Partnership Amalgamation – NBC Institute

FR – Nov 2016 – L2 – Q5b -Professional and Ethical Issues in Financial Reporting

Discuss the ethical considerations for partners and accountants in the amalgamation process.

Question

Amalgamating two or more firms into one presents ethical challenges.

Required:
Discuss TWO ethical considerations that the partners and their accountants should take into account in the process of the amalgamation of the partnerships.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Ethics, Integrity, Partnership Amalgamation, Professional Conduct, Transparency
Level: Level 2

Topic: Professional and Ethical Issues in Financial Reporting
Series: NOV 2016

FR – Nov 2016 – L2 – Q5a – Preparation of Financial Statements

Prepare the Realisation accounts and Partners' capital accounts for Santasi, Patasi, Bremang, and Asafo on amalgamation.

Question

Santasi and Patasi are in partnership sharing profits and losses in the ratio 3:2. They decided to amalgamate their firm with that of another partnership, Bremang and Asafo, as at 30 June 2015. Bremang and Asafo share profits and losses in the ratio 2:1.

The following were their statements of financial position as at that date:

Additional Information:
The terms of the amalgamation, concluded on 30 June 2015, were as follows:

Profits and losses were to be shared in the ratio of Santasi: Patasi: Bremang: Asafo = 2:2:1:1 respectively.
The values of goodwill of the two firms were agreed to be valued at two years’ purchase of the average profits of the last four accounting years to the year of amalgamation. No goodwill account is to be maintained in the books.
- Profits for the last five years (GH¢’000):

Year	Santasi & Patasi	Bremang & Asafo
2015	1,050	910
2014	910	820
2013	1,020	670
2012	950	450
2011	800	320

The new firm was to take over all the assets and liabilities of Santasi and Patasi. The following assets were revalued:
- Buildings: GH¢14,400,000
- Plant & Equipment: GH¢10,400,000
- Inventory: GH¢8,500,000
- Trade Receivables: GH¢5,000,000
The new firm was to take over all the assets and liabilities of Bremang and Asafo at the following agreed values:
- Plant & Equipment: GH¢9,500,000
- Inventory: GH¢9,900,000
- Trade Receivables: GH¢4,900,000
The capital of the new firm was to be GH¢60,000,000, contributed according to their profit and loss sharing ratio. The balance due to or from the partners will be settled through the bank account of the new firm.

Required:

Prepare the Realisation account in the books of each of the old firms as at 30 June 2015.
Prepare the partners’ capital accounts in a columnar form, for the period to 1 July 2015.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital Accounts, Partnership Accounting, Partnership Amalgamation, Realisation Account
Level: Level 2

Topic: Preparation of Financial Statements
Series: NOV 2016

FR – Nov 2016 – L2 – Q5b -Professional and Ethical Issues in Financial Reporting

Discuss the ethical considerations for partners and accountants in the amalgamation process.

Question

Amalgamating two or more firms into one presents ethical challenges.

Required:
Discuss TWO ethical considerations that the partners and their accountants should take into account in the process of the amalgamation of the partnerships.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Ethics, Integrity, Partnership Amalgamation, Professional Conduct, Transparency
Level: Level 2

Topic: Professional and Ethical Issues in Financial Reporting
Series: NOV 2016

FR – Nov 2016 – L2 – Q5a – Preparation of Financial Statements

Prepare the Realisation accounts and Partners' capital accounts for Santasi, Patasi, Bremang, and Asafo on amalgamation.

Question

The following were their statements of financial position as at that date:

Additional Information:
The terms of the amalgamation, concluded on 30 June 2015, were as follows:

Profits and losses were to be shared in the ratio of Santasi: Patasi: Bremang: Asafo = 2:2:1:1 respectively.
The values of goodwill of the two firms were agreed to be valued at two years’ purchase of the average profits of the last four accounting years to the year of amalgamation. No goodwill account is to be maintained in the books.
- Profits for the last five years (GH¢’000):

Year	Santasi & Patasi	Bremang & Asafo
2015	1,050	910
2014	910	820
2013	1,020	670
2012	950	450
2011	800	320

The new firm was to take over all the assets and liabilities of Santasi and Patasi. The following assets were revalued:
- Buildings: GH¢14,400,000
- Plant & Equipment: GH¢10,400,000
- Inventory: GH¢8,500,000
- Trade Receivables: GH¢5,000,000
The new firm was to take over all the assets and liabilities of Bremang and Asafo at the following agreed values:
- Plant & Equipment: GH¢9,500,000
- Inventory: GH¢9,900,000
- Trade Receivables: GH¢4,900,000
The capital of the new firm was to be GH¢60,000,000, contributed according to their profit and loss sharing ratio. The balance due to or from the partners will be settled through the bank account of the new firm.

Required:

Prepare the Realisation account in the books of each of the old firms as at 30 June 2015.
Prepare the partners’ capital accounts in a columnar form, for the period to 1 July 2015.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital Accounts, Partnership Accounting, Partnership Amalgamation, Realisation Account
Level: Level 2

Topic: Preparation of Financial Statements
Series: NOV 2016

Question Tag: Partnership Amalgamation

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FR – Nov 2016 – L2 – Q5b -Professional and Ethical Issues in Financial Reporting

Discuss the ethical considerations for partners and accountants in the amalgamation process.

FR – Nov 2016 – L2 – Q5a – Preparation of Financial Statements

Prepare the Realisation accounts and Partners' capital accounts for Santasi, Patasi, Bremang, and Asafo on amalgamation.

FR – Nov 2016 – L2 – Q5b -Professional and Ethical Issues in Financial Reporting

Discuss the ethical considerations for partners and accountants in the amalgamation process.

FR – Nov 2016 – L2 – Q5a – Preparation of Financial Statements

Prepare the Realisation accounts and Partners' capital accounts for Santasi, Patasi, Bremang, and Asafo on amalgamation.

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FR – Nov 2016 – L2 – Q5b -Professional and Ethical Issues in Financial Reporting

Discuss the ethical considerations for partners and accountants in the amalgamation process.

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FR – Nov 2016 – L2 – Q5a – Preparation of Financial Statements

Prepare the Realisation accounts and Partners' capital accounts for Santasi, Patasi, Bremang, and Asafo on amalgamation.

You're reporting an error for "FR – Nov 2016 – L2 – Q5a – Preparation of Financial Statements"

FR – Nov 2016 – L2 – Q5b -Professional and Ethical Issues in Financial Reporting

Discuss the ethical considerations for partners and accountants in the amalgamation process.

You're reporting an error for "FR – Nov 2016 – L2 – Q5b -Professional and Ethical Issues in Financial Reporting"

FR – Nov 2016 – L2 – Q5a – Preparation of Financial Statements

Prepare the Realisation accounts and Partners' capital accounts for Santasi, Patasi, Bremang, and Asafo on amalgamation.

You're reporting an error for "FR – Nov 2016 – L2 – Q5a – Preparation of Financial Statements"

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