Accounting › Section N · Partnership accounting › Topic N.3
Admission, withdrawal, and dissolution
Partners join, retire, die and sometimes decide to close the doors. Each change ends the old agreement, and the accounting has to move capital between partners fairly, record any bonus, and, if the firm is wound up, pay creditors before a single dollar goes to the owners.
In this topic
- Every change starts a new agreement
- Admission by purchasing an interest
- Admission by investing in the firm
- The bonus method
- Worked example: a bonus to the old partners
- Withdrawal of a partner
- Worked example: a partnership buyout
- Winding up: the four liquidation steps
- Worked example: liquidation with a deficiency
- Common mistakes to avoid
- Key takeaways
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