...have formed a partnership and based on their draft agreement should share equally the $200,000 annual royalty paid by Hyper Games Ltd for the exclusive licence of the game they developed between themselves. However, if circumstances are analysed in conjunction with relevant partnership legislation, the Partnership Act 1963 and precedent case law it becomes less clear that there is a partnership between the three. The issues arising, that raise doubt as to whether Marco should be entitled to a one third share of the annual royalty are: • Jack and Jill had already developed an early version of Galactic Explorer, before Marco’s involvement and he only ‘assisted’ and added concepts to the game. • Can the draft agreement be relied upon to prove the intention of the three partners was to share equally any profit from the sale of the licence • The draft agreement which had not been signed by Marco, stated that Marco only provided assistance. • Marco had not attended any meetings with Jack and Jill for three months prior to Jack and Jill granting the exclusive copyright licence to Hyper Games. • The contract with Hyper Games was only with Jack and Jill. A) WOULD MARCO BE ENTITLED TO SHARE THE PROFITS WITH JACK AND JILL? Marco would only be entitled to an equal share of the royalty if it can be proven there was a partnership arrangement between the three of them and in order to establish whether this was the arrangement it is necessary to refer to the Partnership Act 1963 and...
Words: 936 - Pages: 4
...Accounting 11 Partnership vs Sole Proprietorship March 11, 2014 Thinking about starting your own business? Do you prefer to work alone? Or do you prefer to work with a partner? If you choose to work with a partner then the best business structure for you would be the partnership structure. First you must ask yourself; do we have the same vision or objectives on how to run the business? Are we able to communicate well with each other? Most important question of all, do you trust this individual? If two of these three questions is no then maybe the partnership structure isn’t for you and you should set the business up as a sole proprietorship. The partnership business structure allows two or more people start up a business as co-workers with no special formalities (Partnership: Pros and Cons, 2014), but with this structure you do not have total control over the business. Decisions are shared among the partners. Unlike the sole proprietorship structure you make all the decisions by yourself (Schaefer, 2006). No complex paperwork is required when setting up a business under the partnership structure. This structure is less expensive and more affordable because the startup cost is divided evenly among the partners (Partnership: Pros and Cons, 2014). As opposed to the sole proprietorship structure the startup cost is more expensive due to the fact that there is only one owner and no one else to split the cost with. When a business has been setup as a partnership all the partners...
Words: 702 - Pages: 3
...Fair Shares what the outgoing Partner can expect 03 July 2006 Problems are posed where, after dissolution, a partnership business is continued by one partner. Such problems are longstanding. Frequently a husband and wife have run a business as partners (often without a Deed of Partnership). Following the breakdown of their marriage, one of them leaves whilst the other continues the business. This frequently raises the issue as to liability for the income earned from the business which is continued by the remaining spouse. As a matter of elementary fairness, it seems unjust that the partner continuing the business should benefit both from having the facility of the business and the income it can produce. Section 42 Partnership Act 1890 seeks to facilitate justice entitling the partner who has ceased operating the business, to "such share of the profits... as the court may find to be attributable to the use of his share of the assets of the partnership...". The problem always is how that share of the assets is to be assessed. The recent Court of Appeal decision in Sandhu -v- Gill [2006] 2 WLR 8 provides useful guidance. In that case, Messrs Sandhu and Gill ("S" and "G") agreed to open the business as a residential home for the elderly. To that end a property was purchased for £171,000. The partnership deed entered into provided that both partners should contribute half of the purchase price of the property each (£85,000). It was specifically laid down that whilst G had paid the...
