were 25% for Pratt and 30% for Storey. The amount of unrealized intercompany profit that should be eliminated in the consolidated statements is

• It takes time and effort to build the right relationship and partnering with another business can be challenging. Problems are likely to arise if:

By: Charn Gek Cheng, Chiang Soo Ling, Kummar Sokali Muthu Mogan, Lee Siew Fen Samantha