PARTNERSHIP DISSOLUTION

 ADMISSION OF NEW PARTNERS

 RETIREMENT/WITHDRAWAL OF EXISTING PARTNER
 DEATH OF EXISTING PARTNER
 INCORPORATION OF PARTNERSHIP

ADMISSION OF NEW PARTNER

A. BY PURCHASE
o WITHOUT REVALUATION (IF SILENT) [PAYMENT=INTEREST
ACQUIRED]
 PERSONAL TRANSACTION BETWEEN OLD AND NEW PARTNERS
 NO GOODWILL RECOGNITION
 TOTAL ASSETS AND TOTAL CAPITAL REMAINS UNCHANGED
 THE PURCHASE TRANSACTION IS NOT RECORDED IN THE PARTNERSHIP
BOOK. WHAT SHALL BE RECORDED IS ONLY THE TRANSFER OF INTEREST
FROM OLD TO NEW PARTNER.

OLD PARTNER A OLD PARTNER B NEW PARTNER C TOTALS

CONTRIBUTIONS XXX XXX - XXX
TRANSFER OF (XXX) XXX -
INTEREST
AGREED CAPITAL XXX XXX XXX XXX

o WITH REVALUATION (PAYMENT><INTEREST ACQUIRED)

 DETERMINE THE REVALUATION (OVER/UNDER) AND DISTRIBUTE TO OLD
PARTNERS USING THEIR P/L RATIO.
 TRANSFER CAPITAL TO THE NEW PARTNER
OLD PARTNER A OLD PARTNER B NEW PARTNER C TOTALS
CONTRIBUTIONS XXX XXX - XXX
REVALUATION XXX(XXX) XXX(XXX) - XXX(XXX)
BALANCE XXX XXX - XXX
TRANSFER OF (XXX) XXX -
INTEREST
AGREED CAPITAL XXX XXX XXX XXX
NOTE: IF ASSET REVALUTION IS THE APPROPRIATE METHOD, BUT THE AMOUNT OF OVER/UNDER
VALUATION (OR ADJUSTMENT IN ASSETS) IS NOT GIVEN. THE BALANCE AFTER REVALUATION OF THE
SELLING PARTNER IS COMPUTED AS FOLLOWS: [NEW PARTNER /ACQUIRED INTEREST (%) FROM
SELLING PARTNER] THEN SQUEEZED.

o SPECIAL CASE: ASSET REVALUATION AND BONUS COMBINED

 TOTAL CONTRIBUTED CAPITAL (TCC) NOT EQUAL TOTAL AGREED CAPITAL (TAC)
 PARTNER’S CONTRIBUTED CAPITAL (BEFORE ADJUSTMENT) NOT EQUAL THEIR
AGREED CAPITAL (AFTER ADMISSION)
 OLD PARTNERS ACCOUNTS ARE ADJUTED TWICE: 1. FOR ASSET REVALUATION
2. BONUS
 NEW PARTNER ACCOUNT IS ADJUSTED ONLY BY BONUS.

OLD PARTNER A OLD PARTNER B NEW PARTNER C TOTALS

CONTRIBUTIONS XXX XXX XXX XXX
REVALUATION XXX(XXX) XXX(XXX) - XXX(XXX)
BALANCE XXX XXX - XXX
BONUS XXX(XXX) XXX(XXX) XXX(XXX) -
AGREED CAPITAL XXX XXX XXX XXX

NOTE: IF ASSET REVALUATION IS AN APPROPRIATE METHOD, BUT THE AMOUNT OF OVER/UNDER

VALUATION (OR ADJUSTMENT IN ASSETS) IS NOT GIVEN, TOTAL AGREED CAPITAL IS COMPUTED AS
FOLLOWS: [NEW PARTNER CONTRIBUTION/ACQUIRED INTEREST (%) IN THE FIRM]

RETIREMENT / WITHDRAWAL OF OLD PARTNER

o AT DATE OF RETIREMENT, PARTNERS CAPITAL ACCOUNTS SHALL BE

ADJUSTED FOR:
 THEIR SHARE IN PROFIT OR LOSS AT THE DATE OF RETIREMENT
 THEIR SHARE IN ASSET REVALUATION (NOT IMPLIED, THUS MUST BE
INDICATED)
 LOAN BALANCES
 o THE ADJUSTED CAPITAL OF THE REMAINING PARTNER MAY BE
RECOVERED THRU:
 SALE TO OUTSIDER- MERE TRANSFER OF INTEREST (SAME WITH ADMISSION BY
PURCHASE)
 SALE TO REMAINING PARTNERS- MERE TRANSFER OF INTEREST BETWEEN
PARTNERS
 PAYMENT OF HIS SHARE BY THE PARTNERSHIP

SETTELEMENT PRICE=ADJUSTED CAPITAL NO BONUS

SETTELEMENT PRICE>ADJUSTED CAPITAL BONUS TO RETIRING PARTNER
SETTELEMENT PRICE<ADJUSTED CAPITAL BONUS TO REMAINING PARTNERS

INCORPORATION
STEP 1: ADJUST CAPITAL BALANCES

STEP 2: CLOSE ADJUSTED CAPITAL ACCOUNTS INTO SHARE CAPITAL AND APIC IF ANY

DEATH OF PARTNER

 SETTLEMENT IS EITHER:

OPTION 1

BEG OF THE YEAR -------- DATE OF DEATH ------------- SETTLEMENT

PRO-RATA SHARE IN PROFIT PLUS

INTEREST ON CAPITAL BALANCE
OPTION 2

SHARE IN PROFIT FOR THE WHOLE YEAR