Words: 1014 - Pages: 5
...GAAP ACCOUNTING FOR PARTNERSHIPS Formation [i]. The Revised Uniform Partnership Act defines a partnership as a. Any association of two or more persons or entities. b. An association of two or more persons to carry on as co-owners a business for profit. c. A separate legal entity for most legal purposes. d. An entity created by following statutory requirements. Gleim [ii]. The partnership agreement is an express contract among the partners (the owners of the business). Such an agreement generally does not include a. A limitation on a partner’s liability to creditors. b. The rights and duties of the partners. c. The allocation of income between the partners. d. The rights and duties of the partners in the event of partnership dissolution. Gleim *. A partnership records a partner’s investment of assets in the business at a. The market value of the assets invested. b. A special value set by the partners. c. The partner’s book value of the assets invested. d. Any of the above, depending upon the partnership agreement. RPCPA 0598 [iii]. When property other than cash is invested in a partnership, at what amount should the noncash property be credited to the contributing partner’s capital account? a. Fair value at the date of recognition. b. Contributing partner’s original cost. c. Assessed valuation for property tax purposes. d. Contributing partner’s tax basis. AICPA 0594 F-35 [iv]. When property other than...
Words: 3500 - Pages: 14
...CHAPTER 15 Accounting for Partnerships CHAPTER OUTLINE Partnership Accounting Partners’ Accounts Ownership Changes Partnership Liquidation Instalment Liquidation Plan of Cash Distribution to Partners Summary Review and Multiple Choice Questions, Case, and Problems LEARNING OBJECTIVES After studying this chapter, you should be able to do the following: • Describe the advantages and disadvantages of the partnership form of organization. • Explain where the major differences lie in the accounting for corporations and partnerships. • Apply the three accounting methods available to record the admission of a new partner, and evaluate the strengths and weaknesses of each method. • Apply the accounting methods for the recording of the retirement of a partner. • Prepare the journal entries to record the liquidation of a partnership when a cash payment to partners is made only after the sale of all of the partnership assets. • Prepare a schedule of the liquidation of a partnership where instalment payments to partners are made as cash becomes available. • Prepare a cash distribution plan prior to the commencement of the partnership liquidation. 1 2 CHAPTER 15 ACCOUNTING FOR PARTNERSHIPS This chapter will examine the accounting practices involved in the partnership form of business organization. The major differences between corporations and partnerships appear in the equity section of the balance sheet. The accounting principles involved have been in use for many...
Words: 12196 - Pages: 49
...DEFINITION In a contract of partnership, two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profit among themselves. Two or more persons may form a partnership for the exercise of a profession civil Code of the Philippines, article 1767). An association of two or more persons to carry on, as co-owners, a business for profit (Uniform Partnership Act, section 6). Partnerships resemble sole proprietorships, except that there are two or more owners of the business. Each owner is called a partner. Partnerships are often formed to bring together various talents and knowledge or to bring needed capital into a business. Partnerships are generally associated with the practice of law, public accounting, medicine and other professions. Partnerships of this nature are called general professional partnerships. On the other hand, service industries, retail trade, wholesale and manufacturing enterprises may also be organized as partnerships. CHARACTERISTICS OF PARTNERSHIPS The characteristics of partnerships are different from the sole proprietorships already studied in basic accounting. Some of the more important characteristics are as follows: Mutual Contribution.There cannot be a partnership without contribution of money. Property or industry (i.e. work or services which may either be personal manual efforts or intellectual) to a common fund. Division of Profits and Losses...
