Change in the relation of the partnership:
1. Admission
a. Purchase of interest from partnership
b. Purchase of interest from partner
c. Investment
2. Retirement
Scenarios regarding Admission and Retirement:
1. Asset Revaluation - before admitting/retiring a partner, the partnership must adjust first all
assets needed to be revalued.
2. No Asset Revaluation (Silent)
a. Purchase of Interest
• Simple transfer of capital
• Total Contributed Capital = Total Agreed Capital
b. Purchase of Interest
• Bonus method
• Total Contributed Capital = Total Agreed Capital
b. Retirement
Bonus Method:
1. Bonus to new partner - capital of new partner increases, capital of old partner decreases.
2. Bonus to old partner - capital of new partner decreases, capital of old partner increases.
Before Admission/Retirement:
1. Distribute any undistributed NI/NL.
2. Adjust any assets/liabilities needed to be revalued.
Loan Balances:
1. Admission - ignore
2, Retirement - only include to the retiring partner.
1. Admission
a. Purchase of interest from partnership
b. Purchase of interest from partner
c. Investment
2. Retirement
Scenarios regarding Admission and Retirement:
1. Asset Revaluation - before admitting/retiring a partner, the partnership must adjust first all
assets needed to be revalued.
2. No Asset Revaluation (Silent)
a. Purchase of Interest
• Simple transfer of capital
• Total Contributed Capital = Total Agreed Capital
b. Purchase of Interest
• Bonus method
• Total Contributed Capital = Total Agreed Capital
b. Retirement
Bonus Method:
1. Bonus to new partner - capital of new partner increases, capital of old partner decreases.
2. Bonus to old partner - capital of new partner decreases, capital of old partner increases.
Before Admission/Retirement:
1. Distribute any undistributed NI/NL.
2. Adjust any assets/liabilities needed to be revalued.
Loan Balances:
1. Admission - ignore
2, Retirement - only include to the retiring partner.
