MISAMIS UNIVERSITY Prepared by: Document Code: Module Reference No.
Ozamiz City Wilnirose C. Malinao
Office of the Vice President Faculty
for Academic Affairs
COLLEGE OF BUSINESS AND
MANAGEMENT Checked by: Revision Date: Units:
Rosemarie P. Duhaylungsod June 24, 2020 3.0
Program Chairman
LEARNING Reviewed by: Revision No.: Subject Code:
MODULE Efren Barillo 0 Advanced Acc.
Dean
Approved by: Prerequisite: Co-requisite:
Geraldine Durias none None
VPAA/Director for Instruction
Descriptive Title: Accounting for Special Transactions
Module 1.3
ACCOUNTING FOR PARTNERSHIP DISSOLUTION.
I. Course Outcome : Prepare the financial reports relating to partnership formation,
operation and liquidation, and corporate liquidation and
reorganization
II. Learning Outcome/s : Accounting for partnership dissolution.
III. Time Frame : 2.5 Hours
IV. Introduction :
Partnership Dissolution
Learning Objectives
• State the causes of partnership dissolution.
• Account for the effects of partnership dissolution on the partnership equity.
Dissolution is the change in the relation of the partners caused by any partner ceasing to be
associated in the carrying on of the business.
Causes of partnership dissolution
1. Admission of a partner
2. Withdrawal, retirement or death of a partner
3. Incorporation of a partnership
Admission of partner
The admission of a new partner may be effected either through:
1. Purchase of interest in the partnership, or
2. Investment in the partnership
Purchase of interest
• A personal transaction between and among the partners
• Any consideration paid or received is not recorded in the partnership books
• Only a transfer within equity is made to establish the capital account of the new partner
and decrease the capital account(s) of the selling partner(s).
• No gain or loss shall is recognized in the partnership books.
Revaluation of assets
• When a partnership is dissolved but not liquidated, a new partnership is created. The
assets and liabilities carried over to the new partnership are restated to fair values.
• Any adjustment to the assets and liabilities is allocated first to the existing partners
before recording the admission of the new partner.
Investment in the partnership
• The incoming partner invests directly to the partnership instead of purchasing interest
from an existing partner(s).
MISAMIS UNIVERSITY Prepared by: Document Code: Module Reference No.
Ozamiz City Wilnirose C. Malinao
Office of the Vice President Faculty
for Academic Affairs
COLLEGE OF BUSINESS AND
MANAGEMENT Checked by: Revision Date: Units:
Rosemarie P. Duhaylungsod June 24, 2020 3.0
Program Chairman
LEARNING Reviewed by: Revision No.: Subject Code:
MODULE Efren Barillo 0 Advanced Acc.
Dean
Approved by: Prerequisite: Co-requisite:
Geraldine Durias none None
VPAA/Director for Instruction
Descriptive Title: Accounting for Special Transactions
• This is a transaction between the new partner and the partnership. Any consideration
paid by the incoming partner is recorded in the partnership books.
• No gain or loss shall be recognized
Withdrawal, retirement or death of a partner
• When a partner withdraws, retires or dies, his interest may be purchased (a) by one or all
of the remaining partners or (b) by the partnership.
• The interest of the withdrawing, retiring, or deceased partner shall be adjusted for the
following:
a. his share of any profit or loss during the period up to the date of his withdrawal,
retirement or death; and
b. his share of any revaluation gains or losses as at the date of his withdrawal,
retirement, or death.
• Purchase by one or all of the remaining partners
This is a transaction between and among the partners (or deceased partner’s estate). As such,
the settlement amount is not recorded in the books. The only entry to be made in the
partnership books is a transfer within equity.
• Settlement by the partnership
This is a transaction between the retiring or withdrawing partner (or deceased partner’s estate)
and the partnership. As such, the settlement amount is recorded in the books.
Incorporation of a partnership
• On date of incorporation:
a. The partners’ capital balances are adjusted for their respective shares in any
profit or loss and revaluation gains or losses as at the date of incorporation. The
adjusted capital balances may be used in determining the number of shares to be
issued to each partner.
b. Normally, the books of the partnership are closed and new books are set-up for
the corporation.
V. Learning Materials : 1.Book: Accounting for Special Transactions, 2020 edition by
Millan, Chapter 3: Partnership Dissolution
2. pdf document
Filename 1: Partnership Dissolution.pdf
3. Video
Video Link :
https://www.youtube.com/watch?v=L5Rfep9LG38
MISAMIS UNIVERSITY Prepared by: Document Code: Module Reference No.
Ozamiz City Wilnirose C. Malinao
Office of the Vice President Faculty
for Academic Affairs
COLLEGE OF BUSINESS AND
MANAGEMENT Checked by: Revision Date: Units:
Rosemarie P. Duhaylungsod June 24, 2020 3.0
Program Chairman
LEARNING Reviewed by: Revision No.: Subject Code:
MODULE Efren Barillo 0 Advanced Acc.
Dean
Approved by: Prerequisite: Co-requisite:
Geraldine Durias none None
VPAA/Director for Instruction
Descriptive Title: Accounting for Special Transactions
Title of the video is AFAR: Partnership Dissolution
3. Writing Materials: Pen and paper
VI. Supplementary
Learning Resources : A. Books
Pedro P. Guerrero and Jose F. Peralta. Advanced Accounting
Principles and Procedural Applications vol. 1, 2017 edition
Susan Ballada, CPA and Win Ballada, CPA, MBA. Partnership
and Corporation Accounting.
Rafael Lopez Jr., CPA. Accounting for Partnership and
Corporation.
Robert A. Demafiles, MBA, CAT, CPA. Accounting for
Partnership and Corporations, 2015 edition.
B. Online
Advanced Accounting
highered.mheducation.com/sites/0078136628/student_view0/
Wiley: Advanced Accounting
www.wiley.com
Advanced Accounting - School of Continuing Studies
sps.northwestern.edu/program-areas/.../advanced-
accounting/index.php
VII. Learning Activities :
1. Read and understand Chapter 3: Partnership Dissolution
of our book reference.
2. You can also read the document filename, “Partnership
Dissolution.pdf” for other discussions.
3. Watch the video link for better understanding of the
chapter.
https://www.youtube.com/watch?v=L5Rfep9LG38
4. Answer Activity 1.3
VIII. Equipment : None
IX. Student Feedback : Your feedback is important. Please don’t leave this blank. This
portion will allow us to evaluate how this module is going. Your
feedback will help improve this module for future revision.
MISAMIS UNIVERSITY Prepared by: Document Code: Module Reference No.
Ozamiz City Wilnirose C. Malinao
Office of the Vice President Faculty
for Academic Affairs
COLLEGE OF BUSINESS AND
MANAGEMENT Checked by: Revision Date: Units:
Rosemarie P. Duhaylungsod June 24, 2020 3.0
Program Chairman
LEARNING Reviewed by: Revision No.: Subject Code:
MODULE Efren Barillo 0 Advanced Acc.
Dean
Approved by: Prerequisite: Co-requisite:
Geraldine Durias none None
VPAA/Director for Instruction
Descriptive Title: Accounting for Special Transactions
1. Which part of this module you found interesting? Why?
2. Which part of this module you considered challenging? Why?