Words: 1407 - Pages: 6
...Page 1 of 19 PARTNERSHIP It is a CONTRACT whereby two or more persons (1) bind themselves to CONTRIBUTE money, property, or industry to a COMMON FUND (2) with the intention of dividing the PROFITS among themselves or in order to EXERCISE a PROFESSION a STATUS and a FIDUCIARY RELATION subsisting between persons carrying on a business in common with a view on profit CHARACTERISTICS OF THE CONTRACT OF PARTNERSHIP [C, C, L, I, AS, NP] 1. CONSENSUAL perfected by mere consent 2. CONTRIBUTION of money, property or industry to a COMMON FUND 3. object must be a LAWFUL one 4. INTENTION of DIVIDING the PROFIT among the PARTNERS 5. “AFFECTIO SOCIETATIS” the desire to formulate an ACTIVE UNION, with people among whom there exist a mutual CONFIDENCE and TRUSTS 6. NEW PERSONALITY the object must be for profit and not merely for the common enjoyment otherwise only a co-ownership has been formed. HOWEVER, pecuniary profit need not be the only aim, it is enough that it is the principal purpose BUSINESS TRUSTS when certain persons entrust their property or money to others who will manage the same for the former RULES ON CAPACITY TO BECOME A PARTNER 1. a person capacitated to enter into contractual relations may become a partner 2. an UNEMANCIPATED MINOR CANNOT become a partner UNLESS his parent or guardian consents 3. a MARRIED WOMAN, cannot contribute conjugal funds as her contribution to the partnership UNLESS she is permitted to do so by her husband...
Words: 8779 - Pages: 36
...SCHOOL OF COMMERCE BACHELOR OF BUSINESS MANAGEMENT AND ENTREPRENEURSHIP COMPANY LAW (CL300) AUG-DEC 2014 - ASSIGNMENT ONE PARTNERSHIP PREPARED BY STUDENT NUMBER MA3640 SUBMITTED TO C. CHIDOTHE SUBMISSION DATE 11th October The protection that the partnership act provides for people to opt for partnership as mode of carrying business. Definition Under the Partnership Act 1890, Partnership is defined as ‘The relation which subsists between persons carrying on a business in common with a view to profit’. The relation between members of any company or association which is registered as a company under any written law for the time being in force in Malawi rating to the registration of joint stock companies; or formed or incorporated by or in pursuance of any other written law, letters patent or Royal Charter, is not a partnership within the meaning of this Act. Formation of a partnership does not necessarily require a formal process although for practical reasons writing is usually used. The maximum number of partners is 20 in a partnership except for some professionals like the accountants and lawyers People opt for partnership as a mode of business in the sense that; Every partner is an agent of the firm and that it grants them an implied authority to bind the firm by any transactions entered into by them in the ordinary course of business unlike with the Limited companies. This implies that an outsider who conducts business with a partner within the scope of that implied...
Words: 1958 - Pages: 8
...General Partnership Agreement of a Business Owned by Individuals ARTICLES OF PARTNERSHIP OF ^ABCD ASSOCIATES ARTICLES OF PARTNERSHIP of ^, ^, ^, and ^, dated ^, 19^. RECITAL The parties hereto wish: (a) to enter together into the business of purchasing, acquiring, operating, leasing, owning and selling real property, including but not limited to that certain parcel of land described on Exhibit A hereto and all improvements constructed thereon and (b) in order to provide for and carry out the foregoing, to form and do business as a general partnership under and pursuant to Illinois law. NOW THEREFORE, in consideration of the premises and the mutual covenants and agreements set forth herein, the parties agree as follows: Definitions As used in this Agreement the terms listed below will have the meanings stated below, and other terms defined elsewhere will have the meanings there ascribed to them: "Agreement" or "this Agreement": these Articles of Partnership. "Bankruptcy": with respect to any Person, shall mean that such Person shall have become insolvent or generally failed to pay, or admitted in writing his or its inability to pay, debts as they become due; or shall have applied for, consented to, or acquiesced in the appointment of, a trustee, receiver or other custodian for such Person or any property of such Person, or such Person makes a general assignment for the benefit of creditors; or, in the absence of such application, consent...
Words: 5897 - Pages: 24
...1. Whether the defendants liable to pay the compensation for the breach of contract to the plaintiff firm? Section 16 of the Sale of Goods Act, 1930 clearly stated: Subject to the provisions of this Act and of any other law for the time being in force, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale In the case of Dharmpal & Co, Agra v. Firm Kila Gatla Ram Chandra Rao & Co , the court held that the buyer cannot repudiate the contract of sale on account of quality if it is not mentioned clearly as per the contract. Similarly, the court also held the same principle in the case of In re Firm Beharilal Baldeo Prasad . In the present matter, the plaintiff firm has rejected the consignment of the defendant on the grounds of poor quality when the facts are silent regarding the quality of the goods as per the provisions of the agreement between both parties of supplying 76,000 neem soaps. The contract was limited to supply of the consignment within 90 days which the defendants have done. The term “expected consignment” is vague as it is silent on specific facts of the consignment like quality. The defendants have taken exceptional efforts to perform the contract within the stipulated time period as HHI was beset with labour dispute as well as failure of soap mixture machine Sigma. The refusal on the part of the plaintiff firm to extend the deadline of the contract forced the defendants to...
Words: 830 - Pages: 4
...Partnership sgs1 1890 – Regulates general partnerships. Still relevant now as in an absence of settings not it fills in obligations and rights of the partners in a partnership. Partnership agreement is not necessary a verbal agreement would classed as a partnership. However majority of partnerships tend to have a written agreement s1(1) of PA 1890 defines a partnership as : ‘...the relation which subsists between persons carrying on a business in common with a view of profit’ S45 of the act defines business as ‘....the term “business” includes every trade, occupation and profession.’ BUT a partnership cannot exist with a entity i.e. a business, it has to be individuals or a group of individuals. This is then called ‘the firm’ (s4(1)). Though this is not a separate entity and does not have a separate legal personality. Saying this there can be a partnership between more than one company (corporate partnership), between more than two individuals (group) and sub-partnerships which is partnership within a partnership. The partnership is contractual mainly in nature, but because it is also a fiduciary relationship equity also comes in to play. How to create one (badges of partnership) – s1(1) and s2(3) [the receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business...] Normally they have deeds etc as to formally set it up, though it is possible to create one by accident, by association etc...
Words: 2987 - Pages: 12
...Partnership Act 1892 Preamble WHEREAS it is expedient to declare and amend the law of Partnership: Be it therefore enacted by the Queen's Most Excellent Majesty, by and with the advice and consent of the Legislative Council and Legislative Assembly of New South Wales in Parliament assembled, and by the authority of the same, as follows: Part 1 – Preliminary 1A Name of Act This Act may be cited as the Partnership Act 1892. 1B Interpretation (1) In this Act:"business" includes trade, occupation and profession."Court" means the court having jurisdiction in the case concerned."general partner" is defined in section 49."incorporated limited partnership" is defined in section 49."limited partner" is defined in section 49."limited partnership" is defined in section 49. (2) In this Act, a reference, in relation to an incorporated limited partnership, to the partnership or the firm is a reference to the incorporated limited partnership as a separate legal entity and not to the partners in that partnership. (3) Notes included in this Act do not form part of this Act. 1C Application of laws of partnership to incorporated limited partnerships Except as provided (whether expressly or by necessary implication) by this Act or any other enactment, the law relating to partnership does not apply to or in respect of an incorporated limited partnership, the partners in an incorporated limited partnership or to the relationship between an incorporated limited partnership and...
Words: 7355 - Pages: 30
...PARTNERSHIP AND SUBCHAPTER S TAX OUTLINE SPRING 2009 VICE PRESIDENT, ASSOCIATE DEAN, AND PROFESSOR BRUCE A. MCGOVERN Stephen A. Lind et al, Fundamentals of Partnership Taxation: Cases and Materials (8th ed. 2008) Selected Federal Taxation Statutes and Regulations (Daniel J. Lathrope ed., 2009 ed. 2008) Laura E. Cunningham & Noël B. Cunningham, The Logic of Subchapter K: A Conceptual Guide to the Taxation of Partnerships (3d ed. 2006) PART 1: AN OVERVIEW OF THE TAXATION OF PARTNERSHIPS AND PARTNERS 3 I. Introduction to Subchapter K 3 II. Tax Classification of Business Enterprises 3 a. In General 3 b. Corporations and Partnerships 3 i. “Check-the-Box” Regulations 3 ii. Existence of a Separate Entity for Federal Tax Purposes 4 iii. Publicly Traded Partnerships 6 c. Trusts 6 d. Tax Policy Considerations 6 III. Introduction to Choice of Business Entity 7 PART 2: FORMATION OF A PARTNERSHIP 8 I. Contributions of Property 8 a. General Rules 8 b. Introduction to Partnership Accounting 11 II. Treatment of Liabilities: The Basics 15 a. Impact of Liabilities on Partner’s Outside Basis 15 b. Contributions of Encumbered Property 16 III. Contributions of Services 23 a. Introduction 23 b. Receipt of Capital Interest for Services 24 c. Receipt of a Profits Interest for Services 30 i. Current Law 30 ii. Proposed Regulations 31 IV. Organization and Syndication Expenses 32 PART 3: OPERATIONS...
Words: 55311 - Pages: 222
...FORM OF AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT OF BLACKSTONE HOLDINGS I L.P. Dated as of 2007 THE PARTNERSHIP UNITS OF BLACKSTONE HOLDINGS I L.P. HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, THE SECURITIES LAWS OF ANY STATE, PROVINCE OR ANY OTHER APPLICABLE SECURITIES LAWS AND ARE BEING SOLD IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. SUCH UNITS MUST BE ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE WITH (I) THE SECURITIES ACT, ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR PROVINCE, AND ANY OTHER APPLICABLE SECURITIES LAWS; AND (II) THE TERMS AND CONDITIONS OF THIS AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT. THE UNITS MAY NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS AND THIS LIMITED PARTNERSHIP AGREEMENT. THEREFORE, PURCHASERS AND OTHER TRANSFEREES OF SUCH UNITS WILL BE REQUIRED TO BEAR THE RISK OF THEIR INVESTMENT OR ACQUISITION FOR AN INDEFINITE PERIOD OF TIME. Table of Contents | Page | ARTICLE I | | | | DEFINITIONS | | SECTION 1.01. Definitions | 1 | | | ARTICLE II | | | | FORMATION, TERM, PURPOSE AND POWERS | | | | SECTION 2.01. Formation | 11 | SECTION 2.02. Name | 11 | SECTION 2.03. Term | 11 | SECTION 2.04. Offices | 11 | SECTION 2.05. Agent...
Words: 20537 - Pages: 83
...PARTNERSHIP ( It is a CONTRACT whereby two or more persons (1) bind themselves to CONTRIBUTE money, property, or industry to a COMMON FUND (2) with the intention of dividing the PROFITS among themselves or in order to EXERCISE a PROFESSION ( a STATUS and a FIDUCIARY RELATION subsisting between persons carrying on a business in common with a view on profit CHARACTERISTICS OF THE CONTRACT OF PARTNERSHIP [C, C, L, I, AS, NP] 1. CONSENSUAL ( perfected by mere consent 2. CONTRIBUTION of money, property or industry to a COMMON FUND 3. object must be a LAWFUL one 4. INTENTION of DIVIDING the PROFIT among the PARTNERS 5. “AFFECTIO SOCIETATIS” ( the desire to formulate an ACTIVE UNION, with people among whom there exist a mutual CONFIDENCE and TRUSTS 6. NEW PERSONALITY ( the object must be for profit and not merely for the common enjoyment otherwise only a co-ownership has been formed. HOWEVER, pecuniary profit need not be the only aim, it is enough that it is the principal purpose BUSINESS TRUSTS ( when certain persons entrust their property or money to others who will manage the same for the former RULES ON CAPACITY TO BECOME A PARTNER 1. a person capacitated to enter into contractual relations may become a partner 2. an UNEMANCIPATED MINOR CANNOT become a partner UNLESS his parent or guardian consents 3. a MARRIED WOMAN, cannot contribute conjugal funds as her contribution to the partnership UNLESS...
Words: 8589 - Pages: 35
